Core Insights - Bread Financial Holdings (BFH) reported an operating income of $3.14 per share for Q2 2025, exceeding the Zacks Consensus Estimate by 69.7% and reflecting an 18% year-over-year improvement [1][8] Revenue Performance - Revenues decreased by 1.1% year over year to $929 million, primarily due to lower finance charges and late fees from a reduced average prime rate, lower delinquencies, and a shift in risk and product mix [2][8] - The revenue figure missed the consensus estimate by 0.9% [2] Credit Sales and Loans - Credit sales increased by 4% to $6.8 billion, driven by new partner growth and increased general-purpose spending, surpassing the estimate of $6.6 billion [2][8] - Average loans decreased by 1% to $17.7 billion, attributed to the macroeconomic environment affecting consumer spending and tighter underwriting standards [3] Interest Income and Margins - Total interest income fell by 3% to $1.2 billion, aligning with estimates [3] - Net interest margin contracted by 30 basis points to 17.7%, slightly better than the Zacks Consensus Estimate of 17.4% [3] Expenses and Earnings - Total non-interest expenses rose by 3% to $481 million, driven by debt extinguishment costs [4] - Pre-tax pre-provision earnings decreased by 5% year over year to $448 million due to lower net interest income [4] Financial Position - As of June 30, 2025, cash and cash equivalents increased by 14.4% to $4.2 billion [5] - Long-term debt rose by 28.7% to $1.3 billion compared to the end of 2024 [5] - Tangible book value per share was $52.21, up 7% year over year [5] - Return on average equity was 17.5%, expanding by 80 basis points year over year [5] Share Repurchase - In April, BFH repurchased 1.1 million shares, completing a $150 million share repurchase program [6] Future Guidance - Management estimates average receivables to be flat to slightly down from 2024, with total revenues expected to remain flat year over year [9] - The net loss rate is guided to be in the range of 7.8-7.9% [9]

Financial Data and Key Metrics Changes - Adjusted net income for the second quarter of 2025 was $149 million, with adjusted earnings per diluted share of $3.15, excluding a $10 million post-tax impact from debt repurchase expenses [5] - Return on average tangible common equity was 22.7% for the quarter [5] - Revenue decreased by 1% year over year to $929 million, primarily due to lower finance charges and late fees [13] - Average loans decreased by 1% to $17.7 billion, influenced by macroeconomic challenges and elevated gross credit losses [12] Business Line Data and Key Metrics Changes - Credit sales grew by 4% year over year, driven by new partner growth and higher general purpose spending [6] - Non-interest income increased by $3 million, primarily due to recent paper statement pricing changes [14] - Total non-interest expenses increased by $12 million or 3% year over year, mainly due to debt extinguishment costs [13][15] Market Data and Key Metrics Changes - Direct to consumer deposits increased to $8.1 billion at quarter end, up 12% year over year [9] - Delinquency rate improved to 5.7%, down 30 basis points year over year [21] - Net loss rate was 7.9%, down 70 basis points year over year [22] Company Strategy and Development Direction - The company is focused on technology modernization, digital advancement, and product innovation to drive future growth [9] - A multi-year extension of the relationship with Caesars Entertainment was announced, securing top programs until at least 2028 [10] - The company aims to optimize its balance sheet and maintain a strong capital position while delivering value to shareholders [20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the stability of consumer health and spending trends, despite mixed economic data [28][30] - The full-year net loss rate guidance was adjusted to a range of 7.8% to 7.9%, reflecting better-than-expected improvements in credit metrics [25] - Management remains cautious about potential macroeconomic impacts on consumer spending and employment [30][90] Other Important Information - The company completed a $150 million share repurchase program and a $150 million tender offer for senior notes [9] - The total loss absorption capacity was reported at 25.7% of total loans, indicating a strong margin of safety [21] Q&A Session Summary Question: Health of the customer regarding credit sales and