AMERICAN EXPRESS CO Q4 FY2024 earnings call

• 2024 was a strong year with record revenues, net income, card member spending, net card fees, and new card acquisitions. - Exited 2024 with increased momentum, 8% fourth quarter billings growth. - Refreshed over 40 products globally, enhanced dining portfolio with acquisitions, launched new sponsorships. - US small and medium enterprise customer base grew, with improved small business sentiment in Q4. - Continued global expansion of merchant network, added millions of new locations, 80% coverage in top 12 international countries' travel and entertainment categories. - 2025 will see continued investment in innovative value propositions, marketing, and technology, with 35-50 product refreshes planned. - Premium strategy attracts high credit quality customers, driving strong credit performance with stable delinquency and write-off rates.

In 2024, American Express had record revenues of $66 billion, up 10% on an FX adjusted basis. Net income was $10 billion with earnings per share of $14.01, up 25%. Annual Card Member spending, net card fees, and new card acquisitions were all record levels. Fourth quarter billings growth accelerated to 8% driven by holiday spend. The company refreshed over 40 products globally in 2024, expanded its merchant network, and saw growth in US small and medium sized enterprises. International business was a fast-growing segment with 15% Q4 growth on an FX adjusted basis and 80% coverage in top 12 international countries' travel and entertainment categories.

• 2025 revenue growth expected to be 8% to 10% and EPS $15 to $15.50 (12% to 16% increase over 2024 adjusted for Accertify Gain). - Assumes 2025 billings growth similar to 2024 full year, but if Q4 spend growth continues, revenue could be at higher end of range. - Expect 2025 loans and receivables growth to be faster than spend, card fee growth to continue mid-to-high teens but moderate, NII growth to outpace loans and receivables growth, operating expenses to grow low-single-digits, and quarterly dividend to increase 17% to $0.82 per share.

• External factors like economic uncertainty, tax policy, interest rates, and currency movements could impact results. - Competition from Fintechs, particularly in SME technology-integrated card offerings, could pose challenges. - Uncertainty in sustaining the spend momentum seen in Q4 2024 over the full 2025 year.

Q: Ryan Nash asked about potential headwinds to revenue growth and why 2025 isn't in line with aspirational growth.

A: Steve Squeri said it's about billings, with guidance incorporating scenarios; if billings continue at Q4 levels, revenue could be at top end of range.

Q: Sanjay Sakhrani asked about spend acceleration sustainability and EPS range.

A: Steve Squeri mentioned EPS flexibility based on investment decisions, and Christophe Le Caillec noted holiday shopping strength but uncertainty in sustainability.

Q: Erika Najarian asked about billing strength drivers.

A: Steve Squeri said it's a mix of new cards, organic spend, and attrition, with organic spend being hard to predict.

Q: Mark DeVries asked about customer confidence and billed business response.

A: Steve Squeri said rising confidence was seen in Q4, with travel and SME showing strength.

Q: Craig Maurer asked about SME tech and Delta Co-Brand card.

A: Steve Squeri said aligned with Delta, and constantly looks to improve SME tech.

Q: Donald Fandetti asked about Capital One-Discover merger impact.

A: Steve Squeri said it's a good deal for them, but American Express will continue to compete.

Q: Richard Shane asked about experience vs reward impact.

A: Steve Squeri said experiential has more fixed costs but enables operating leverage.

Q: Jeffrey Adelson asked about product refresh and credit commentary.

A: Steve Squeri said 35-50 products to be refreshed, Christophe Le Caillec said credit metrics are best-in-class but may trend up with new customer seasoning.

Q: Cristopher Kennedy asked about marketing allocation.

A: Christophe Le Caillec said lion's share of marketing growth goes to customer acquisition, balancing consumer and prospect acquisition.

Q: Moshe Orenbuch asked about SME business.

A: Steve Squeri said SME is an organic story, with focus on small business confidence.

Q: Brian Foran asked about FX impact.

A: Christophe Le Caillec said FX adjusted is used for momentum, with FX reported GAAP differing by 1% and complex EPS impact.

Q: Saul Martinez asked about international business drivers.

A: Steve Squeri said strong merchant acceptance, card acquisition, and growth in top markets.

Q: Terry Ma asked about net card fee growth moderation.

A: Christophe Le Caillec said strong growth but moderation expected as cycle of refreshes plays out.

Q: Mihir Bhatia asked about Fintech competition.

A: Steve Squeri said consumer not impacted as Card Members value experience, service, and rewards, while SME is watched for technology integration.