American Express Company (AXP) on Q1 2021 Results - Earnings Call Transcript
Operator: Ladies and gentlemen, thank you for standing by. Welcome to the American Express Q1 2021 Earnings Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session. As a reminder, today’s call is being recorded. I would now like to turn the call over to our host, Head of Investor Relations, Ms. Vivian Zhou. Please go ahead. Vivian Zhou: Thank you, Alan, and thank you all for joining today’s call. As a reminder, before we begin, today’s discussion contains forward-looking statements about the company’s future business and financial performance. These are based on management’s current expectations and are subject to risks and uncertainties. Factors that could cause actual results to differ materially from these statements are included in today’s presentation slides, in our reports on file with the SEC. The discussion today also contains non-GAAP financial measures. The comparable GAAP financial measures are included in this quarter’s earnings materials as well as the earnings materials for the prior periods we discussed. All of these are posted on our website at ir.americanexpress.com. We will begin today with Steve Squeri, Chairman and CEO, who will start with some remarks about the company’s progress and results; and then Jeff Campbell, Chief Financial Officer, will provide a more detailed review of our financial performance. After that, we will move to a Q&A session on the results with both Steve and Jeff. With that, let me turn it over to Steve. Steve Squeri: Thanks, Vivian. And hello, everyone. We appreciate you joining us for today's call. Early this morning, we reported first quarter revenues of $9.1 billion and earnings per share of $2.74. I'm pleased to say, that our overall core business performance was slightly better than our expectations with credit performance continuing to be best-in-class. And we're especially encouraged about the progress we're making toward our aspiration of returning to the original EPS expectations we had for 2020 in 2022. As I discussed in January, we're looking at 2021 as a transition year, where our focus is – is on investing to rebuild growth momentum by firing up our core business, scaling next horizon opportunities, while continuing to retain financial flexibility. And while I feel good about our results for the quarter, what I feel really good about is the progress we're making to rebuild momentum. When we talk about firing up the core, we're looking for meaningful progress in four areas, spending volumes coming back to pre-pandemic levels, bringing new customers into the franchise, retaining and deepening relationships with our current customers, and signing up additional merchants. We're making good progress in all these areas. Overall, spending on American Express cards in Q1 continued the sequential improvements we saw through the last two quarters of 2020. US volumes exceeded our expectations in the quarter, and spending in March from US consumer and small business - small and medium sized enterprise customers was higher than March 2019 levels. Non-US volume lagged a bit due to renewed lockdowns in certain international countries. Jeff Campbell: Well, thank you, Steve. And good morning, everyone. It's good to be here today and talk about our first quarter results, which reflect a good progress toward the aspirations we have for 2022 that Steve just outlined. As I've said since the beginning of the pandemic last year, the key drivers of our financial performance in this environment remain volume and credit trends, along with, this year, the marketing investments we are making to rebuild growth momentum. I'll spend most of my time this morning on these topics. But first, looking at the summary financials on slide three, when you consider year-over-year results, last year's first quarter included two months of pre-pandemic results. And so, as you would expect, first quarter revenues of $9.1 billion were down 13% year-over-year on an FX-adjusted basis. But in contrast, while we don't typically look at monthly results, were you to look at our revenues in just the month of March, you'd see that they were up 7% year-over-year. Our first quarter net income was $2.2 billion and earnings per share was $2.74. Included in these results is a $1.05 billion credit reserve release due to improvements in the macroeconomic outlook and continued strong credit performance. So, now, let's get into the first key driver of our performance, volumes. Beginning with a few comments on some nomenclature changes we have made to our volume reporting. Thinking ahead on how we expect our card processing network in Mainland, China to grow in the coming quarters and years, we have renamed what we previously called GNS bill business as processed volumes, because our business model in China is unique and different from what we do with our GNS partners in other regions. We have also changed what we previously referred to as proprietary billed business to just billed business and renamed what we used to call our overall volumes from billed business to network volumes. You will see we've recast prior periods in the disclosures that accompany our earnings release, as well as on appendix, slide 27. So, with these changes in mind, moving on to our volume performance on slide four, we saw continued recovery across all of our volumes in the first quarter with total network and billed business volumes down 8% and 9%, respectively, and process volumes down only 1%, all on an FX-adjusted basis. Getting into the details of our billed business growth, which you will see several views of on slides five through 10, we've shown first quarter trends on both a year-over-year basis and relative to 2019 in order to provide a clearer picture of how spending is recovering as we begin to lap the onset of the pandemic in March of last year. I'd also note that the trends we've seen in the first two weeks of April are a continuation of the trends we saw exiting the first quarter that I'll focus on this morning. Vivian Zhou: Thank you, Jeff. Before we open up the line for Q&A, I will ask those in the queue to please limit yourself to just one question. Thank you for your cooperation. And with that, the operator will now open up the line for questions. Alan? Operator: Thank you. Our first question will come from the line of Don Fandetti with Wells Fargo. Go ahead. Don Fandetti: 4% in March versus '19… Steve Squeri: Hey, Don. Don, could you start again? We missed the beginning. Don Fandetti: Sure, no problem. So Jeff, if you look at your T&E down about 54% versus '19 in March and April sounds like it gained a lot of momentum, it looks like, you know, down 30% for Q4 would be pretty conservative. How are you thinking about that? And also, what are your T&E assumptions as you sort of look at your '22 aspirational guide? Jeff Campbell: Well, maybe I'll start, and then, Steve, you might want to add a few comments. So let me work backwards. So in 2022, we're really assuming, Don, that