Synchrony Financial (SYF) Earnings Call Transcript & Summary

All right. I'm going to keep us on time. Joining us next is Brian Wenzel, CFO of Synchrony. Brian has over 25 years at Synchrony and its predecessor, GE Capital. Prior to becoming CFO in 2019, he held key roles, including Deputy CFO and CFO of the Retail Card business. So thank you, Brian, for joining us today.

Sanjay, thanks for the invitation. Great to be here.

So I saw your monthly data this morning, and it looks like the consumer continues to be resilient in the back of this choppy macro backdrop. Maybe you could just talk a little bit about what you're seeing in the portfolio and just in the back of -- like we get a lot of mixed signals on the economy. How is your consumer holding up so well?

Yes. Listen, we were pleased, obviously, with the results this morning. When you think about credit -- and to go back to that story, Sanjay, in mid-2023 and into 2024, we took credit actions, right, because we did not want to be in a situation where our losses were outside of our target underwriting zone. It's not a good use of capital for us. It's not efficient. And we generally are not going to chase growth. So we put credit actions in place. I think if you look at those trends and how those trends have performed, it's done remarkably well and arguably probably better than some of our expectations. And if you look at 30-plus better year-over-year on a seasonal basis, you look at month-on-month, it's better on a seasonal basis. Same thing on net charge-offs, [ inferred ] same thing on 90-plus. So when you look at that trend from a seasonality perspective, it's continuing to take hold. It's slowing a little bit, right, because we realized a bunch of the credit action effectiveness has been flowed through. So from that standpoint, the roles in the performance is great. Entry rate continues to be better than the pre-pandemic period back to that '18, '19 window. So that's great. And we don't see things inside delinquency that's troublesome. We don't see a greater percentage of nonprime coming through. We don't see anything related to student loans. We don't see different attributes that are in there. So it looks actually pretty good from our perspective.

That's great. And then when we think about the reserve, obviously, the reserve rate has been coming down, but there's still more to give relative to CECL day 1. Can you just talk about how we should think about that -- the path of the reserve rate, particularly as you might start growing a little bit as we move into next year?

Yes. So obviously, we don't guide towards reserve rate. So I won't give you specific guidance. But I think as you think about our framework, right, we're back inside the target operating zone, but we have qualitatives, all right, and different scenarios that sit back and say, if the macroeconomic environment were to get worse, what could that outcome be? So clearly, I think ourselves, I think most issuers are in a situation where we have a little bit of -- when you look at those models, a little bit of conservatism in those models to sit back and say, okay, even though we don't view a recession coming, there are indicators that say, hey, listen, not everything is perfect So we have those. As we get greater clarity in that macroeconomic environment, and we continue to see stabilization in delinquency performance, there is a downward bias on to the rate. You'll see some downward bias naturally, and I said this in our third quarter call in October. There's going to be some downward bias, obviously, because of seasonal growth here in the in the fourth quarter. But again, I wouldn't expect anything in the short term because I don't think we're going to see anything in the macro in the next 2 months, given the fact that there's not a lot of data out there, but there is a downward bias towards that reserve.

Can I just follow up a little bit on this? Like when we see deterioration across some of these cohorts, what do you think is driving that? Is it because those areas were growing and maybe those lenders kind of went further than they should have? I'm just curious, as you look at it, you're not seeing anything in your portfolio, but you obviously have insight across the economy.

So Sanjay, we talked quite a bit about PRISM, our advanced underwriting tool. We talked about the fact that we have migrated quite a bit away from just being score only. We have massive amounts of data. So when we do underwriting, I think we have probably a little bit more unique insight into the customers, whether it's data coming from our partners, whether it's data coming from unique sources, yes, we do pull a Vanta score, fraud score, bankruptcy score. We have our own proprietary scores that we put on it. So I think -- first of all, we have, I think, a competitive advantage when it comes to that data and the underwriting because of the nature of our business, number one. I think two -- when we look at some lenders, I think they are -- their models are a little bit more rigid, number one. And I think number two, I think everyone is in this war now they're try to grow and maybe that credit aperture is off a little bit in an environment where scores may be not necessarily the best indicator.

Got it. Okay. So maybe we start talking about other encouraging trends. Obviously, spending has been showing some green shoots, both average transaction frequency and average transaction value showed some growth acceleration. Are you seeing any noticeable differences between the industry vertical mix, consumer segment mix that help you sort of think about the path forward and how those trends might manifest themselves in the future?