loan growth - Management noted that consumer health remains stable, with a positive trend in credit sales growth continuing into July [28][30] Question: Capital plans and buybacks - Management indicated that capital priorities remain unchanged, focusing on responsible growth and potential buybacks when appropriate [36][38] Question: Top line view and NII progression - Management acknowledged that improved delinquency rates and lower late fees are impacting top line NII, with expectations for variability in revenue [43][46] Question: Growth prospects and capital utilization - Management emphasized ongoing investments in the business and maintaining a balance between growth and shareholder returns [49][52] Question: Trends in applications and approval rates - Management reported strong application flows and appropriate approval rates based on current economic conditions [76][78] Question: Impact of BNPL and new client conversations - Management confirmed that BNPL is part of their product offerings and highlighted a robust pipeline for future growth opportunities [93][96] Question: Competitive renewal processes and risk-adjusted returns - Management described the competitive nature of the market and their proactive approach to partner renewals, ensuring alignment with hurdle rates [100]

Financial Data and Key Metrics Changes - Bred Financial reported adjusted net income of $149 million and adjusted earnings per diluted share of $3.15, excluding a $10 million post-tax impact from debt repurchase expenses [4] - Return on average tangible common equity was 22.7% for the quarter, reflecting strong operational performance [4] - Revenue for the quarter was $929 million, down 1% year over year, primarily due to lower finance charges and late fees [12] Business Line Data and Key Metrics Changes - Credit sales grew 4% year over year, driven by new partner growth and higher general purpose spending [5] - Average loans decreased by 1% to $17.7 billion, impacted by macroeconomic challenges and elevated gross credit losses [11] - Direct to consumer deposits increased to $8.1 billion, up 12% year over year, indicating strong growth in this segment [7] Market Data and Key Metrics Changes - The net loss rate improved to 7.9%, down 70 basis points year over year, reflecting better credit metrics [20] - Delinquency rate decreased to 5.7%, down 30 basis points from last year, indicating improved consumer credit health [19] - The reserve rate for credit losses was 11.9%, a 30 basis point improvement year over year, due to better credit metrics [21] Company Strategy and Development Direction - The company is focused on technology modernization, digital advancement, and product innovation to drive future growth [7] - A multi-year extension of the partnership with Caesars Entertainment was announced, securing top programs until at least 2028 [8] - The company aims to optimize its balance sheet and maintain disciplined capital allocation while investing in growth opportunities [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the stability of consumer health and spending, despite mixed economic signals [28] - The outlook for the net loss rate was adjusted to a range of 7.8% to 7.9%, reflecting better-than-expected credit metrics [24] - Management remains cautious about macroeconomic uncertainties but optimistic about gradual consumer improvement [30] Other Important Information - The company completed a $150 million share repurchase program and a $150 million tender offer for senior notes, enhancing shareholder value [7] - Total liquid assets and undrawn credit facilities were $7.7 billion, representing 35% of total assets, indicating a strong liquidity position [16] - The company anticipates higher marketing and employee-related costs in 2025 due to typical seasonality [14] Q&A Session Summary Question: Health of the customer and credit sales growth - Management noted that consumer health remains stable, with a 4% growth in credit sales and positive trends continuing into July [27][30] Question: Capital plans and buybacks - Management indicated that capital priorities remain unchanged, focusing on responsible growth and potential buybacks as capital ratios improve [34][36] Question: Top line revenue outlook - Management explained that improved delinquency rates and lower late fees are pressuring top line revenue, but they expect gradual improvements [42][44] Question: Growth prospects and credit actions - Management highlighted ongoing efforts to manage credit strategies dynamically, with a focus on improving loss rates and consumer engagement [66][68] Question: Trends in applications and approval rates - Management reported strong application flows and appropriate approval rates based on current economic conditions, emphasizing customer engagement post-approval [78][80] Question: BNPL and new product offerings - Management confirmed that BNPL is part of their product set, allowing flexibility to meet market demands and partner needs [97][100] Question: Competitive renewal processes and retail partner penetration - Management discussed proactive renewal strategies with partners and emphasized the importance of deepening relationships to drive growth [104][106]

Company Performance - Bread Financial Holdings (BFH) reported quarterly earnings of $3.14 per share, exceeding the Zacks Consensus Estimate of $1.85 per share, and up from $2.66 per share a year ago, representing an earnings surprise of +69.73% [1][2] - The company posted revenues of $929 million for the quarter ended June 2025, which was a slight miss compared to the Zacks Consensus Estimate by 0.92%, and down from $939 million year-over-year [3] - Over the last four quarters, Bread Financial has surpassed consensus EPS estimates three times and topped consensus revenue estimates two times [2][3] Market Performance - Bread Financial shares have increased by approximately 5.1% since the beginning of the year, while the S&P 500 has gained 8.1% [4] - The current Zacks Rank for Bread Financial is 3 (Hold), indicating that the shares are expected to perform in line with the market in the near future [7] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $2.17 on revenues of $988.48 million, and for the current fiscal year, it is $7.17 on revenues of $3.88 billion [8] - The estimate revisions trend for Bread Financial was mixed ahead of the earnings release, and future changes in estimates will be closely monitored [5][7] Industry Context - The Financial - Miscellaneous Services industry, to which Bread Financial belongs, is currently ranked in the top 38% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [9]

Financial Performance - Net income was $139 million, with earnings per diluted share at $2.94[6] - Adjusted net income reached $149 million, and adjusted earnings per diluted share were $3.15, excluding a $10 million post-tax impact from repurchased debt[6] - Revenue totaled $0.9 billion[7] - Credit sales increased by 4% to $6.8 billion, driven by new partner growth and increased general-purpose spending[11] Capital and Funding - Direct-to-consumer deposits increased by 12% year-over-year to $8.1 billion, representing 45% of average total funding[6] - Tangible book value per common share increased by 7% year-over-year to $52.21[6] - Completed a $150 million tender offer for 9.75% senior notes due 2029[6] - CET1 capital ratio was 13.0%[17] - Total risk-based capital ratio was 16.5%[17] Credit Quality - The delinquency rate decreased to 5.7% from 6.0% in the second quarter of 2024[11] - The net loss rate decreased to 7.9% from 8.6% in the second quarter of 2024[11]

Core Insights - Bread Financial Holdings, Inc. reported a net loss rate of 7.8% for the three months ended June 30, 2025, slightly down from 7.9% in the previous year [1] - The delinquency rate improved to 5.7% as of June 30, 2025, compared to 6.0% a year earlier [1] - The company experienced a year-over-year decline of 1% in average credit card and other loans, totaling $17.631 billion [1] Financial Performance - End-of-period credit card and other loans stood at $17.656 billion as of June 30, 2025 [1] - Net principal losses for the quarter were reported at $113 million, with a total of $348 million for the year [1] - The company noted that the impact of hurricanes Helene and Milton led to a temporary freeze on delinquency progression, affecting net principal losses and loss rates in the second quarter of 2025 [1] Company Overview - Bread Financial is a tech-forward financial services company providing personalized payment, lending, and saving solutions to millions of U.S. consumers [2] - The company offers general purpose credit cards and savings products, aiming to empower customers and enhance their quality of life [2] - Bread Financial collaborates with recognized brands in various sectors, including travel, health, and specialty apparel, through private label and co-brand credit cards [2]