consumer travel and entertainment spending is mostly back to where it was pre-pandemic. Small business lagging that a bit and then large and global corporation travel still being well below its 2019 levels. The other comment I would make about 2022 is domestic travel in the US and around the globe will be the fuel that gets us to that level. We would still expect cross-border travel to be a little weaker next year than it was in 2019, just given the likely lingering number of cross-border restrictions that you've seen. You know, as of how we feel about our Q4 assumption, look, you know, we had a clear inflection point this quarter in the US, and so we feel good. But Steve, you may want to add a few? Steve Squeri: Yeah. No, I think that, you know, those - the assumptions that Jeff just went through are exactly the assumptions we have in our - in our calculus here. But I think when you look at - when you look at this quarter and you look at the trends that we're seeing, I mean, we're seeing an increase in bookings, right? So we're seeing our travel - our travel bookings are up 50% over the - this quarter up 50% over Q4 '20. When you look at - and we look at this really carefully, when you look at February versus March, in March now, you know, we were 50% of 2019 bookings, and that was 19%. So we have 31% in February and then went to 50%. So we feel - we feel really good about that. When we also start to really dig into the data, we start to look at, you know, sort of cohorts of spending. And we're seeing, you know, people that are younger are getting back at a much higher level. Their overall T&E spending is probably about 85% to 90% and, you know, almost 100% back to where they were in 2019 in restaurants. And then when we look at older people, as they get vaccinated, we're seeing sequential growth month-on-month, as we look at their growth. And so, if you look at, just people over 45, you're seeing an 11% increase in their overall T&E spending month-to-month. We - that's only going to get better for us as we move along. And the last - the last thing that, you know, gives us a lot of great hope is, is redemptions, is MR redemptions. I mean, you know, when you go back and look at sort of MR redemptions that we had, our MR point redemptions in the fourth quarter for air was like 30%, and it's up to 54%. So we are, you know, we're doing some good things here. And our customers are doing some good things. And we'll continue to make sure that we're retaining these customers because they're going to spend. And as, you know, Jeff said, our co-brand cards are doing quite well as well. So, you know, all of that leads to, again, in an environment that continues to improve, us having a lot of confidence in hitting our 2020 plan in 2022. Don Fandetti: Got it. Thank you. Operator: We'll go next to the line of - one moment, please. We'll go next to the line of Craig Maurer . Go ahead, please. Craig Maurer: Yeah. Hi, good morning. Thanks. I hope everybody is well. I wanted to just ask about the guide a little bit for 2021. Versus your original scenarios that you laid out with fourth quarter earnings, how much higher was the reserve release than you had envisioned? I'm trying to understand how much pull forward of reserve release benefit might have happened in the first quarter because of how strong credit quality was and the fact that lending did not accelerate? Jeff Campbell: Yeah. So I think, Craig, the first comment I would make is, remember, we're not trying to provide guidance this year. We tried to give people a couple of low and high scenarios back in January to help people think about the year, and we updated them this quarter. What we are incredibly focused on is that 2022 aspiration, which we are really growing in confidence about. All that said, if I take you back to January, the then $5 low scenario assumed that the world would be so tough this year that you would not end up releasing any credit reserves. So we just released $1.05 billion of reserves. That's about $1. That takes you from $5 to $6. So your $6 assumes, once again, the world from here is suddenly going to get really tough, and you're not going to release any more reserves. At the high end, yes, we had assumed you release some modest level of reserves, which is why the high end only went up from $7 to $7.50. So that's how we thought about it. I just want to close though, by again emphasizing we're not focused on any particular EPS outcome this year. We're incredibly focused on what we're trying to achieve for 2022. Operator: We'll go next to the line of Mark DeVries with Barclays. Go ahead, please. Mark DeVries: Yeah, thanks. You know, I think that guidance around the corporate T&E spend makes a lot of sense. But Steve, I'd be interested in getting, you know, your color on recent conversations you're having with your large corporates on, when they think they'll feel comfortable having their employees travel more freely? You know, whether they'll recover to pre-pandemic levels? How much substitution of virtual occurs? And then finally, just given that, do you see more upside or kind of downside to that, that 70% of recovery level? Steve Squeri: All right. So, you know, when you think about corporate, the first thing people have to do is get back into the offices, right, because if people aren’t back into the offices, there's nowhere to travel to. And you're starting to see - look, I mean, you know, Jeff and I are in here today with 80 of our closest friends in a building that, you know, has about 5,000 people. And we've said we're not going to have people really come back until after Labor Day. You're seeing other companies sort of gradually get back into it. So I think the step one. First step is let's get people back into the office, and then companies are going to say, okay, how comfortable I am having visitors into the building. And, you know, my anticipation is most companies will start opening - start the process of reopening in the United States now, July through, you know, sort of September, and get to some capacity level. I mean - and you guys have your own situations yourselves, where you're - most of you are probably sitting at home today. So, I think what's going to happen is it's going to be slow, which is why we really haven't assumed a lot of corporate T&E coming back and a lot of travel coming back. Having said that, corporate T&E takes many forms. You know, we do have salespeople that are on - out and on the road and calling on accounts. And there's car rental and there's gas, and they're still staying at hotels and restaurants. And so, you know, I think for a segment of it. And I think when you look at a segment of our, let's call them, industrial corporate T&E - corporate customers, they have people that are going to plants and visiting, you know, making customer calls and so forth. I think that eventually, what will happen is, you know, investment banks and consultants are going to want to go out and meet with their clients again. There is been a lot