Yes. When we look at -- if I start really top and then come to ATV and ATF. When you think about our purchase volume, we're down 4% first quarter, down 2% second quarter, plus 2% third quarter. So you could see that trend building and the momentum. When you specifically look at average transaction value and average transaction frequency in the data that we talked about and we showed in our third quarter earnings, we had 4 consecutive quarters of positive trends, right, kind of moving up on both ATV and ATF. I think as we look at October, that trend continued, to be honest with you. If you look at it underneath, right, when I think about average transaction frequency for a second, all the kind of cohorts when we think about nonprime, prime and super prime all trended up. When I think about average transaction values, it's really nonprime and super prime that kind of had that. So where everyone -- I know there's a lot of this fear around the nonprime consumer, particularly in autos, you're feeling some of the pressure, and that's probably a little bit more unique to the class and some underwriting. But we're seeing nonprime hang in there. And part of it is the credit action. So our nonprime is a stronger group because we've, in theory, eliminated out some of the, I'd say, is the tougher credits in there.

Got it. And you've talked a little bit about unwinding some of the prior credit tightening by the end of the year. Are those -- any specific risk or product tiers? Maybe you could just help us dimensionalize what that means for growth in the future.

Yes. So I'm going to break it into 2 pieces, Sanjay. I'm going to bring you back a little bit to what we talked about in July. So in July, we said we were making some selective adjustments. Those selective adjustments were really into, I would say, our health and wellness platform and then I'd say our digital sales platform. When you think about health and wellness, some of the things that we were doing there was really around ticket size and things like that. So one of the ways you control credit is, I may not do a $15,000 or $25,000 dental implant. I may scale it back a little bit. We started to go back and do some of those things. So taking a little bit more exposure to the consumer just through ticket growth as went there. The 30%, as we talked about, again, we're trying to dimensionalize it for people. When I think about the actions that we were doing or beginning to do here in the fourth quarter, the first is around credit line increases, right? We weren't doing really any credit line increases proactively if someone asked, we would do them, but we probably were more conservative. So we started to address some of that. So people who are eligible, it's great that we send you an offer and say, Sanjay, thank you for being a loyal customer. Your credit line goes from A to B. And a lot of times, merchant offer comes in there, it's a very good growth tool as it kind of steps in. And it gives the consumer confidence that we believe in them. So we started to see things like that. That is across the board. So that's not necessarily limited to any one particular sales platforms. We're seeing that. We're leaning into -- as we tighten credit, we put more people on to the private label product versus Dual Card, even though they were potentially eligible to control that exposure. We're now going through a campaign where we're offering those customers to go to the Dual Card, again, with an offer so that they can upsize and you're going to get hopefully bigger balances off of that. You'll see some other new accounts that kind of go in there. So there's targeted things like that. On the account management side, Sanjay, again, these are pretty much across the board. When we do credit line decrease strategies, you decrease someone to a percentage over the balance. As you pay down, we continue to ratchet you down to take the exposure down. We've slowed down the ratchet. We're still going to credit line decrease, but we may not continue to go down there. So we're being a little thoughtful. All the actions though, that we're taking here in the fourth quarter are on existing customers, right? So they're not net new customers. They are customers we know, they are customers that have experience. So we feel confident in what it will do to the loss rate, but really on a growth perspective.

And so I think the number you guys have put out there is 30% of the prior credit tightening is what you're easing or unwinding, right? So as we think about the remaining 70%, how quickly do you unwind the remaining 70%?

Yes. If you go back to April this year, I talked about it almost 3 phases. That's not necessarily how we do it inside the company, but almost 3 phases. You're going to have an initial phase, then you're probably going to have a further step out and then you have kind of a final phase. So I think we're on target for that. I think if you look at what we did here in the back half of 2025, that's kind of I would call Phase 1. I think it's fair to say we would come back probably think about getting through the first quarter and that would be kind of Phase 2 and then the latter part of '26 into '27 where you'd kind of be back to a nonrestrictive credit aperture, if I put it that way. Again, the actions we're taking didn't unwind some of the things we did in '23 and '24. So if we were concerned about you taking a personal loan, we're not unwinding that. We're just doing different things and say, okay, I'm kind of swap in and swap out from a credit standpoint, but the effect on sales will be neutralized once you kind of get through those 3 phases.