[Second Quarter 2025 Results Overview](index=1&type=section&id=Second%20quarter%202025%20results) Bread Financial reported Q2 2025 net income of $139 million, improved credit quality, and executed significant capital allocation initiatives [Second Quarter 2025 Key Highlights](index=2&type=section&id=Second%20quarter%202025%20Key%20Highlights) Bread Financial reported Q2 2025 net income of $139 million, improved credit quality, and completed capital allocation programs Q2 2025 Key Financial Metrics | Metric | Value | Change (YoY) | | :--- | :--- | :--- | | Net Income | $139 million | +4% | | Diluted EPS | $2.93 | +11% | | Adjusted Net Income(1) | $149 million | +12% | | Adjusted Diluted EPS(1) | $3.14 | +18% | | Revenue | $0.9 billion | -1% | | Credit Sales | $6.8 billion | +4% | | Average Loans | $17.7 billion | -1% | | Delinquency Rate | 5.7% | -0.3 ppt | | Net Loss Rate | 7.9% | -0.7 ppt | - Completed a **$150 million** board-authorized share repurchase program, with **3.2 million shares** repurchased year-to-date[5](index=5&type=chunk) - Completed a **$150 million** tender offer for its 9.75% senior notes due 2029, resulting in **$13 million** in debt extinguishment costs[5](index=5&type=chunk)[11](index=11&type=chunk) - Renewed a long-term partnership with Caesars Entertainment and launched a new, fee-based credit card[5](index=5&type=chunk) - Direct-to-consumer deposits grew **12%** year-over-year to **$8.1 billion**, now representing **45%** of average total funding[5](index=5&type=chunk) [Financial Performance Analysis](index=4&type=section&id=Financial%20Performance%20Analysis) Q2 2025 financial performance analysis covers P&L, net interest margin, funding, capital, liquidity, and credit quality metrics [Summary P&L Results](index=4&type=section&id=Summary%20P%26L%20results) For Q2 2025, revenue decreased by 1% year-over-year to $929 million, while net income increased by 4% to $139 million Q2 2025 vs Q2 2024 Profit & Loss Statement | ($ in millions) | 2Q25 | 2Q24 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $929 | $939 | -1% | | Provision for credit losses | $274 | $290 | -6% | | Total non-interest expenses | $481 | $469 | +3% | | Income before income taxes | $174 | $180 | -3% | | Net income | $139 | $133 | +4% | YTD 2025 vs YTD 2024 Profit & Loss Statement | ($ in millions) | YTD '25 | YTD '24 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $1,899 | $1,929 | -2% | | Provision for credit losses | $570 | $611 | -7% | | Total non-interest expenses | $958 | $949 | +1% | | Net income | $280 | $269 | +4% | - Adjusted Pre-tax Pre-provision Net Revenue (PPNR) was **$458 million** in Q2 2025, a slight decrease of **1%** from **$465 million** in Q2 2024[12](index=12&type=chunk)[13](index=13&type=chunk) [Net Interest Margin](index=5&type=section&id=Net%20interest%20margin) The net interest margin for Q2 2025 was 17.7%, a slight decrease from 18.0% in Q2 2024, with direct-to-consumer deposits comprising 45% of average interest-bearing liabilities Key Margin and Yield Metrics | Metric | 2Q25 (%) | 2Q24 (%) | Change (ppt) | | :--- | :--- | :--- | :--- | | Net Interest Margin | 17.7% | 18.0% | -0.3 ppt | | Loan Yield | 26.0% | 26.4% | -0.4 ppt | | Avg. Earning Asset Yield | 21.7% | 22.0% | -0.3 ppt | | Cost of Total Interest-Bearing Liabilities | 4.9% | 5.4% | -0.5 ppt | - The funding mix has evolved, with direct-to-consumer deposits increasing to **45%** of average interest-bearing liabilities in Q2 2025, up from **40%** in Q2 2024[16](index=16&type=chunk) [Funding, Capital, and Liquidity](index=6&type=section&id=Funding%2C%20capital%20and%20liquidity) The company maintained a robust capital and liquidity position in Q2 2025, with a CET1 ratio of 13.0% and stable total liquid resources of $7.7 billion Capital Ratios | Ratio | 2Q25 (%) | 2Q24 (%) | | :--- | :--- | :--- | | CET1 Capital Ratio | 13.0% | 13.8% | | Tier 1 Capital Ratio | 13.0% | 13.8% | | Total Risk-Based Capital Ratio | 16.5% | 15.1% | | TCE + Credit Reserve Rate(1) | 25.7% | 25.9% | - The CET1 ratio decreased from **13.8%** in Q2 2024 to **13.0%** in Q2 2025, primarily impacted by share repurchases (**-1.1%**) and repurchased debt (**-1.1%**), partially offset by net earnings (**+2.2%**)[19](index=19&type=chunk) - Total