Q2 EPS Increased 44% to $4.15, or 21% to
$3.49 Excluding a Transaction Gain1
Revenue Grew 8% (9% FX-Adjusted2) to Record
$16.3 Billion
American Express Company (NYSE: AXP) today reported
second-quarter net income of $3.0 billion, or $4.15 per share,
compared with net income of $2.2 billion, or $2.89 per share, a
year ago. Second-quarter earnings per share included a $0.66 gain
from the sale of Accertify, which closed during the quarter.
Excluding the transaction gain, adjusted EPS was $3.49, up 21
percent from the prior year.1
(Millions, except per share
amounts, and where indicated)
Quarters Ended
June 30,
Percentage Inc/(Dec)
Six Months Ended
June 30,
Percentage Inc/(Dec)
2024
2023
2024
2023
Billed Business (Billions)
FX-adjusted 2
$388.2
$368.1
$365.9
5%
6%
$755.2
$713.6
$710.0
6%
6%
Total Revenues Net of Interest Expense
FX-adjusted 2
$16,333
$15,054
$14,957
8%
9%
$32,134
$29,335
$29,187
10%
10%
Net Income
$3,015
$2,174
39%
$5,452
$3,990
37%
Diluted Earnings Per Common Share (EPS)
3
$4.15
$2.89
44%
$7.48
$5.29
41%
Adjusted EPS Excluding Transaction Gain
1
$3.49
$2.89
21%
$6.82
$5.29
29%
Average Diluted Common Shares
Outstanding
717
741
(3)%
719
742
(3)%
“We delivered strong second-quarter results, with quarterly
revenue reaching an all-time high of $16.3 billion, up 8 percent,
or 9 percent on an FX-adjusted basis, and significant EPS growth,”
said Stephen J. Squeri, Chairman and Chief Executive Officer. “We
continued to drive momentum across the business, including stable
growth in billings at 6 percent, strong new card acquisitions of
3.3 million, double-digit growth in card fee revenues for the 24th
consecutive quarter, and excellent credit performance, which
remained best in class.
“Based on the strong performance of our core business, we
believe we can increase our marketing investments by around 15
percent over last year without using any of the transaction gain,
while still delivering exceptional earnings results this year. As a
result, we have made the decision to drop the entire gain to the
bottom line and are raising our full-year EPS guidance to $13.30 -
$13.80 from $12.65 - $13.15 previously. We continue to expect
revenue growth in line with the guidance range of 9 percent to 11
percent that we set at the beginning of the year.
"Since the end of 2021, we have significantly grown the scale of
our business, increasing revenues by nearly 50 percent and Card
Member spending by almost 40 percent, while adding around 23
million new cards and over 30 million merchant locations.4 This
increased scale, combined with our premium, high credit quality
customers, our well-controlled expense base and our successful
investments to continuously enhance our Membership Model, fuels the
earnings power of the core business and reinforces our confidence
in our ability to deliver strong bottom-line growth.”
Second-quarter consolidated total revenues net of interest
expense were $16.3 billion, up 8 percent from $15.1 billion a year
ago. The increase was primarily driven by higher net interest
income, increased Card Member spending, and continued strong card
fee growth.
Consolidated provisions for credit losses were $1.3 billion,
compared with $1.2 billion a year ago. The increase reflected
higher net write-offs, partially offset by a lower reserve build
year-over-year.
Consolidated expenses were $11.3 billion, up 1 percent from
$11.1 billion a year ago. The increase primarily reflected higher
variable customer engagement costs driven by higher Card Member
spending and usage of travel-related benefits, and increased
marketing investments, offset by lower operating expenses primarily
due to the previously-mentioned gain from the sale of
Accertify.
The consolidated effective tax rate was 20.4 percent, compared
to 20.5 percent a year ago, reflecting discrete tax benefits in
both periods.
This earnings release should be read in conjunction with the
company’s statistical tables for the second quarter 2024, which
include information regarding our reportable operating segments,
available on the American Express Investor Relations website at
http://ir.americanexpress.com and in a Form 8-K furnished today
with the Securities and Exchange Commission.
An investor conference call will be held at 8:30 a.m. (ET) today
to discuss second-quarter results. Live audio and presentation
slides for the investor conference call will be available to the
general public on the above-mentioned American Express Investor
Relations website. A replay of the conference call will be
available later today at the same website address.