So with the credit actions unwinding, the Walmart portfolio coming on, it seems like you're well positioned to sort of reinvigorate growth in some capacity. I think if I was to pick up one thing in the monthly data, that might be one area that was still a little bit weak, but we still got a couple of months to go. So maybe you could just dimensionalize for us sort of how we should think about that long-term target you have of 7% to 10% and sort of how -- where you fall into the range next year?

Yes. So that's a very unique way to try to give me guidance for 2026 that, of course, I won't do.

I try. I got to try.

I would say come back in January. We'll have a great conversation about that. Listen, there's nothing structurally in our portfolio that says that, that medium-term target or longer-term target of 7% to 10% is not achievable. Right now, we're in a restrictive credit capture mode. And listen, we've been very clear that the sales decline that you're feeling and the growth we're feeling now, a majority of that is credit actions oriented. And Sanjay, you know better than I do, is a lending and a credit card business is the easiest business to grow. So there's no real, I think, structural impediment. And I think when you look at the underlying portfolio for a second, you look at some of the areas where we're leaning in more to, right, Health and wellness. We have a tremendous franchise value there. It's very fragmented. We have the ability to continue to drive that. There's verticals in which we don't have. You think about digital platform, which has just tremendous partners when you think about an Amazon or a PayPal and folks like that. Now you put Walmart in there. We had a very good relationship for a number of decades, and we're excited about where that program can go. But I think also, if you think about -- so -- and I'm sure you'll probably unpack Walmart a little bit later. But you think about Walmart coming in, we have Lowe's Commercial going to come into the portfolio in the first half of 2026. So when you think about those types of items, you think about the tailwinds from the credit action rewind, that's going to, in theory, give you solid momentum. I think even when we go back to what we're seeing today, there's this view on the consumer that the consumer is really pulling back. I look at our October data and discretionary spend on our Dual Card. So world sales on Dual Card, discretionary is up 9%, nondiscretionary is up 6%. That says the consumer is willing to spend. The consumer is confident to spend if they have a reason to spend.

Very interesting. I guess when we think about Walmart, maybe we can unpack that a little bit more, as you said. it's obviously coming back. And it probably is going to come back in a little bit of a different capacity than it was there before as you guys have talked about it. Maybe you can just talk a little bit about that.

Yes. First of all, we're excited with the relationship with Walmart. It is just an iconic brand. You think about the number of consumers that just shop, whether it's in a Walmart physical location online now, and they've really built that and invested in that property. They've really transformed the business. So we're excited about the relationship. I think we take a lot of pride in the fact that they came back to us because they realize our capabilities, and we take that as a win. Most certainly, we said to them, we don't need to. We have a great relationship with Sam's and -- but if you wanted to do it and you want to do it quickly, we can do it because we know how the system works. I think when you look at that program, to stand up that program as quickly, it is one of the more technologically advanced programs. If you look at the placement and the way in which it sits inside the OnePay app and that API tech stack, it is really seamless to the consumer. When you apply for the card, it automatically gets digitally presented inside either the OnePay app or the Walmart app. So when you think about those capabilities on how the consumer can do it, and the consumer can use a QR code throughout the store. Back when we had the program in 2018, if you wanted an account in store, you're going really to the front-end associate, a lot of which are folks who were not credit eligible themselves. And so now you can do QR codes inside the store, you can do it yourself. You have tremendous access. I think if you now look at the placement, if you went to the Walmart homepage, product page, et cetera, it is right there for you. So I think the way in which a consumer can get the card is fundamentally different number one. Number two, there's a much stronger value proposition that's on the card today. So if you think about Walmart+, which is a big initiative for Walmart, getting 5% off purchase there and then 1.5% in the world. If you're not a Walmart+ getting 3% purchases in Walmart versus 1.5% in the world, that's much richer than it was under the prior program. What that does is give you a better credit quality and more consumers that are willing to kind of go into the program. So you look at that thing. Then you look at the alignment between Walmart, OnePay and ourselves, I think the senior leadership of Walmart is much more engaged relative to that. So when you think about better placement, better digital placement, stronger value proposition, we have actually better revenue generation off the product. And then you kind of get into the engagement. It's just -- we're excited about the launch and the potential. And again, to remind people, this was a top 5 program for us. There's no reason it can't be a top 10 and then potentially most certainly a top 5 program over time. It just -- it has tremendous scale.