end-of-period liquid resources stood at **$7.7 billion**, representing **35.1%** of total assets[18](index=18&type=chunk) [Credit Quality and Allowance](index=7&type=section&id=Credit%20quality%20and%20allowance) Credit quality metrics improved year-over-year in Q2 2025, with the delinquency rate declining to 5.7% and the net loss rate decreasing to 7.9% Credit Quality Metrics | Metric | 2Q25 (%) | 2Q24 (%) | Change (ppt) | | :--- | :--- | :--- | :--- | | Delinquency Rate | 5.7% | 6.0% | -0.3 ppt | | Net Loss Rate | 7.9% | 8.6% | -0.7 ppt | Allowance for Credit Losses (ACL) | Metric | 2Q25 ($ in millions) | 2Q24 ($ in millions) | | :--- | :--- | :--- | | ACL Balance | $2,098 million | $2,172 million | | Reserve Rate | 11.9% | 12.2% | - The revolving credit risk distribution remained consistent, with **58%** of the portfolio having a VantageScore greater than 660, **27%** between 601-660, and **15%** at 600 or below[23](index=23&type=chunk) [2025 Financial Outlook](index=8&type=section&id=2025%20financial%20outlook) Bread Financial provided its full-year 2025 outlook, anticipating average loans to be flat to slightly down compared to 2024, with revenue relatively flat and an improved net loss rate [Full Year 2025 Guidance](index=8&type=section&id=Full%20Year%202025%20Guidance) The company projects flat to slightly down average loans for 2025, with flat revenue, targeted positive operating leverage, and an improved net loss rate between 7.8% and 7.9% Full Year 2025 Financial Outlook | Metric | Full Year 2024 Actuals ($ in millions) | Full Year 2025 Outlook | | :--- | :--- | :--- | | Average loans | $18,084 million | Flat to slightly down | | Revenue (excl. gain on sale) | $3,827 million | Flat | | Adjusted total non-interest expenses | $1,943 million | Positive operating leverage | | Net loss rate | 8.2% | 7.8% to 7.9% | [Appendix](index=9&type=section&id=Appendix) The appendix details strategic focus, comprehensive financial tables, and non-GAAP reconciliations for in-depth analysis [Strategic Focus and Portfolio Details](index=10&type=section&id=Strategic%20Focus%20and%20Portfolio%20Details) The appendix details the company's four strategic focus areas for 2025, explains the 3% YoY rise in non-interest expenses, and illustrates the loan portfolio's diversification - The company's 2025 strategic pillars are: Responsible growth, Managing the macroeconomic and regulatory environment, Disciplined capital allocation and risk management, and Operational excellence[29](index=29&type=chunk)[30](index=30&type=chunk) - Total non-interest expenses increased **3%** YoY in Q2 2025[33](index=33&type=chunk)[35](index=35&type=chunk) - The loan portfolio is diversified by product, with co-brand cards accounting for **54%** of credit sales and **55%** of end-of-period loans in Q2 2025[40](index=40&type=chunk) [Detailed Financial Tables](index=13&type=section&id=Detailed%20Financial%20Tables) This section provides extensive historical financial data, including summary financial highlights, quarterly trending data, detailed net interest margin calculations, and historical capital and credit quality trends - Provides a comprehensive summary of financial highlights for Q2'25, comparing YoY, QoQ, and YTD performance across sales, loans, deposits, returns, margins, capital, and credit rates[43](index=43&type=chunk) - Includes detailed quarterly trending data from Q2 2023 to Q2 2025 for P&L results, financial highlights, capital ratios, and credit quality, allowing for in-depth trend analysis[45](index=45&type=chunk)[47](index=47&type=chunk)[51](index=51&type=chunk) - A detailed table breaks down the components of the Q2 2025 Net Interest Margin, showing average balances, interest income/expense, and average yields for all interest-earning assets and interest-bearing liabilities[49](index=49&type=chunk) [Non-GAAP Financial Measures and Reconciliations](index=22&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Reconciliations) This section defines non-GAAP financial measures like Adjusted Net Income and PPNR, and provides detailed reconciliation tables to their most directly comparable GAAP measures for historical periods - Defines key non-GAAP metrics used by management to evaluate performance, including Adjusted Net Income (excluding debt repurchase impacts), PPNR, ROTCE, and Tangible Book Value per common share[65](index=65&type=chunk)[66](index=66&type=chunk) - Presents detailed tables reconciling GAAP to Non-GAAP financial measures, including Total non-interest expenses, Net income, EPS, and PPNR, for quarterly periods from Q2 2023 to Q2 2025[67](index=67&type=chunk)[69](index=69&type=chunk)

