Executive Summary
Synchrony Financial delivered a challenging top-line quarter in QQ2 2025 with revenue down 17% year over year to $4.712 billion, weighed by a softer pre-tax environment and ongoing macro headwinds in consumer spend. Notwithstanding the revenue contraction, the company posted meaningful profitability and cash-flow strength: gross margin stayed robust at approximately 53.1%, operating margin stood at 31.1%, and net income rose 47% YoY to $946 million, yielding EPS of $2.51 (diluted $2.50). The delta between lower revenue and higher net income reflects disciplined cost management, favorable mix, and the impact of non-operating items that moderated relative to the prior year.
Cash flow and liquidity remained a core strength. Operating cash flow was $2.56 billion for the quarter, with free cash flow also reported at $2.56 billion. Synchrony ended QQ2 2025 with a sizable net cash position (net debt of approximately -$3.45 billion) and a strong liquidity footprint (cash and cash equivalents of $19.46 billion and total cash + short-term investments of $22.36 billion). The balance sheet shows a conservative leverage profile with total liabilities of roughly $103.55 billion against total assets of $120.51 billion and stockholders’ equity of ~$16.95 billion. While the current ratio and quick ratio sit around 0.27x, this liquidity framework is typical for a consumer-finance lender with substantial deposits and investment securities as a funding base.
Looking ahead, the absence of explicit forward-looking guidance in the provided materials necessitates a cautious but constructive investment stance. The firm’s cash-generating capability and balance-sheet strength support ongoing capital returns and potential strategic investments, though investors should monitor net interest income dynamics, delinquencies in consumer portfolios, and the external macro backdrop that could influence loan growth and credit performance. Overall, the QQ2 2025 result set underscores a company with durable profitability and exceptional cash generation, balanced against revenue headwinds and rate-sensitive earnings volatility.
Key Performance Indicators
QoQ: -17.32% | YoY:-17.32%
QoQ: -19.89% | YoY:-11.66%
QoQ: -21.98% | YoY:-11.37%
Key Insights
Revenue: 4.712B (YoY -17.32%, QoQ -17.32%)
Gross Profit: 2.501B (YoY -11.66%, QoQ -19.89%)
Operating Income: 1.466B (YoY -11.37%, QoQ -21.98%)
Net Income: 0.946B (YoY +47.12%, QoQ +24.97%)
EPS: 2.51 (Diluted 2.50), YoY +60.90%, QoQ +31.41%
Gross Margin: 53.08%
Operating Margin: 31.11%
Pretax Margin: 26.66%
Net Margin: 20.08%
EBITDA: 1.553B, EBITDA Margin: 32.96%
Interest Expense: 1.065B
Effective Tax Rate: 23.0%
Return on Equity: 5.58%
Return on Assets: 0.79%
Return on Capital Employed: 3.83%
De...
Financial Highlights
Revenue: 4.712B (YoY -17.32%, QoQ -17.32%)
Gross Profit: 2.501B (YoY -11.66%, QoQ -19.89%)
Operating Income: 1.466B (YoY -11.37%, QoQ -21.98%)
Net Income: 0.946B (YoY +47.12%, QoQ +24.97%)
EPS: 2.51 (Diluted 2.50), YoY +60.90%, QoQ +31.41%
Gross Margin: 53.08%
Operating Margin: 31.11%
Pretax Margin: 26.66%
Net Margin: 20.08%
EBITDA: 1.553B, EBITDA Margin: 32.96%
Interest Expense: 1.065B
Effective Tax Rate: 23.0%
Return on Equity: 5.58%
Return on Assets: 0.79%
Return on Capital Employed: 3.83%
Debt/Capitalization: 48.6%
Debt/Equity: 0.94x
Current Ratio: 0.27x
Quick Ratio: 0.27x
Cash Flow (operating): 2.56B
Free Cash Flow: 2.56B
Cash at End: 19.46B; Cash at Beginning: 22.68B
Net Cash from Financing: -2.82B; Net Cash from Investing: -2.24B; Net Change in Cash: -2.50B
Total Assets: 120.51B; Total Liabilities: 103.55B; Shareholders’ Equity: 16.95B
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
4.71B |
-17.32% |
-17.32% |
| Gross Profit |
2.50B |
-11.66% |
-19.89% |
| Operating Income |
1.47B |
-11.37% |
-21.98% |
| Net Income |
946.00M |
47.12% |
24.97% |
| EPS |
2.51 |
60.90% |
31.41% |
Key Financial Ratios
operatingProfitMargin
31.1%
operatingCashFlowPerShare
$6.8
freeCashFlowPerShare
$6.8
dividendPayoutRatio
14.3%
Management Commentary
Note: No earnings call transcript data was provided in the input. As a result, there are no management quotes or theme-based highlights to quote. If you can share the transcript or specific management remarks, I will extract and synthesize them by themes (strategy, operations, market conditions) with context and significance.
Forward Guidance
No explicit forward guidance was included in the provided materials. Given the macro environment for consumer finance (rates, spending, and credit trends), key areas to monitor would include: (1) trajectory of credit quality indicators (delinquencies, charge-offs) as consumer balance sheets adjust to rate normalization; (2) net interest income sensitivity to funding costs and asset yields; (3) balance sheet liquidity management and deposit growth; (4) merchant/retail partner program mix and private-label credit card performance; and (5) potential regulatory or macro-policy changes affecting consumer lending dynamics. Investors should watch quarterly trajectory in revenue and net interest income, as well as any commentary from management on reserve levels and loss-rate expectations as conditions evolve.