And I mean, are there any early signs that you're seeing? I mean, how should we think about sort of the sequencing of the growth maybe just over the next 6 months or so?

Yes. Listen, it was really important for us to get it up for holiday. A lot of folks use Walmart, walmart.com to provide for their families in holiday. So really important to kind of get us up. The way I'd characterize it, Sanjay, is when I look at other fast-growing de novo programs that were really big brands, this is far outpacing on a per account production on a weekly basis. It's just -- it goes to speak to the relevance and the importance of Walmarts in a lot of people's lives. So we're seeing really good new account traction here. Again, you know that there is a spending curve, but having it out and trying to get the engagement early. We're also going through probably our largest prescreen we've ever done for any program that's currently underway. So we're going to touch a lot of people and try to see how many cards we can get because if we can get them in holiday, it really is going to spend pretty well. The final thing I'd say about it, what makes the program, I think, really attractive, we have a high percentage of people who are Walmart+ members, right? When you're paying a monthly fee to have that product, you're sticker, you're more loyal to that brand. So getting the credit card pairing the value, which Walmart really appreciates it because now it's more value on that program, that's going to create stickiness with those customers. They're going to be more willing to utilize the card and potentially get it to top of wallet for some.

Great. Well, it sounds encouraging, but the setup seems encouraging.

Come back in January for discussion on setup.

Wonderful. So maybe we shift gears and talk about the NIM. You've talked about tailwinds in the fourth quarter and you get the benefits from lower funding costs, maybe some -- and some offsets from lower-yielding investments in the portfolio. So how should we think about the NIM to progress in 2026?

Yes. Again, you're trying to drag me into 2026...

Or just the progression of the NIM...

Here's -- the biggest wildcard that comes in, I'd say, quarter-on-quarter is the percentage of loan receivables to average earning assets, right? And if you kind of go back to the 2019, 2020 days, we're borrowing money at 1%, 2%, I'm getting 8 basis points, 9 basis points for that. It was a terrible economic trade. So you're really closely managed. Today, I'm getting, call it, 4-ish percent yield and I'm borrowing at like 3.80%. So it's a positive economic trade. So again, we're not going to chase that metric, right? Because if we can gather deposits, as we talked about growth, you're going to need them. So that's the first wildcard. Again, I think we're probably a little bit higher from a liquidity standpoint. So I think there's room for that to come down, which provides a tailwind on NIM. I think when you start looking inside of the components of NIM, when I think about interest income, you got a couple of things going on. Number one, you're going to continue to see year-on-year growth as it relates to our PPPCs and how they kind of come in. So that creates a tailwind for you. You have a little bit of a headwind as rates come down here with prime rate for the cards that are variable that come down. You have a little bit of, I'd say, a headwind when it comes to merchant discount, which is, again, based off of market level pricing on interest costs. And then you have interest costs themselves, right? And that should create a tailwind for you. Again, I think betas are a little bit lagging from what they were on the way up at this point. I think people are trying to watch the market. We'll see. It's really a toss-up what the Fed here does in December. I don't think -- even if the Fed did something, I don't think you'll see a lot of people move rates in the fourth quarter because people are trying to gather deposits because they have seasonal growth. It's not just us. But I think you'll then say, okay, how does that roll through and betas kind of come up from what's now in the 50% range up to that 75% range on what we had on a rate hiking cycle. The last thing I'd sit back and say the one thing we try to do a little bit more next year than this year. This year, we had a lot of front-ended maturities on CDs. We're trying to -- we thought we're going to move a little sooner from the Fed. They didn't, so we didn't quite get as much. Next year, we're much more level. So I think we'll be able to kind of -- as rates come down, you get a little quicker reset on the portfolio. So there's generally a mix between headwinds and tailwinds. I generally say there's more tailwinds than headwinds.

Yes. Sounds like it. And maybe you could just drill down a little bit on the PPPCs and how much of that sort of in the run rate now? And any risk that it sort of becomes a smaller tailwind at some point?

