Alliance Data Reports Third Quarter 2021 Results

– Net income of $224 million, or $4.47 per diluted share
– Third quarter credit sales up 20%, supporting expectations for continued receivables growth
– Strategic transformation continues as spinoff of LoyaltyOne® segment as Loyalty Ventures Inc. is expected on November 5th, significantly improving Alliance Data’s capital ratios and other key metrics
– Recent agreement with Sezzle leverages Bread’s fintech payments platform for installment lending across Sezzle’s over 40,000 merchant network

Alliance Data Systems Corporation, a leading provider of data-driven marketing, loyalty and payment solutions, today announced results for the quarter ended September 30, 2021.

“Alliance Data’s third quarter performance demonstrates considerable operating progress.  Net income improved year-over-year and pre-tax pre-provision earnings increased substantially both year-over-year and sequentially, in line with strong credit sales and reduced expense levels,” said Ralph Andretta, president and chief executive officer of Alliance Data.  “At the same time, we continued to move forward with the transformation of our company and are demonstrating how the investments we have made and continue to make drive our future growth.”

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“Credit sales remained strong in the third quarter as we saw improving performance across our brand partners, which more than offset a previously announced portfolio sale in the third quarter.    We saw positive momentum building in the LoyaltyOne segment as campaign activity picked up late in the quarter for BrandLoyalty, and AIR MILES® reward miles redeemed improved to the highest level since the pandemic began.

“Our net loss rate was particularly low in the third quarter, and our delinquency rate remained below historic levels.  We expect credit metrics and payment rates to continue to moderate into 2022 as stimulus programs wind down. We continue to monitor uncertainties in the market and remain confident that our full suite of product offerings, combined with our disciplined risk management, will enable us to drive responsible, profitable growth in the periods ahead.

“The upcoming spinoff of our LoyaltyOne segment concludes a multi-year Board initiative to simplify Alliance Data’s business model and strengthen our enterprise-level capital metrics. At the spin-off date, which is expected to be November 5, 2021, Alliance Data will retain a 19% ownership in, and expects to receive a $750 million cash distribution from Loyalty Ventures Inc., which we will use for deleveraging.  The spin is expected to provide a significant improvement in Alliance Data’s capital metrics.  Loyalty Ventures will have the opportunity to focus on its own unique strategic priorities and make meaningful investments to drive growth and efficiencies.  We are excited about the prospects for both businesses and the long-term potential of each of the companies.”

Mr. Andretta continued, “Our recently announced strategic relationship with Sezzle provides another way to capitalize on the versatility of Bread’s fintech payments platform to open new opportunities for expansion outside of our direct distribution network.  Sezzle’s over 40,000 merchants will be able to leverage our digital offerings to provide their consumers with additional flexible installment payment solutions for big ticket purchases.  We will continue to expand Bread’s direct merchant partners while enlisting existing Alliance Data retail card partners to launch on Bread’s platform.  The business development pipelines across our offerings remain robust, and our focus on portfolio optimization will continue to drive profitability and growth into 2022 and beyond.


“For full-year 2021, we expect our credit sales to increase at a double-digit growth rate providing positive receivables growth momentum into 2022.  Based on our current visibility and payment rate expectations, receivables at year-end 2021 are projected to be in line with year-end 2020 levels.  We expect to resume high-single- to low-double-digit average receivables growth in 2022,” said Mr. Andretta.  “Given the continued strength of our credit metrics, we now expect a net loss rate in the high 4% range for the year.  Total revenue for the year is anticipated to be down low-single-digits compared to 2020 driven by lower receivables.  As a result of lower expenses in the third quarter, partially driven by improved credit and collections efficiencies, we now expect total expenses, excluding provision for loan loss, to be flat to modestly down year-over-year while we continue to fund initiatives to position the Company for future growth.  In 2021, we are investing over $100 million in digital innovation and technology enhancements and plan to continue to invest in 2022.”

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Quarter Ended September 30,

(in millions, except per share amounts)








Income before income taxes (“EBT”)




Net income




Net income per diluted share




Weighted average shares outstanding – diluted                             




Supplemental Non-GAAP Metrics (a):

  Pre-tax pre-provision earnings (“PPNR”)




      (a)  See “Financial Measures” for a discussion of non-GAAP Financial Measures.

Third Quarter: Consolidated revenue increased 5% to $1,099 million compared to the third quarter of 2020, resulting from the ongoing consumer recovery from pandemic lows.  PPNR increased $68 million, or 18%, as a result of the increase in revenue and lower interest expense in the quarter.  EBT increased 65% to $291 million, impacted by a lower provision for loan loss during the third quarter of 2021 versus prior year.  Net income was $224 million, or $4.47 per diluted share.


Card Services: Revenue increased 7% to $930 million compared to the third quarter of 2020, primarily due to the negative impact from the pandemic on gross revenue yields in the third quarter of 2020.  EBT increased $102 million to $314 million compared to the third quarter of 2020, attributable to the improvement in revenue, lower interest expense, and a lower provision for loan loss.  The net principal loss rate was 3.9% in the third quarter of 2021, an improvement of 190 basis points from the prior year period, while the delinquency rate of 3.8% improved 90 basis points from the prior year period.

Credit sales increased 20% to $7.4 billion compared to the third quarter of 2020, as consumer spending recovers.

LoyaltyOne: Segment revenue declined 8% to $169 million compared to the third quarter of 2020.  BrandLoyalty revenue decreased 18%, or $21 million, due to a decline in retailer programs associated with the continuing impact of COVID-19.  AIR MILES revenue increased 9%, or $6 million, compared to the third quarter of 2020, due in part to higher redemptions, as well as the impact of favorable currency exchange rates.  EBT for the LoyaltyOne segment increased 143% to $45 million due to lower cost of redemptions and amortization expense.

Issuance of AIR MILES reward miles decreased 7% compared to the third quarter of 2020, reflecting certain promotional activity in the prior year not present in the current year. AIR MILES reward miles redeemed increased 30% compared to the third quarter of 2020, reflecting an improvement in travel-related categories.

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