Alliance Data Systems (ADS) Misses Q4 EPS by 48c

Alliance Data Systems (NYSE: ADS) reported Q4 EPS of $1.93, $0.48 worse than the analyst estimate of $2.41. Revenue for the quarter came in at $1.11 billion versus the consensus estimate of $1.11 billion.

"Alliance Data's 2020 operating performance demonstrated resilience in a very challenging business environment, with key strategic initiatives undertaken throughout the year that position us for ongoing improved performance," said Ralph Andretta, president and chief executive officer of Alliance Data. "We adapted quickly to pandemic-related challenges and succeeded in achieving significant sequential improvement in our results following the major impact of the pandemic in the first half of last year. At the same time, we made strategic investments in innovation and additional capabilities that have improved our competitive positioning and enhanced cardmember experience. Specifically, our actions included the acquisition of Bread®, a technology-driven fintech company, our new outsourcing relationship with Fiserv, the launch of our Enhanced Digital Suite, and the introduction of the Comenity CardSM, each of which is fully aligned with our transformation program.

"Our fourth quarter financial results reflected a continued gradual recovery in Card Services credit sales. Success in our beauty and health & wellness verticals contributed to the 24% sequential increase in total credit sales in the seasonally strong holiday period. Credit metrics remained resilient and delinquency rates improved as a result of enhanced collection efforts, prudent credit line management, the expansion of consumer relief programs in 2020, and stimulus payments. LoyaltyOne® activity improved from the third quarter, yet pressure remains from pandemic-related shutdowns throughout the world."

Andretta continued, "Bread's growth trajectory continues to accelerate as we onboard digital partners at an impressive rate and have an increasing pipeline of quality prospects. Active cross-sell partner discussions continue with high levels of interest from our Card Services' brand partners to augment existing programs with Bread's white-label solutions. The combination of Bread's innovative fintech capabilities and Card Services' funding, marketing, data & analytics, and underwriting expertise provides promising new opportunities for growth and synergies. We continue to invest in the expansion of our fintech business to capitalize on its significant growth prospects. We are especially pleased by the recent Bread announcement with Royal Bank of Canada ("RBC") and the growth opportunity related to this strategic partnership. Our technology partnership with RBC accelerates Bread's platform growth and enables us to bring our next-generation payment and point-of-sale solutions to more consumers globally.

"Importantly, we added talent in key areas of our Card Services businesses, including business development, product, data & analytics, and digital innovation which, accompanied by our strategic investments and plans for the future, give Alliance Data the foundation to drive long-term profitable growth. Also, we eliminated approximately $240 million of fixed cost from our 2019 expense base as we right-sized our cost structure. We remain committed to prudent expense management and driving ongoing efficiency programs that reduce our cost to serve and enable additional investment in areas of strategic priority.

For earnings history and earnings-related data on Alliance Data Systems (ADS) click here.

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