of deals that have been done, a lot of relationships that have been built. But, you know, there's nothing like in person. I just think, you know, it will take a bit of time. And, you know, look, there's also - there's that substitution. It's a substitution of WebEx and Zoom and what have you, which is why, you know, we've been talking 2023 before it gets back to 2019 levels. And I think, with that assumption, we feel good about hitting that 2020 aspiration in 2022. So when you think about what goes into our assumption for 2022, you've got a slower return of international. You've got a much lower return of corporate, and yet we're saying we'll be at 2020 levels. And so, you know, is there upside from a consumer perspective on travel? I think that all depends on the rollout of the vaccine, governments opening up their borders and things like that. I think, you know, from a domestic travel perspective, pent-up - there's pent-up demand. In talking to Ed Bastian and talking to Chris Nassetta, they're seeing a lot of bookings out front. I just went through some of our travel data. So, you know, as we go through this, I think what's going to be the key thing to watch for is how much does international travel come back from a consumer. And, you know, we're assuming that sort of now in the second half of 2022, okay. Not in - not really - not really this year. And I think the other thing you're seeing, Mark, is you're seeing a divergence. I mean, you see what's going on in India right now. There's a lot of countries that are having different results and different situations as it relates to the vaccine. But one thing is inarguable, the more vaccine rollout, the more people feel confident. The more people feel confident, the more they'll get out and spend. And that's why I think when you look at, you know, sort of the - toward the end of this second quarter into third quarter in the summer, you're going to see people hitting the road, you're going to see people hitting the skies, especially in the US. Operator: We'll go next to the line of Betsy Graseck with Morgan Stanley. Go ahead, please. Betsy Graseck: Hi, good morning. Jeff Campbell: Hi, Betsy. Steve Squeri: Good morning. Betsy Graseck: So my question is on the 2.1 million accounts acquired in the quarter. Maybe you could give us some color on the type of customer, you know, age bracket, income, geography, that kind of thing? And give us a sense of what's resonating, is it more the cash back, the T&E, the specific, you know, enhancements that you're making on, you know, some of the programs, spend more get more kind of points, bonus points. And a little bit on how you're thinking about this group of new accounts that you're acquiring and what that means for future spend trajectory and growth rates versus maybe what you were acquiring pre-pandemic if there's any, you know, compare contrast there you can share would be great? Thanks. Steve Squeri: Okay. Well, let me give you a couple. It's a probably a half hour meeting there. But let me go through. So look, 2.1 million new cards normally, you know, 2019, you saw us average about 2.5 million new cards. When you look at the consumer cards, 60% of the cards we acquired were millennial or Gen Z. We saw - in the pandemic, you saw more cash back cards being acquired. We're - you know, there was a 35% jump in premium cards that we saw in this particular quarter. And acquisition of platinum and gold cards was well above pre-pandemic levels. So we feel good about that. And just to give you some sort of contrast on that. When you look at our fee-based products, it's still a little bit lower. I mean, we're acquiring about 60%. It was about 70% in 2019, but sequential increases have helped. We're seeing co-brand cards come back. I mean, you know, we talked about 90% more Delta cards acquired in this quarter than in the - than in the previous - than in the previous quarter. And we're seeing a higher level customer. I mentioned that in my remarks, the FICO is a lot higher, and we're seeing good spending. So, you know, we feel good about both our small business and consumer. I would - we don't really talk about geographic distribution and things like that. But, you know, our intent is not only to acquire cards, but we also, when we talk about it, we acquire billed business. And we're on track to do from a billed business acquired perspective where we in 2019. So we feel good about that. Jeff Campbell: You know, the other thing I'd add just to make it clear, Betsy, is that the sequential growth in the travel co-brands has been tremendous. They're still below where they were pre-pandemic because you still don't have anywhere near as many people staying at hotels or sitting on airplanes. And so that's what leaves us overall a little bit below the level of pre-pandemic new card acquisitions. But we're quite confident that we'll come back. And once you look beyond that sector, we think we're at great levels today. Operator: We will go next to the line of me Mihir Bhatia with Bank of America. Go ahead. Mihir Bhatia: Good morning and thank you for taking the question. I wanted to ask about - dig a little bit more on the 70% by year-end T&E assumption. Is there - it sounds like there's a mix shift between volumes that do between domestic and international, weighted more toward domestic, which I think we all understand. But maybe - is there a difference in revenue or profitability between that travel in terms of what you make? So I guess what I'm trying to ask is as T&E comes back, is the contribution to revenue maybe going to lag a little bit on the - compared to the contribution to volume just from that mix shift? And then any update on April billing trends? Thank you. Steve Squeri: Yeah. No, so when we report the volume, it's the volume. And there's no - there's no different. Obviously, if people are booking first-class international tickets to Hong Kong, they cost a lot more than first-class tickets to Indianapolis. But the reality is we're giving you volume numbers. So it just means you need a lot more of those tickets to Indianapolis than you do to Hong Kong. So no, there isn't a difference for us. We're not giving you sort of - you know, when we talk about volumes, we're not giving you a number of trips booked here. What we're doing is we're giving you actual volume. So we may have actually more trips. In fact, when we look at - you know, we look at this, you'll - you know, we look at receipt of charges and transactions basically. So we may have more transactions in air and you may have lower dollar, but that doesn't - that doesn't mean anything to our margins. Jeff Campbell: The only thing I'd add, Mihir, is when you look at our other revenue and other fee and commission lines, there is some in dollars in there that do come from cross-border travel. And as we think about the 2022 aspiration, we don't actually expect that to be fully back to 2019 levels in 2022. We don't need it to be to hit our 2022 aspirations. I'd actually put that in the category of things