________________________________
1
Adjusted diluted earnings per common
share, a non-GAAP measure, excludes the $0.66 per share impact of
the gain from the sale of Accertify, Inc. See Appendix I for a
reconciliation to EPS on a GAAP basis. Management believes adjusted
EPS is useful in evaluating the ongoing operating performance of
the company.
2
As used in this release, FX-adjusted
information assumes a constant exchange rate between the periods
being compared for purposes of currency translations into U.S.
dollars (i.e., assumes the foreign exchange rates used to determine
results for current period apply to the corresponding prior-year
period against which such results are being compared). FX-adjusted
revenues is a non-GAAP measure. The company believes the
presentation of information on an FX-adjusted basis is helpful to
investors by making it easier to compare the company’s performance
in one period to that of another period without the variability
caused by fluctuations in currency exchange rates.
3
Diluted earnings per common share (EPS)
was reduced by the impact of (i) earnings allocated to
participating share awards of $23 million and $17 million for the
three months ended June 30, 2024 and 2023, respectively, and $41
million and $31 million for the six months ended June 30, 2024 and
2023, respectively, and (ii) dividends on preferred shares of $15
million for both the three months ended June 30, 2024 and 2023, and
$29 million for both the six months ended June 30, 2024 and
2023.
4
The 30 million new merchant locations
include approximately 14 million registered merchant locations in
China from year-end 2021 through May 2024.
As used in this release:
- Card Member spending (billed business) represents transaction
volumes, including cash advances, on payment products issued by
American Express.
- Operating expenses represent salaries and employee benefits,
professional services, data processing and equipment, and other,
net.
- Reserve releases and reserve builds represent the portion of
the provisions for credit losses for the period related to
increasing or decreasing reserves for credit losses as a result of,
among other things, changes in volumes, macroeconomic outlook,
portfolio composition, and credit quality of portfolios. Reserve
releases represent the amount by which net write-offs exceed the
provisions for credit losses. Reserve builds represent the amount
by which the provisions for credit losses exceed net
write-offs.
- Variable customer engagement costs represent the aggregate of
Card Member rewards, business development, and Card Member services
expenses.
ABOUT AMERICAN EXPRESS
American Express is a globally integrated payments company,
providing customers with access to products, insights and
experiences that enrich lives and build business success. Learn
more at americanexpress.com and connect with us on
facebook.com/americanexpress, instagram.com/americanexpress,
linkedin.com/company/american-express, X.com/americanexpress, and
youtube.com/americanexpress.
Key links to products, services and corporate sustainability
information: personal cards, business cards and services, travel
services, gift cards, prepaid cards, merchant services, Business
Blueprint, Resy, corporate card, business travel, diversity and
inclusion, corporate sustainability and Environmental, Social, and
Governance reports.
Source: American Express Company
Location: Global
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS
This release includes forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995,
which are subject to risks and uncertainties. The forward-looking
statements, which address American Express Company’s current
expectations regarding business and financial performance,
including management’s outlook for 2024 and long-term growth
aspiration, among other matters, contain words such as “believe,”
“expect,” “anticipate,” “intend,” “plan,” “aim,” “will,” “may,”
“should,” “could,” “would,” “likely,” “continue” and similar
expressions. Readers are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date
on which they are made. The company undertakes no obligation to
update or revise any forward-looking statements. Factors that could
cause actual results to differ materially from these
forward-looking statements include, but are not limited to, those
that are set forth under the caption “Cautionary Note Regarding
Forward-Looking Statements” in the company’s current report on Form
8-K filed with the Securities and Exchange Commission (SEC) on July
19, 2024 (the Form 8-K Cautionary Note), which are incorporated by
reference into this release. Those factors include, but are not
limited to, the following:
• the company’s ability to achieve its 2024 earnings per common
share (EPS) outlook and grow EPS in the future, which will depend
in part on revenue growth, credit performance and the effective tax
rate remaining consistent with current expectations and the
company’s ability to continue investing at high levels in areas
that can drive sustainable growth (including its brand, value
