Key Takeaways:
- AmEx Q2 net income rose 8% to $3.11 billion, or $4.53 a share
- Revenue grew 10% to $19.64 billion, slightly below the $19.69 billion consensus
- Full-year revenue guidance raised to 10% growth from 9%-10%
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American Express Q2 profit rises 8% to $4.53 a share, topping forecasts
American Express reported second-quarter net income of $3.11 billion, or $4.53 a share, up 8% from a year earlier and topping the $4.40 consensus estimate compiled by FactSet.
"The results reflect another excellent quarter with better-than-expected member spending growth," Chief Executive Officer Stephen Squeri said.
Revenue rose 10% to $19.64 billion, narrowly missing the $19.69 billion analyst consensus. Card Member spending climbed 9% on a currency-adjusted basis, the highest rate in three years, with the average customer charging $6,759 on their cards during the quarter, up from $6,393 a year earlier. The company added 3 million new customers, three-quarters of whom signed up for fee-based products such as the Platinum Card and Gold Card.
Provisions for credit losses fell to $1.1 billion from $1.4 billion a year ago, while the net write-off rate held steady at 2%. Operating expenses rose 12% as the company invested in marketing, product refreshes and artificial intelligence technology, costs that weighed on margins despite the top-line growth.
Management raised its full-year revenue growth guidance to 10% from a prior range of 9% to 10% but left its profit outlook unchanged, signaling plans to reinvest the additional revenue into marketing and customer acquisition. Shares fell 6.5% in Friday trading as the market focused on the slight revenue miss.
The premium card market is becoming increasingly competitive. JPMorgan Chase's Sapphire Reserve, Citigroup's Strata card and Capital One's Venture X are all vying for the same high-spending customers that AmEx targets with its Platinum and Gold products. The company's willingness to spend on perks and marketing reflects its bet that the affluent consumer segment will continue to drive spending growth even as broader economic uncertainty persists.
The guidance raise signals management expects spending growth to accelerate further. Investors will watch the Q3 earnings call for updates on whether the marketing investments deliver the expected return on new customer acquisition.
This article is for informational purposes only and does not constitute investment advice.
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