Steve talked about earlier that even beyond '22, there is still probably a couple of remaining tailwinds as the last of cross-border travel and corporate travel begin to come back to 2019 levels post 2022. Operator: We'll go next to the line of Meng Jiao with Deutsche Bank. Go ahead, please. Meng Jiao: Great. Thanks for taking my question. I wanted to touch on the recent expansion of Pay It Plan It to all US consumer products. Have you seen any sort of usage acceleration since you expanded that? And then can you actually frame for us how big the opportunity set can be, and if it could apply to that 2022 aspiration that you mentioned? Thank you. Steve Squeri: Yeah. No. So, you know, it's really too early to sort of - to tell on, you know, just how much we've got it, because we really just did it. But it's not really in the - you know, it's not in our calculus to help us make our 2022 number. It's totally - it's totally upside for us. But, again, just to put it in perspective, you're talking about 6 million plans from inception, you're talking about 5 billion of overall AR. And it's a convenience, you know, feature that - that we have. It's - yeah, I'd like to say it was our answer to Buy Now Pay Later, except we had it before a lot of the Buy Now Pay Later. We just had it on a particular card, and now we've put it on all the cards. So it really is all about meeting overall card members', you know, cash flow needs. And, you know, they'll do this versus potentially revolve on charge or, you know, just a normal lending transaction. It gives them more certainty. So it's in the overall numbers that we have and the overall spending that we have. But I wouldn't say in any way shape or form it's a big driver of 2022. Operator: We'll go next to line of Bill Carcache with Wolfe Research. One moment. Your line is open, sir. Go ahead. Bill Carcache: Thank you. Good morning, Steve and Jeff. Steve Squeri: Hey, Bill. Jeff Campbell: Good morning, Bill. Bill Carcache: So you guys have done a very effective job of adjusting your pre-pandemic value propositions, but can you offer any thoughts on the work you've done more recently around potential post-pandemic changes and consumer preferences that may be longer - longer lasting and the risks that that could lead to more permanent changes? For example, how concerned are you guys about the risk that the value proposition associated with the airline lounges may not be as great post-COVID and how confident are you that you'll be able to identify sustainable cost-effective alternatives to maintain the overall value proposition across your different products to the extent that we can't just go back to the old, you know, sort of the older pre-pandemic offerings that you guys had? Steve Squeri: Yeah. So a couple of points. So look, you know, our strategy for the last three years has been to refresh our products on an ongoing basis, ongoing basis anywhere from sort of three to four years. And so we'll talk more as we - as we refresh those products and we'll give you a little bit more color on that. I take the opposite view on sort of the travel value propositions. I think they're actually going to be even stronger at this point. I think that people are going to want to have the safety and security of our lounges. We're opening up more lounges. We're not backing away from these lounges. In fact, we've opened up numerous lounges during the pandemic and they've - they've turned into a little bit more of an oasis for people where they know with our brand, our security, and our reputation, we're going to take - take as good care of those - of people in our lounges as possible. And I think, the other thing that, you know, was a lot of questions we got at this time last year was what's the future of your travel co-brand cards? And when we look at the month of March and we look at sort of Delta and we look at Hilton, as just two examples, they're at 2019 spending levels, you know, overall. And because people have been accumulating points and people want status. And as I've said numerous times on these calls, status is probably even going to be more important going forward. So what we will continue to do is we're not going to walk away from our travel value propositions. If anything, I've been more encouraged that we did the right things, and we'll continue to add though. I mean, I think if you look at our history over the last three years or so, three and a half years, we've kept our core value proposition and continue to add. And during the pandemic, I talked about the results we had with wireless and the results we had with streaming. We got customers who were not using our card for those things, by putting some value in, we're now four months after the value and they're still spending. And we're doing the same thing, right now, we've got a PayPal credit for our platinum cardholders, and we're picking up more card members that didn't use PayPal. And as I've talked about PayPal and I've talked about some of the other Fintech Square and in Stripe and so forth, they've actually not only helped us get more coverage, but have helped us in ways to deliver more value to our card members. So we feel good about our card - our value propositions. We feel good about the travel value propositions that are in our products, but we will continue to expand and evolve our value propositions as we have over time. We're not walking away from that strategy. Operator: We'll go next to Ryan Nash with Goldman Sachs. Go ahead, please. Ryan Nash: Hey. Good morning, guys. Steve Squeri: Hey, Ryan. Ryan Nash: So, Steve, maybe as a follow-up on that. So, you know, you injected significant value prop enhancements into the business like streaming and wireless as you just referenced, and I believe some of those will evolve over the next few quarters. So can you maybe just talk about how you envision repurposing those marketing dollars? I think, Jeff, you talked about spending a little over four and a half this year. Could we see that come down beyond this - beyond this year or do you expect to see these enhancements shifted toward customer acquisition and maybe we could see customer acquisitions above that, you know, those 2.5 million per quarter that you talked about in 2019? Thanks. Steve Squeri: Yeah. So a couple of points. We spent, I think it was like $1 billion this quarter. Some of that was in value injection, not the wireless and streaming. Those have ended. This is different types of value injection. But the majority of that was, you know, customer acquisition and customer engagement. When we look at the rest of the year, I think we said we're going to spend $4.5 billion. But we'll spend up to the attractive opportunities that are there. If there are not attractive opportunities, we will not spend it. If there are attractive opportunities, we will spend more if they are there, because we're focused on building that momentum. Having said that, given that you have sort of probably a six-month value injection window and you've got customer