Yes. So the way -- if I kind of break it into, I'll call it, 3 buckets, right, they are the more meaningful buckets. Bucket 1 was APR, Bucket 2 is paper statement fees, Bucket 3 is kind of default pricing or penalty pricing. So if you go to bucket 1, we talked about the fact that about 50% of the portfolio would have reset to the new rates in June of this year. You're going to be at 75% June of next year. We're slightly ahead of that schedule. So you get a magnitude of there's ways to go not only in '26, but in '27. It's a declining number as far as year-on-year growth. But on an absolute dollar basis, it grows in those particular years. When you think about the paper statement fees, that's kind of in for the most part. And you really have 2 dynamics that are going on there. Number one, as I grow new accounts, I pick up more paper statement fees. But I have more people migrating into e-bill servicing. So I'm getting the cost benefit. So on the revenue side, it probably treads water to a little bit, but it's fully in. Now it's how much more can we get people to kind of go to e-servicing because it has greater benefits for us there. And default pricing has a longer tail. So it's not quite as big, but that will kind of come, but it's not going to move the numbers significantly. So we view they stick. We talked about that there are some small modifications that we made. We're not really in discussions now to change that. Again, I think having the incremental price gives us the ability to make very strategic discussions with our partners, either about a different value proposition in the card or two, given the incremental revenue, kind of take a little bit more credit loss exposure on the margin in order to do that. Those are conversations we may have in 2026, but we're not -- right now, we're focused on executing for holiday for merchants and cardholders.

Okay. Maybe we can talk about capital. You guys ended the quarter with 13.1% CET1 ratio. You announced a $1 billion share repurchase authorization, strong. It seems like there's a decent amount of excess capital. Can you just talk about how you guys are thinking about capital allocation going forward outside of the $1 billion?

Yes. Listen, I think the Board's confidence in the business, the Board's confidence in our continued ability to generate capital at a very high level. And I think given the RWA position, they were very comfortable adding $1 billion on. So I think as we exited the third quarter, I think the total amount that we had left through June of 2026 was $2.1 billion. You think about that number, it's, I call it, 8% or so of kind of market cap. So very strong. And even if we do that, we have a significant amount more to go. And we're going to be aggressive but prudent. We understand running at a high level. And given the capital generation is not necessarily where we want to be. So I think we're going to continue to look at that. We'll continue to look at the dividend and be what I'd say, aggressive but prudent at the same level. I think about the priorities, it has not shifted at all, right? The first one is organic RWA growth. And you have things like Walmart, probably the other ones. You got Lowe's commercial kind of come in. How do we kind of get books that are now ours, we have agreements with how does that continue to grow? And as you talked about moving back towards that 7% to 10% growth. So that's priority #1. Priority #2 is around the dividend and how do I have the right level of dividend, both when you look at it on a yield perspective, but also really as what percentage of net income are we allocating to the dividend. Those 2 are our first 2 priorities. Then you get into a discussion around share repurchase versus inorganic. The great news about our company is we generate such a high level of capital each year. I think if you go back to the third quarter, the chart we showed, I think we generated 310 basis points of CET1 in trailing 12 months. So we can generate a lot of capital quickly if we need to. So we don't need to hold on to it. So if there's a portfolio that comes out, most certainly, if it's a very large portfolio, we can generate capital enough quickly in order to do that. If it's a small portfolio, we have so much excess now, it's not a big deal. I don't think you'd see us do large-scale M&A, to be honest with you, even though there's a lot of talk about bank M&A. You'll see us do what we had done in the past, something like a Pets Best, something like Allegro. If you look back in October, our Versatile acquisition, which is a really terrific capability where we can bring to our partners and certainly our fragmented base. So we'll do things like that, not capital intensive, but those are the things that we'll kind of continue to evaluate in combination.

And then in terms of like large -- not bank portfolios, but large portfolios out there, I mean, are there any that you think are relevant in terms of -- in the pipeline?

Yes. Yes. I'd sit back and say there are some that are coming up. I'd sit there and say a lot of folks are spending more time. Brian's talked about this, Brian Doubles has talked about this quite a bit is you really have seen a shift with regard to merchants and partners about capabilities first. It's not only about economics, about capabilities and how do you really help me grow sales, maintain sales and really maintain customer loyalty. That is a richer discussion. You rather have that discussion than how much money can I get off this program and how does that fund a value prop, et cetera. So you see that kind of occurring. What that does, though, it lengthens out the process. We're having conversations now of partners that may be, hey, listen, it's a 27, but there are some attractive names that are out there. I think a lot of it stems from some of these other portfolios that are looking to move around they're not necessarily happy with the capabilities they get today. And I think when we can point to a Venmo experience, you can point to a Walmart OnePay experience where you can see it is absolutely seamless to the consumer. You think about Amazon, I think digitally, we can really execute. And then most certainly, I would arguably say we have the best in-store execution of anyone in the space.