propositions, customers, colleagues, marketing, technology and
coverage), controlling operating expenses, effectively managing
risk and executing its share repurchase program, any of which could
be impacted by, among other things, the factors identified in the
subsequent paragraphs and the Form 8-K Cautionary Note, as well as
the following: macroeconomic conditions, such as recession risks,
higher rates of unemployment, changes in interest rates, effects of
inflation, supply chain issues, energy costs and fiscal and
monetary policies; geopolitical instability, including the ongoing
Ukraine and Israel wars, broader regional hostilities and tensions
involving China and the U.S.; the impact of any future
contingencies, including, but not limited to, legal costs and
settlements, the imposition of fines or monetary penalties,
increases in Card Member remediation, investment gains or losses,
restructurings, impairments and changes in reserves; issues
impacting brand perceptions and the company’s reputation; impacts
related to sales and acquisitions, including management’s decisions
regarding the use of the gain from the sale of Accertify, and new
or renegotiated cobrand and other partner agreements and joint
ventures; and the impact of regulation and litigation, which could
affect the profitability of the company’s business activities,
limit the company’s ability to pursue business opportunities,
require changes to business practices or alter the company’s
relationships with Card Members, partners and merchants;
• the company’s ability to achieve its 2024 revenue growth
outlook and grow revenues net of interest expense in the future,
which could be impacted by, among other things, the factors
identified above and in the Form 8-K Cautionary Note, as well as
the following: spending volumes and the spending environment not
being consistent with expectations, including T&E spend
categories growing slower than expected, further moderation in
spending by U.S. small and mid-sized enterprise Card Members, or a
slowdown in U.S. consumer or International spending volumes; an
inability to address competitive pressures, attract and retain
customers, invest in and enhance the company’s Membership Model of
premium products, differentiated services and partnerships, grow
spending and lending with customers across generations and age
cohorts, including Millennial and Gen Z customers, and implement
strategies and business initiatives, including within the premium
consumer space, commercial payments and the global network; the
effects of regulatory initiatives, including pricing regulation;
merchant coverage growing less than expected or the reduction of
merchant acceptance; increased surcharging, steering or suppression
of the company’s products; merchant discount rates changing by a
greater or lesser amount than expected; and changes in foreign
currency exchange rates; and
• the actual amount the company spends on marketing in 2024 and
beyond and the effectiveness and efficiency of its marketing
spending, which will be based in part on continued changes in the
macroeconomic and competitive environment and business performance,
including the levels of demand for the company’s products;
management’s decisions regarding the timing of spending on
marketing and the effectiveness of management’s investment
optimization process; management’s identification and assessment of
attractive investment opportunities; management’s ability to
develop premium value propositions and drive customer demand,
including continued customer spend growth and retention; the
receptivity of Card Members and prospective customers to
advertising and customer acquisition initiatives; and the company’s
ability to realize marketing efficiencies and balance expense
control and investments in the business.
A further description of these uncertainties and other risks can
be found in American Express Company’s Annual Report on Form 10-K
for the year ended December 31, 2023, Quarterly Report on Form 10-Q
for the quarter ended March 31, 2024 and the company’s other
reports filed with the SEC, including in the Form 8-K Cautionary
Note.
(Preliminary)
American Express Company
Appendix I
Reconciliation of Adjusted EPS
Excluding Transaction Gain
Quarters Ended
June 30,
Six Months Ended
June 30,
2024
2023
YoY%
Inc/(Dec)
2024
2023
YoY%
Inc/(Dec)
GAAP Diluted EPS
$
4.15
$
2.89
44
%
$
7.48
$
5.29
41
%
Accertify Gain on Sale (pretax)
$
0.73
$
—
$
0.73
$
—
Tax Impact of Accertify Gain on Sale
$
(0.07
)
$
—
$
(0.07
)
$
—
Accertify Gain on Sale (after tax)
$
0.66
$
—
$
0.66
$
—
Adjusted Diluted EPS Excluding the Impact
of Accertify Gain
$
3.49
$
2.89
21
%
$
6.82
$
5.29
29
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240718950590/en/
Media Contacts: Giovanna Falbo, Giovanna.Falbo@aexp.com,
+1.212.640.0327 Melanie Backs, Melanie.L.Backs@aexp.com,
+1.212.640.2164 Investors/Analysts Contacts: Kartik
Ramachandran, Kartik.Ramachandran@aexp.com, +1.212.640.5574 Kristy
Ashmawy, Kristy.Ashmawy@aexp.com, +1.212.640.5574
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