acquisition and customer retention, more than likely, you will see that overall dollar bucket come down next year, as we go into 2022 when you're not doing that value injection. Jeff Campbell: The only thing I'd add, Ryan, is we've talked about the fact that as you go through this year, to Steve's point, you need to see the value injection spending come down. And we were pleased this quarter because actually it was down sequentially and we still continue to see tremendous customer attrition and retention rates further because the travel-oriented value parts of our value propositions are becoming more valuable to people again. Operator: We'll go next to the line of Jamie Friedman with Susquehanna Research. Go ahead, please. Jamie Friedman: This is a very thoughtful IR deck so thank you for that and for the updated commentary. I just want to ask in slides seven, eight, nine, you demonstrate the outperformance of SME. You don't have to go to the slides just anchoring it. But in terms of the outperformance of SME, Steve and Jeff, could you remind us what it is about that relative to large and corporate that is different that makes it more sustainable? Thank you. Steve Squeri: Yes. So you can probably hear a shuffling of pages to get to seven, eight, nine. But yeah, so there is a huge difference. I mean, you know, so our corporate card is predominantly like 60% travel and entertainment, whereas our SME card is, you know, like 80% goods and services, they use the card to run their business. And you know, as we've talked about travel coming back, it comes back in layers. It comes back with consumer then it's SMB and then it's - then it's lodging corporate. So it is a very different business, which is why we went and acquired Kabbage to have a digital front for these SMEs where they can, you know, not only get their card spending done, but also get working capital loans, have a transaction banking account, have merchant financing loan, have short-term loans, and things like that. Because small businesses, small midsize businesses use this card to really help to run their businesses, which is a fundamental difference between how corporations use the card, which is to support T&E and obviously it is B2B opportunities with large corporates but that's why small business has come back. Why are small businesses have done I think even better than what you might have thought is - is the - the dispersion that we have across the small business arena. And I've said this many times, when people think about small businesses they tend to think about the small retail shop and they tend to think about the small restaurant. The reality is a lot of them didn't do so well during this time. We don't have a tremendous amount of our small business base. There is a very diverse base, and when you think about professional services, you think about, you know, cooling and plumbing and electric and all those things. You know, our base is very wide and that has helped us because some small business segments during this time have just been through the roof. Others have been hit really hard and others have, you know, businesses has - have maintained as they were before the pandemic. Operator: We'll go now to the line of Bob Napoli with William Blair. Go ahead. Bob Napoli: Thank you. Good morning, Steve and Jeff. Steve Squeri: Hey, Bob. Jeff Campbell: Hey, Bob. Bob Napoli: Question on China, I guess, and in debit, as you know, broader thoughts on debit. So what do we - what should we see out of China? You've changed your reporting somewhat because it's your - you expect to see some significant numbers, I guess, out of China, but you've also talked about building a debit capability broader than China, and I just wondered what your long-term thoughts were on that? Steve Squeri: Yeah. So I think, you know, we changed that to provide, I think, the appropriate level of transparency for you guys because, obviously, as we've said this all along, GNS volumes are not, you know, worth the same to us as GNS as proprietary volumes and China volumes are, you know, part of that - that mix. And so - that's why we change it to process funds. Because, yes, you're right, over time we do expect that volume to be very significant and we wanted to make sure we were providing the right level of insight so that you guys could make the right - the right assumptions. And there will be, you know, in China it'll be, you know, charge credit and it'll be debit cards. And so as we - as we build that capability, we will evaluate where else, you know, if we - if you build that capability for your network it gives you the capability to do it in other markets. And so we'll evaluate over time where that makes sense for us to roll that out. So nothing really to announce here, but I think it's important that you understand the capabilities that we're building as well and, you know, we're building these capabilities from a global perspective so that we have it. But to also point out, we do have GNS partners in local markets today that have debit products, have American Express debit products. They just tend to get used more locally within the country as opposed to around the world. And it's important, you know, at -at some point, we will have a lot of traveling Chinese card members and it's important that they're able to use all the products that we - that our partners issued to them all around the world, and debit being one of them. Operator: We'll go next to the line of Rick Shane with JPMorgan. Go ahead, please. Rick Shane: Hey, guys. Thanks so much for taking my question. I know you guys have been on here a while. One of the consequences of the Card Act was that it shifted the competitive landscape from offering lower rates to higher rewards. And we think at the peak of the GFC recovery, that was particularly challenging for AXP because it had the impact of basically causing industry offers to converge to your core value propositions. One of the responses we saw from you is that you move onto your front foot in terms of targeting millennials for card acquisition. I'm curious as we sort of enter this new period of expansion and all of your competitors are talking about growth, what are the lessons you learned the last cycle in either tactically or strategically how will you respond? Steve Squeri: Well, you know, I have a different version of the Card Act than you do. I think our competitors got into this more after the financial crisis when they really looked at this and said this was a very attractive business. The reality is the Card Act had a lot less impact on us because remember, 80% of our revenues are not from interest and, you know, the fact that interest rates, especially on prior balances, were now controlled. You know, it really had less impact on us than it did and our competitors. Our competitors wound up just growing their overall business and one of the first things they did is hire a lot of people from American Express to do that. But you know, look, I think that, you know, the lessons that we've