Release Date: April 17, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- American Express Co (AXP, Financial) reported strong revenue growth of 8% year over year on an FX-adjusted basis, or 9% excluding the leap year impact.
- The company added 3.4 million new cards in the quarter, with Millennials and Gen-Z consumers making up over 60% of new consumer accounts acquired globally.
- Card fee growth was up 20% on an FX-adjusted basis, marking the 27th consecutive quarter of double-digit card fee growth.
- Net interest income increased by 11% on an FX-adjusted basis, growing slightly faster than loans and receivables.
- American Express Co (AXP) maintained a strong credit performance, with delinquency and write-off rates below pre-pandemic levels and flat compared to the prior year.
Negative Points
- There was a sequential slowdown in airline spending growth, although spending on front of cabin tickets remained strong.
- The macroeconomic environment has increased uncertainty, with a peak weighted average unemployment rate of around 5.7% incorporated into the company's guidance.
- Commercial services spend was up only 3% versus last year, consistent with the trends seen in 2024, indicating modest growth in this segment.
- The strengthening of the US dollar continues to be a headwind to reported revenue growth, although less than anticipated earlier in the quarter.
- Rewards expense grew 16% year over year, driven by changes to the URR model and small program changes, which could impact short-term profitability.
Q & A Highlights
Q: Have you seen any indication of spending pull forward, and how would you handle potential revenue volatility?
A: Stephen Squeri, CEO: We haven't seen any significant pull forward in spending. While small businesses show minor pull forward, consumer spending remains consistent. We are prepared to manage expenses if revenue declines, but we prioritize long-term investments over short-term earnings targets.
Q: How would proposed tariffs impact your business, and what risk management strategies are in place?
A: Stephen Squeri, CEO: Small businesses might be most affected by tariffs. We continuously adjust our risk models and focus on maintaining a premium card base with high credit scores. Our proactive risk management approach is similar to pre-COVID strategies.
Q: Can you discuss your strategy for card refreshes and fee growth in the current environment?
A: Stephen Squeri, CEO: We remain committed to product refreshes, having updated over 150 products in recent years. Fee increases are tied to added value, ensuring customers receive more benefits than the fee increase. The current environment won't alter our fee strategy.
Q: How are you integrating recent acquisitions like Center into your SME technology offerings?
A: Stephen Squeri, CEO: We aim to create a unified ecosystem for SMEs, integrating Center with our Kabbage platform. This will enhance our offerings, improve retention, and potentially increase organic spending. Integration will take time, but we're committed to building comprehensive solutions.
Q: How do you view the potential impact of unemployment on your revenue guidance?
A: Stephen Squeri, CEO: Our guidance accounts for a peak unemployment rate of 5.7%. We focus more on white-collar unemployment, which affects our card base more significantly. Despite higher unemployment projections, we are confident in maintaining our revenue growth targets.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