Core Insights - Bread Financial Holdings, Inc. reported its second quarter 2025 financial results, emphasizing its position as a tech-forward financial services company [1] - The company provides a range of payment, lending, and saving solutions tailored to U.S. consumers, enhancing customer experience and brand partnerships [3] Financial Performance - The financial results for the second quarter of 2025 were announced, with all related materials available on the investor relations website [1] - A conference call was scheduled to discuss these results, indicating a commitment to transparency and investor engagement [2] Company Overview - Bread Financial specializes in personalized financial solutions, including general purpose credit cards and savings products, aimed at improving customers' financial well-being [3] - The company collaborates with well-known brands across various sectors, including travel, entertainment, health, beauty, jewelry, and specialty apparel, through private label and co-brand credit card offerings [3]

Core Points - Bread Financial Holdings, Inc. has initiated cash tender offers to purchase up to $150 million of its Senior Notes and Subordinated Notes [1] - The tender offers are subject to specific sublimits for each series of notes, with a maximum of $100 million for the 2029 Notes and $50 million for the 2035 Notes [1] - The tender offers will expire on August 21, 2025, with an early participation deadline on August 6, 2025 [2] Tender Offer Details - The total consideration for each $1,000 principal amount of notes will be determined through a modified "Dutch Auction" procedure [3] - Holders who tender their notes before the early participation deadline will receive an additional $50 for each $1,000 principal amount [3][11] - The expected final payment date for accepted notes is August 26, 2025 [3] Participation and Bidding - Holders can specify a minimum bid price for their notes, which must be within a defined range and in increments of $1.25 [4] - The aggregate principal amount of notes accepted may be subject to proration if the total validly tendered exceeds the applicable sublimits [6] Withdrawal and Conditions - Notes can be withdrawn until the withdrawal date of August 6, 2025 [7] - The tender offers are subject to various conditions that may be waived or modified by the company [8] Management and Agents - J.P. Morgan Securities LLC is the lead dealer manager for the tender offers, with several co-dealer managers assisting [9] - D.F. King, Inc. serves as the information and tender agent for the offers [9]

Core Insights - Caesars Entertainment is launching a new premium credit card, the Caesars Rewards Prestige Visa Signature, in partnership with Bread Financial, aimed at enhancing customer experience and loyalty [1][2][3] Group 1: Credit Card Features - The Caesars Rewards Prestige Visa Signature credit card has a $149 annual fee and offers up to $450 in annual value through various perks [1][2] - Cardmembers can earn rewards on everyday purchases and unlock exclusive benefits in travel, entertainment, dining, and gaming [2][3] - The card includes a complimentary hotel night upon anniversary (up to $300), $50 Slot Play, and $100 Caesars dining credit [4] Group 2: Tier Credits and Bonuses - New cardholders can earn up to 25,000 additional Tier Credits in their first year, accelerating their progress in the Caesars Rewards loyalty program [2][5] - The card provides multiple opportunities for earning Tier Credits, including bonuses for spending outside Caesars Rewards destinations [5] Group 3: Company Background - Caesars Entertainment is the largest casino entertainment company in the U.S., operating under various brand names and offering a wide range of gaming and hospitality services [7] - The company focuses on enhancing guest value through its Caesars Rewards loyalty program and a commitment to operational excellence and technology leadership [7] Group 4: Partner Company Overview - Bread Financial is a tech-forward financial services company that provides personalized payment and lending solutions, enhancing customer experiences in various sectors [8]