American Express, widely known as Amex, is a global financial services corporation that offers a variety of credit and charge cards to both consumers and businesses. Founded in 1850, the company began as an express mail business before evolving into a major player in the financial sector. Its headquarters is in New York City, and it is one of the thirty companies in the Dow Jones Industrial Average.
Over the years, American Express has built a reputation for providing high-quality customer service and a range of premium benefits to its cardholders. This includes rewards programs, travel and dining benefits, and exclusive access to events and experiences. Its products are designed to cater to different segments of the market, from everyday consumers to small businesses and large corporations.
Revenue for American Express primarily comes from card processing fees, which are charged to businesses that accept Amex cards. The company also earns from annual membership fees and interest on outstanding balances. Additionally, American Express provides business financing solutions and travel-related services, further diversifying its income streams.
American Express Fiscal Q3 2024
American Express Company (NYSE: AXP) continues its impressive streak with a 10th consecutive quarter of record revenue, rising 8% year-over-year to $16.6 billion. However, the company’s revenue missed expectations. Also, American Express reported a Q3 net income of $2.51 billion, or $3.49 per share, up from $2.45 billion, or $3.30 per share, a year ago.
Key Highlights:
- Revenue: $16.6 billion, up 8% year-over-year.
- Earnings Per Share (EPS): $3.49, up 6% year-over-year.
- Net Income: $2.51 billion, up 2% year-over-year.
- Card Member Spending: $387.3 billion, up 6% year-over-year.
Total Card Member spending increased by 6% in Q3, while card fee revenue growth accelerated to 18%. The company acquired 3.3 million new premium Card Members, driven by successful product refreshes, including the new U.S. Consumer Gold Card. Engagement and retention remained high, with excellent credit performance.
Financial Performance:
American Express reported consolidated total revenues, net of interest expense, of $16.6 billion. Provisions for credit losses were $1.4 billion, compared with $1.2 billion a year ago. Consolidated expenses increased to $12.1 billion, up from $11.0 billion a year ago. The effective tax rate rose to 21.8%, compared to 20.9% a year ago.
Full Year 2024 Guidance:
- Full-Year EPS Guidance: Raised to $13.75 – $14.05.
- Revenue Growth Forecast: Around 9% for the full year 2024.
Board Statements
Stephen J. Squeri, Chairman and CEO said: “We had another strong quarter that reflects the earnings power of our business model and our continued investments for growth. Based on our performance and the strong earnings our core business is generating, we are raising our full-year EPS guidance to $13.75 – $14.05, up from $13.30 – $13.80 previously. We continue to expect full-year revenue growth that is within the annual guidance range we provided at the beginning of the year, at around 9%.”
The company’s Chief Financial Officer, Christophe Le Caillec, described spending results as “strong” and “stable,” noting that consumers remain cautious in discretionary categories.
Amex is seeing “extremely strong performance on the credit side, which means that [customers] have cash and they’re paying back their balances,”
“We are refreshing products, raising prices, and we see demand for the products,” Le Caillec said. “We see very strong renewal rates.”
Impact on the Market
Despite the AXP stock dropping 4% on Friday, American Express still showed positive performance indicators like a 6% increase in total card member spending and an 18% acceleration in card fee revenue growth for Q3. American Express delivered robust Q3 new premium card acquisitions, and effective cost management. The company’s strategic investments and product refreshes continue to fuel its growth. This reinforces confidence in its financial performance and future outlook. The raised full-year EPS guidance further highlights the strength and resilience of American Express’s business model.
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