AMERICAN EXPRESS CO Q3 FY2024 earnings call

Key Remarks

• Had a strong Q3 with 10th consecutive quarter of record revenues. Raised full-year EPS guidance due to strong earnings power.
• Product refresh strategy: Refreshed 40 products globally in 2024, with more to come. The US Consumer Gold Card refresh is performing well with strong new accounts and retention.
• Dining is integral to the membership model; investments in Resy and Tock acquisitions to enhance dining capabilities. Resy has over 50 million registered users and has seeded over 350 million diners in the last 12 months.
• Financial performance: Bill business growth needs acceleration for 10% revenue growth. Card fees continue to grow at double digits, NII is moderate. Expenses managed with discipline, VCE to revenue ratio stable at 41%.

In Q3, earnings per share were $3.49 and revenues were $16.6 billion, up 8% year-over-year. Full-year EPS guidance was raised to between $13.75 and $14.05 from $13.30 to $13.80, with full-year revenue growth expected around 9%. Build business grew 6% on an FX adjusted basis. Spend across the affluent US consumer base was stable, with Millennial and Gen-Z customers up 12%. International card services had 13% spend growth. Total loans and card member receivables grew 10% year-over-year. Net card fees increased 18% on an FX adjusted basis in the quarter.

Forward-Looking Statements

• Raised full-year EPS guidance to $13.75 to $14.05, reflecting business momentum. Full-year revenue growth expected around 9% within the initial guidance range. Bill business needs to accelerate to achieve the 10% revenue growth aspiration.

Risks

• Factors causing actual results to differ from forward-looking statements. Soft spending backdrop could impact revenue growth. Potential macroeconomic conditions affecting consumer and small business confidence, which could impact billing and organic spend.

Q: About updated guidance and 10% revenue expectation in current spending backdrop A: Steve Squeri stated bill business needs to accelerate for 10% revenue growth. The balance of spending, NII, and card fees is key, with card fees growing at double digits.

Q: Business development spend and weather impact A: Stephen Squeri said no weather impact. Christophe Le Caillec explained business development spend related to co-brand agreements and customer incentives, with lower billing affecting incentives.

Q: Earnings setup and investment pull-forward A: Stephen Squeri said investments are ramped up, not pulling back; ramping up marketing and technology spend, expecting continued investment in 2025.

Q: Lifetime value and average spend by category A: Stephen Squeri explained that moving up card tiers leads to higher spending; Millennials/Gen-Z move from Gold to Platinum as they gain discretionary income and travel more.

Q: Impact of Fed easing on bill business A: Christophe Le Caillec said too early to see impact, but Fed cuts expected to support consumer/small business confidence, potentially boosting billing and organic growth.

Q: T&E spend, airline and restaurant A: Stephen Squeri noted restaurant spending is strong, growing twice industry rate; airline spend stable; investments in Resy and Tock to continue growing restaurant business.