learned over time, and look, I've always said this, we welcome competition. The lessons that we learned over time is you need to continue to focus in on what your customer needs are and how your customer is changing and evolving. And this is why, when I took over, one of the first things I said is we're going to go to a strategy of refreshing our products on a real ongoing basis. You can not have your green card sit out there for 30 years and think it's still as relevant 30 years ago as it is today. Millennials, was really not, you know, not as much a Card Act. Millennials was us opening our eyes to the fact that our value proposition had a much broader appeal. And I think that we really started to communicate that and, you know, look, and I've said this publicly before, I think your company there did a great job of really highlighting premium cards. I'm talking about JPMorgan, and Gordon and his team did a fantastic job of highlighting premium cards to millennials. And you know, and our value proposition played remarkably well there. And as I just said, 60% of our cards that we just acquired are millennials. I think we had to expand our aperture and we did that. We expanded that aperture and we realized that the value proposition that we had could have a wider audience and could have a wider target. And we've done that and we will continue to do that. You will continue to see that from a multicultural perspective. You will continue to see that from millennials. You'll continue to see that, you know, with women as well. So I think what we learned is that since then is that there is a broader market for our products than we initially thought, number one. Number two, you always have to keep innovating and you have to innovate on a regular cycle basis, you can't stand on your laurels. And I would say that we learn more from, you know, some of our trials and tribulations with Costco than we did from the Card Act. Operator: Our final question will come from Sanjay Sakhrani with KBW. Go ahead, please. Sanjay Sakhrani: Thank you. Good morning. Steve Squeri: Good morning. Sanjay Sakhrani: Most of my questions have been asked, but just a quick one on credit. Jeff, I think you mentioned you're still waiting toward the negative or a higher weighting toward a negative scenario in your reserve calculation. I'm just curious sort of how realistic that is given sort of where we are and where again delinquency rates here and the building momentum? Maybe you just talked about that. And then just one quick one on the expenses. You mentioned that the venture gains helping expenses this quarter. I mean, should we just view it as a one-time gain or how should we think about that, was that spent? Thanks. Jeff Campbell: So on credit, Sanjay, you're correct. For the purposes of our accounting credit reserve, we did significantly wait for a downside scenario. And I think that's in keeping with a little bit of a regulatory view where you have the Federal Reserve saying to all banks, you know, we're still a little – why don’t we see a little bit more time pass before we free everyone to go back to return into your appropriate capital levels. So we thought it was appropriate to be that conservative. But to be clear, the reserve that we have on the books implies that some - that steady recovery that we're in the midst of now just stops and things get worse. So if it doesn't then you would expect to see more reserves. The only other comment I'd make is it's April 23rd, you know, you're already at the point of the year where you really can't for the most part see write-offs go up significantly this year. Even if bad stuff happens, the actual write-offs would go into next year. On OpEx, yes, we did have a $377 million gain on the really great portfolio we have of Fintech investments. We have about 50 different companies, we have holdings, and we do partnerships for those companies and trading all about those partnerships. But the market's been pretty frothy lately so there was a big gain on a couple of those companies this quarter. There are also some offsets, you know, when the equity markets are frothy, our deferred comp balances are a bit of an offset or a hedge almost to the equity investments. I would really think of it, Sanjay, mostly as a one-time sort of thing this year. The reality is we're not focused on any particular EPS outcome. What we're focused on is to the extent we have good investment opportunities, you will see us use the financial strength we have right now to pursue those opportunities because we are laser-focused and increasingly confident of the aspiration we have for 2022. Vivian Zhou: With that, we will bring the call to an end. Thank you again for joining today's call and for your continued interest in American Express. The IR team will be available for any follow-up questions. Alan, back to you. Operator: And thank you. Ladies and gentlemen, the webcast replay will be available on our investor relations website at ir.americanexpress.com shortly after the call. You can also access the digital replay of the conference call at 866-207-1041 or 402-970-0847, access code 3411494 after 12 PM Eastern Time, today, April 23rd through midnight, April 30th. That will conclude our conference call for today. Thank you for your participation. You may now disconnect.
American Express (NYSE: AXP) Surpasses Earnings and Revenue Estimates
- Earnings Per Share (EPS) of $3.64, beating the estimated $3.47.
- Revenue reached approximately $16.97 billion, slightly above the forecast of $16.94 billion.
- Shares rose by less than 1% post-announcement, despite a 15% decline year-to-date.
American Express (NYSE: AXP) is a leading global financial services company known for its credit card, charge card, and travel-related services. Competing with giants like Visa and Mastercard, American Express reported an EPS of $3.64 on April 17, 2025, surpassing the estimated $3.47. The company also reported a revenue of approximately $16.97 billion, slightly exceeding the estimated $16.94 billion.
The company's quarterly earnings reveal a profit of $3.64 per share, surpassing the Zacks Consensus Estimate of $3.45. This marks an improvement from the previous year's earnings of $3.33 per share. The positive growth trajectory is driven by robust consumer spending, as highlighted by CEO Stephen Squeri. He noted that consumer spending in the first quarter was consistent with, and often better than, 2024 levels.
American Express's revenue increased by 7% year-over-year to $16.97 billion, exceeding analysts' predictions. Net interest income also slightly surpassed expectations, reaching $4.17 billion compared to the consensus of $4.10 billion.
Despite the positive earnings report, American Express shares rose by less than 1% immediately following the announcement. The stock had been down approximately 15% for the year. Recently, Bank of America analysts upgraded the stock's rating to "buy," citing the company's "high-quality customer base" as a factor that would support its resilience.
