American Express Q2 Revenue Falls Short of Expectations, EPS Beat

American Express Company (NYSE:) robust results for the second quarter of 2024, achieving record-breaking revenue and significant earnings per share (EPS) growth.

According to Stephen J. Squeri, Chairman and Chief Executive Officer, the company delivered strong second-quarter results with quarterly revenue reaching an all-time high of $16.3 billion, an 8% increase from the previous year. On a foreign exchange (FX) adjusted basis, revenue grew by 9%.

The company’s net income for the quarter was $3.0 billion, or $4.15 per share, compared to $2.2 billion, or $2.89 per share, in the same quarter last year.

This represents a 44% increase in EPS. Adjusted EPS, excluding a $0.66 gain from the sale of Accertify, was $3.49, reflecting a 21% increase from the prior year.

Key drivers for this performance included stable growth in billings, strong new card acquisitions totaling 3.3 million, and double-digit growth in card fee revenues for the 24th consecutive quarter.

American Express also reported excellent credit performance, maintaining its status as best in class.

Higher net interest income, increased Card Member spending, and strong card fee growth bolstered consolidated total revenues net of interest expense.

The company’s consolidated provisions for credit losses rose slightly to $1.3 billion from $1.2 billion a year ago, primarily due to higher net write-offs, partially offset by a lower reserve build year-over-year.

American Express Falls Short on Revenue Expectations in Q2

Despite the impressive results, American Express’ performance slightly missed Wall Street’s revenue expectations. Analysts had projected revenue of $16.59 billion for the quarter, whereas the company reported $16.3 billion. This shortfall, though minor, represents a crucial metric for investors and market analysts who closely monitor such figures.

On the earnings front, American Express surpassed expectations. The anticipated EPS for the quarter was $3.23, but the company delivered an adjusted EPS of $3.49, excluding the Accertify transaction gain.

This exceeded projections by a notable margin, demonstrating the company’s ability to generate higher-than-expected profitability. Including the $0.66 gain from the Accertify sale boosted the EPS further to $4.15, significantly surpassing market forecasts.

Several factors, including increased Card Member spending and higher net interest income drove the company’s strong performance metrics.

Additionally, the company managed to keep its consolidated expenses relatively stable, with a modest 1% increase to $11.3 billion.

This was primarily due to higher variable customer engagement costs, offset by lower operating expenses resulting from the Accertify sale.

American Express Raises Full Year EPS Guidance to the Range of $13.30 to $13.80

Based on the strong performance in the second quarter, American Express has raised its full-year EPS guidance to a range of $13.30 to $13.80, up from the previous range of $12.65 to $13.15.

The company continues to expect revenue growth in line with its initial guidance of 9% to 11% for the full year.

This optimistic outlook is supported by the company’s increased scale, high credit quality customers, and well-controlled expense base.

Stephen J. Squeri emphasized that the company’s ability to increase its marketing investments by around 15% over the previous year without utilizing the transaction gain demonstrates its financial strength.

This strategic decision aims to enhance further the company’s Membership Model, which has been a significant growth driver.

Since the end of 2021, American Express has significantly expanded its business, increasing revenues by nearly 50% and Card Member spending by almost 40%.

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Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.

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