Okay. Great. You've obviously renewed a number of your large partners recently. I'm just curious sort of how the -- I mean, you talked about the capabilities. Maybe when you think about economics, these things go hot and cold over cycles. I'm just curious sort of what the temperature is right now of the conversations do you have? Do they respect the capabilities and therefore, are willing to pay a commensurate price for it?

Yes. I would sit back and say we -- the discussions we've had with partners have not been -- the main part of the discussion has not been economics, which I think is great. It's really about capabilities, really how you're investing. It's how we can bring, you'll say, a versatile piece to the equation. How do we bring other pieces of technology? What are you doing from an AI perspective? What are you doing in order to help bring me different types of sales? How do we wrap Pay Later in and that's an important part, right? When you think about we have Pay Later now at Amazon, Lowe's, Penney, Belk, Sleep Number, I think. So you think about that product, how do I bring you that multiproduct to you, that's where a lot of the discussion is about and about the value prop and refreshing the value prop versus the economics. So that said, I do think, generally speaking, if you go back to a number of years ago, I think there's probably -- the pendulum has come back a little bit towards the issuer from the merchants. You never like it really swung one way or the other way because it's going to move. You'd rather have people be rational in that. And I'd say the large players in the space have generally been rational on price.

Okay. So I've got a couple more, and then we can see if the audience has any. But 2 pretty loaded topics. One is buy now, pay later. Many players in the market continue to grow at a pretty decent clip. Maybe you could just talk about philosophically -- and you guys obviously have your own product and notched a pretty big win with Amazon of late. So maybe you could just talk about philosophically how you think about the buy now, pay later competition, how they're growing? Is it taking share from you guys? Should we expect you to step up your strategies around it? Maybe you can unpack all of that.

Yes. So let me first start with the evolution of buy now, pay later and how it really has taken off. The buy now, pay later product, first of all, I go back to 1932 when we financed our first refrigerator was buy now, pay later. So it's an interesting phrase, but it really speaks to a product that's been in the marketplace for a long period of time. The fundamental difference that you saw really started in the pandemic for the most part, where it took off was going shorter duration, these Pay in 4s, number one. Number two, it was around a very good customer experience, at least on the front end, the customer experience, applying for, et cetera. Maybe not so on the back end, but that experience. So that product is relevant and that product is going to have wherewithal in a financing solution for consumers. So if you kind of put that aside, our strategy, and we believe this and invested in this is you have to be multiproduct to deal with merchants. So you can't be one product. I can't just be an installment lender. I can't just be a private label issuer. You have to be able to say, okay, I can do an installment loan, I can do a secured card. I can do a private label card, I can do a Dual Card. I potentially can do it on a consumer, I can do it on a commercial. So you have a whole product suite that you can kind of go to a merchant and say, I have the right capabilities for your consumer. It depends on the product, depends on the ticket size and you can deploy it. That's number one part of our strategy. I think the second thing is to say, okay, if I originate a Pay Later loan, right, what do you do with that relationship once the closed-end installment stops, right? Traditional buy now, pay later are dragging people around trying to just open new loans at different merchants in order to try to get their business to grow. We sit around and say, okay, can we go ahead and originate you and then figure out how to market to you and convert you into a longer relationship and a private label card or a Dual Card in that. But there are certain consumers that may want that product. There are certain consumers who actually have both of our products because for this one, they wanted to have that separate installment loan. So I think that piece is here as well to say, it's important to have a multiproduct strategy in our view. And I think you see other people trying to migrate towards that, but I think it's going to be tougher given their scale. The other part of your question you asked is, are we feeling pain when it comes to -- there's a lot of folks who are taking out these loans, Sanjay, who don't really -- are not going to take our product. right? They are generally cash people. There's someone who says, listen, it's free money, I'm going to do that. They're not going to look for a private label card. So we have not felt necessarily the impact of it directly on our business in a material way. I'm sure some people would choose a product. That's why it was really important for us to have Amazon, which is an incredible brand to have it right there sitting in the stack. It's a competitor product. So it makes a lot of sense to have it. And we just got to use it in the strategy. The final thing I'd say about it is we are not -- we have the capability to do Pay in 4 or Pay in 6. We don't do a lot of that business. That's not really great. It's not a really profitable business, so we don't do a lot. We're generally doing Pay Later loans, durations starting at 6 months going out to 36 or 42.