American Express maintains a price-to-earnings (P/E) ratio of approximately 17.76, indicating the market's valuation of its earnings. The company's price-to-sales ratio stands at about 2.52, and the enterprise value to sales ratio is around 2.67. The debt-to-equity ratio is about 1.69, indicating the company's leverage level.
American Express (NYSE: AXP) Surpasses Earnings and Revenue Estimates
- Earnings Per Share (EPS) of $3.64, beating the estimated $3.47.
- Revenue reached approximately $16.97 billion, slightly above the forecast of $16.94 billion.
- Shares rose by less than 1% post-announcement, despite a 15% decline year-to-date.
American Express (NYSE: AXP) is a leading global financial services company known for its credit card, charge card, and travel-related services. Competing with giants like Visa and Mastercard, American Express reported an EPS of $3.64 on April 17, 2025, surpassing the estimated $3.47. The company also reported a revenue of approximately $16.97 billion, slightly exceeding the estimated $16.94 billion.
The company's quarterly earnings reveal a profit of $3.64 per share, surpassing the Zacks Consensus Estimate of $3.45. This marks an improvement from the previous year's earnings of $3.33 per share. The positive growth trajectory is driven by robust consumer spending, as highlighted by CEO Stephen Squeri. He noted that consumer spending in the first quarter was consistent with, and often better than, 2024 levels.
American Express's revenue increased by 7% year-over-year to $16.97 billion, exceeding analysts' predictions. Net interest income also slightly surpassed expectations, reaching $4.17 billion compared to the consensus of $4.10 billion.
Despite the positive earnings report, American Express shares rose by less than 1% immediately following the announcement. The stock had been down approximately 15% for the year. Recently, Bank of America analysts upgraded the stock's rating to "buy," citing the company's "high-quality customer base" as a factor that would support its resilience.
American Express maintains a price-to-earnings (P/E) ratio of approximately 17.76, indicating the market's valuation of its earnings. The company's price-to-sales ratio stands at about 2.52, and the enterprise value to sales ratio is around 2.67. The debt-to-equity ratio is about 1.69, indicating the company's leverage level.
American Express (NYSE:AXP) Earnings Preview and Analyst Insights
- Analysts have initiated a Buy rating for American Express (NYSE:AXP) with a price target of $289, anticipating strong growth in premium card fees and consumer spending.
- The company is expected to report an 11% growth in net income for 2025, driven by significant growth in net card fees and resilient consumer spending.
- Despite anticipated growth, lower profits are expected from its Global Merchant and Network Services division, with an increase in network volumes during the first quarter.
American Express (NYSE:AXP), a leading global financial services company, is gearing up to release its quarterly earnings on April 17, 2025. Analysts are closely monitoring the company's performance, with Wall Street estimates projecting an earnings per share (EPS) of $3.46 and a revenue of approximately $16.93 billion.
The analysis of American Express (NYSE:AXP) has led to a Buy rating with a price target of $289, underlining strong growth in premium card fees and consumer spending. The company is poised for an 11% growth in net income for 2025, fueled by mid-to-high teens growth in net card fees and resilient consumer spending, surpassing consensus expectations and indicating a positive outlook.
American Express's closed-loop model and premium customer base are considered undervalued by the market, supporting an 18x forward price-to-earnings multiple. The company's P/E ratio is approximately 18.22, showcasing the market's valuation of its earnings, while the price-to-sales ratio stands at about 2.58, reflecting its revenue valuation.
Despite the anticipated growth, AXP is expected to report lower profits from its Global Merchant and Network Services division. However, an increase in network volumes during the first quarter is anticipated. These factors are crucial for investors as the company approaches its Q1 earnings release.
The company's financial leverage is highlighted by a debt-to-equity ratio of approximately 1.69. The enterprise value to sales ratio is around 2.74, and the enterprise value to operating cash flow ratio is approximately 13.64, providing insights into the company's valuation relative to its cash flow. The earnings yield is about 5.49%, offering a perspective on the return on investment.
American Express (NYSE:AXP) Earnings Preview and Analyst Insights
- Analysts have initiated a Buy rating for American Express (NYSE:AXP) with a price target of $289, anticipating strong growth in premium card fees and consumer spending.
- The company is expected to report an 11% growth in net income for 2025, driven by significant growth in net card fees and resilient consumer spending.
- Despite anticipated growth, lower profits are expected from its Global Merchant and Network Services division, with an increase in network volumes during the first quarter.
American Express (NYSE:AXP), a leading global financial services company, is gearing up to release its quarterly earnings on April 17, 2025. Analysts are closely monitoring the company's performance, with Wall Street estimates projecting an earnings per share (EPS) of $3.46 and a revenue of approximately $16.93 billion.
The analysis of American Express (NYSE:AXP) has led to a Buy rating with a price target of $289, underlining strong growth in premium card fees and consumer spending. The company is poised for an 11% growth in net income for 2025, fueled by mid-to-high teens growth in net card fees and resilient consumer spending, surpassing consensus expectations and indicating a positive outlook.
American Express's closed-loop model and premium customer base are considered undervalued by the market, supporting an 18x forward price-to-earnings multiple. The company's P/E ratio is approximately 18.22, showcasing the market's valuation of its earnings, while the price-to-sales ratio stands at about 2.58, reflecting its revenue valuation.
Despite the anticipated growth, AXP is expected to report lower profits from its Global Merchant and Network Services division. However, an increase in network volumes during the first quarter is anticipated. These factors are crucial for investors as the company approaches its Q1 earnings release.
