Increase In Card Member Spending Boosts Amex Q1 Revenue, Company Eyes Steady Annual Growth

Zinger Key Points
  • American Express Q1 revenue up 11% to $15.8B, beating estimates; EPS at $3.33 surpasses $2.95 consensus.
  • Card Member spending grows 6% Y/Y; company maintains 9%-11% revenue growth outlook for FY24.

American Express Co’s AXP first-quarter revenue (net of interest expense) grew 11% year-on-year to $15.80 billion, marginally beating the consensus of $15.79 billion

The increase was primarily due to higher net interest income and increased Card Member spending. EPS of $3.33 beat the consensus of $2.95

Card Member spending or Billed Business grew 6% Y/Y to $367 million. 

Also Read: Mastercard Set to Increase Credit Card Fees, Adding Millions in Costs for Retailers After Visa Settlement

U.S. Consumer Services revenue was $7.5 billion, up 14% year over year. Commercial Services revenue was $3.8 billion, up 8.4% year over year.

International Card Services revenue was $2.7 billion, up 8.1% Y/Y, and Global Merchant and Network Services revenue was $1.9 billion, up 7.4% Y/Y.

Total expenses increased by 3% Y/Y to $11.4 billion, primarily reflecting higher customer engagement costs due to higher Card Member spending, increased usage of travel-related benefits, and higher marketing investments. 

Provision for credit losses stood at $1.3 billion, compared with $1.1 billion a year ago, reflecting higher net write-offs. 

Chair and CEO Stephen J. Squeri said, “Our fee-based products accounted for around 70 percent of the new account acquisitions we saw in the quarter, and we continue to see strong demand from Millennial and Gen Z consumers, who accounted for over 60 percent of new consumer account acquisitions globally. Our credit metrics remain best in class.

FY24 Outlook: The company reiterated revenue growth of 9% – 11% or $65.96 billion – $67.17 billion (versus consensus of $62.37 billion) and EPS of $12.65 – $13.15 (versus consensus of $12.08) for the fiscal year.

Analysts have shared mixed opinions on American Express Co, citing concerns about credit quality and growth deceleration. Meanwhile, some expressed optimism, highlighting expected revenue growth driven by loans and net card fees and emphasizing American Express’s capacity to maintain higher net interest margins. 

American Express stock gained 32% in the last 12 months. Investors can gain exposure to the stock via Amplify ETF Trust Amplify Mobile Payments ETF IPAY and ALPS Global Travel Beneficiaries ETF JRNY.

Price Action: AXP shares are trading lower by 0.80% at $215.75 premarket at the last check Friday.

Also Read: Bank of America’s Q1 Consumer Banking Income Takes A Hit, Adds 1M Credit Card Accounts

Photo via Wikimedia Commons

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