You don't feel like it affects your lead generation like that those people might otherwise be private label cardholders.

They're not there today, right? But they're going to be there in the future. Like I know the previous speakers on here, we have a lot of millennials, Gen Zs in our portfolio. There's a point in time in which they enter into the product. There's a point in time where people like this product. There could be people are in trouble. Listen, that landscape is also going to change once you finally get to a situation where things are reported at the credit bureau level, and it actually impacts the credit score. However, they determine how the credit score is going to work. Right now, it's seamless to the consumer. So it's a great option. But it's going to face headwinds when it comes to that and it comes -- it gets reported. So listen, the industry has staying power. The question is whether or not people can get to scale having a singular type product.

Cool. My final topic is Agentic commerce. That's one that we're talking quite a bit about at this conference because it's very early days. I'm just curious what -- and I know Brian Doubles talked a little bit about it on the earnings call, but maybe you guys -- maybe you could just sort of rehash what you guys are doing and how you think it transforms the commerce journey and how it affects Synchrony.

Yes. We are focused on it today. We have teams focused on it. We have teams building certain things around it. Agentic commerce is coming. The question really is the time horizon where it's meaningful. If you said to me, is Agenta commerce going to be meaningful in the 3- to 5-year horizon, Probably, yes. Is it going to be meaningful next year? No, I don't believe so. So we're focused on a couple of different things. Number one, when you think about it, there's different avenues. Agentic commerce is either going to happen through individual apps, think about ChatGPT, et cetera. It's going to happen in browsers, right? It's going to happen at particularly at partner sites. And then you're going to have fintechs that are kind of doing. Everyone is going to kind of create it. So the most important part for us is how do we kind of get embedded across all the swim lanes because you don't know yet, and I don't think anyone knows yet who the winners or losers are going to be or how that market gets divided. So whether it's working with AI providers like OpenAI, Perplexity, et cetera, how are you embedding there? But it all starts with we're working with our clients and our partners about what's your Agentic strategy because they have to protect their own sales. So they are very focused on what their strategy is. So again, we flex those partners. So we're working with the partners. We're working then with these AI providers. We're also creating our own Agentic shopper. When you look at our marketplace, we did AI search. So if you said, hey, listen, Sanjay, you're a New York Knicks fan, you want to say, I want to do New York Knicks theme [indiscernible], right? It will go out to our partners and pull a whole bunch of products in for you and say, here's a selection of products. Now we want to be able to create an Agentic shopping agent that also works in that marketplace that can complete the sale for you. So we're going to -- we're working on that as our own. So whether it's the browser, whether it's the AI providers, whether it's our clients or ourselves, we're going down to multiple swim lanes in order to do that. And lastly, I'd say is given we are technology leading, it was announced that we helped and participated with Google with regard to the protocols on how this -- on how Agentic commerce can work. So I think we're at that leading edge of trying to be involved, but most certainly trying to be diverse on the swim lanes in which it can develop.

Cool. So we have like 1 minute left, and I was wondering if there's any pressing questions from the audience. One right there. Mark?

Maybe just with regards to that last comment around Agentic commerce and your integration with Google and others, but is there a way that the agent will effectively see the benefits of some of these, whether it's private label or store cards and the value prop and sort of be incented to use the Synchrony-based card relative to other cards that may have a different metric around rewards or value?

Yes. Most certainly, Mark, when you think about the position of the private label industry, we have a unique position relative to others. So I think having a value prop wrapping around it. The other part I left out a little bit is the proliferation of digital wallets and how it plays in there because they're going to want to have commerce there. And we're working on how do we get private label cards into digital wallets, whether it's broader base wallets or smaller wallets that are maybe merchant run. So private label and enhanced benefits, I think, will come through it and make a stronger value proposition to the consumer ultimately.

Wonderful. I think we're out of time. Thank you, guys. Appreciate it.

Great. Thanks, Sanjay.