The company's financial leverage is highlighted by a debt-to-equity ratio of approximately 1.69. The enterprise value to sales ratio is around 2.74, and the enterprise value to operating cash flow ratio is approximately 13.64, providing insights into the company's valuation relative to its cash flow. The earnings yield is about 5.49%, offering a perspective on the return on investment.
American Express (NYSE:AXP) Earnings Preview: What to Expect
- American Express is expected to report an EPS of $3.03 for Q4 2024, indicating a 15.7% year-over-year growth.
- Revenue for Q4 2024 is projected at $17.18 billion, showcasing an 8.7% increase from the previous year.
- The company's stock has surged over 70% in the past year, significantly outperforming its peers.
American Express (NYSE:AXP) is a leading global financial services company known for its credit card, charge card, and travel-related services. Competing with giants like Capital One and Mastercard, American Express is gearing up to release its fourth-quarter 2024 earnings on January 24, 2025, before the market opens.
Analysts are optimistic, expecting American Express to report an EPS of $3.03, slightly above the Wall Street estimate of $3. This represents a 15.7% increase from the previous year, highlighting the company's robust performance. Revenue is projected to reach $17.18 billion, reflecting an 8.7% year-over-year growth, as highlighted by Zacks.
The company's network volumes are anticipated to have increased, continuing the positive trend from previous quarters. For the entire year, American Express is expected to achieve revenues of $65.95 billion, marking a 9% increase from the prior year. The consensus estimate for the company's EPS for the current year is $13.40, indicating a substantial 19.5% year-over-year growth.
American Express has seen its stock price soar over 70% in the past year, reaching fresh 52-week highs of $319 per share. This performance significantly outpaces its peers, with Capital One rising 49% and Mastercard increasing by 20%. Investors are eager to see if this momentum can be maintained with the upcoming earnings report.
Despite a mixed track record in earnings, American Express has shown consistent growth throughout 2024. The company's premium valuation is supported by its strong brand and a customer base that leans towards higher-tier clients. With a price-to-earnings (P/E) ratio of 23.06 and a debt-to-equity ratio of 1.85, American Express maintains a balanced financial position.
American Express (NYSE:AXP) Earnings Preview: What to Expect
- American Express is expected to report an EPS of $3.03 for Q4 2024, indicating a 15.7% year-over-year growth.
- Revenue for Q4 2024 is projected at $17.18 billion, showcasing an 8.7% increase from the previous year.
- The company's stock has surged over 70% in the past year, significantly outperforming its peers.
American Express (NYSE:AXP) is a leading global financial services company known for its credit card, charge card, and travel-related services. Competing with giants like Capital One and Mastercard, American Express is gearing up to release its fourth-quarter 2024 earnings on January 24, 2025, before the market opens.
Analysts are optimistic, expecting American Express to report an EPS of $3.03, slightly above the Wall Street estimate of $3. This represents a 15.7% increase from the previous year, highlighting the company's robust performance. Revenue is projected to reach $17.18 billion, reflecting an 8.7% year-over-year growth, as highlighted by Zacks.
The company's network volumes are anticipated to have increased, continuing the positive trend from previous quarters. For the entire year, American Express is expected to achieve revenues of $65.95 billion, marking a 9% increase from the prior year. The consensus estimate for the company's EPS for the current year is $13.40, indicating a substantial 19.5% year-over-year growth.
American Express has seen its stock price soar over 70% in the past year, reaching fresh 52-week highs of $319 per share. This performance significantly outpaces its peers, with Capital One rising 49% and Mastercard increasing by 20%. Investors are eager to see if this momentum can be maintained with the upcoming earnings report.
Despite a mixed track record in earnings, American Express has shown consistent growth throughout 2024. The company's premium valuation is supported by its strong brand and a customer base that leans towards higher-tier clients. With a price-to-earnings (P/E) ratio of 23.06 and a debt-to-equity ratio of 1.85, American Express maintains a balanced financial position.
American Express (NYSE:AXP) Price Target and Strategic Acquisition
- Jeff Adelson from Morgan Stanley sets a price target of $252 for American Express (NYSE:AXP), indicating a potential downside of approximately -8.46%.
- American Express is set to become the sole owner of Swisscard as UBS sells its 50% stake, aiming to strengthen its position in the Swiss market.
- Despite the recent price target, AXP's current price is $271.81, with a market capitalization of approximately $193.23 billion, reflecting its significant presence in the financial sector.
On October 21, 2024, Jeff Adelson from Morgan Stanley set a price target of $252 for American Express (NYSE:AXP). At the time, the stock was trading at $275.29, indicating a potential downside of approximately -8.46%. American Express is a major player in the financial services industry, competing with companies like Visa and Mastercard.
American Express is set to become the sole owner of Swisscard, as UBS sells its 50% stake in the credit card provider. This strategic move aligns with UBS's plan to divest parts of the Credit Suisse business it acquired last year. The acquisition will allow American Express to strengthen its position in the Swiss market.
Despite the recent price target set by Morgan Stanley, AXP's current price is $271.81, reflecting a decrease of 1.80%. The stock has dropped by $4.99 today, with a trading range between $271.51 and $276.16. Over the past year, AXP has experienced a high of $286.36 and a low of $140.91.
American Express has a market capitalization of approximately $193.23 billion, indicating its significant presence in the financial sector. The trading volume for AXP today is 712,781 shares, showing active investor interest. The company's acquisition of Swisscard is expected to enhance its growth prospects in the European market.
