AMERICAN EXPRESS CO Q1 FY2025 earnings call

• Strong Q1 performance: Revenues of $17 billion, up 8% year-over-year on FX adjusted basis, net income $2.6 billion or $3.64 per share. - Premium customer base: Continued to spend healthily, total card member spending grew 6% in the quarter. Added 3.4 million new cards, with Millennial and Gen-Z making up over 60% of new consumer accounts. - Spend trends: Goods and Services spending grew faster than 2024, T&E had steady growth with restaurant and lodging strong but airline billings slowed. - Lending: Loans and card member receivables up 7% FX adjusted, premium products driving growth. - Credit: Strong performance with delinquency and write-off rates below pre-pandemic levels. - Revenue drivers: Discount revenue up 5% FX adjusted, net card fees at record levels, net interest income up 11% FX adjusted. - Expense management: VCE to revenue ratio 43%, rewards expense grew 16%, but expect rewards to grow more in line with historical trend. - Strategic principles: Back customers, colleagues; disciplined expense management; strategic investment for long-term.

Total revenues were up 8% year-over-year on an FX adjusted basis or 9% excluding leap year. Total Billed Business was up around 7.5% year-over-year. Goods and Services spending sustained an uptick, growing faster than in 2024. T&E growth was in line with last year, with restaurant and lodging strong but airline billings slowed. Loans and card member receivables increased 7% year-over-year on an FX adjusted basis, with premium products driving growth. Credit performance remained very strong, with delinquency and write-off rates below pre-pandemic levels and flat to prior year. Discount revenue was up 5% FX adjusted, net card fees were at record levels, increasing 20% FX adjusted, and net interest income increased 11% FX adjusted.

• Maintaining full-year revenue growth guidance of 8% to 10% and EPS of $15 to $15.50. - Guidance incorporates a macroeconomic outlook with a peak weighted average unemployment rate of around 5.7%.

• Macroeconomic uncertainty: Increased uncertainty in the environment. - Potential impact on small businesses: Tariffs could impact small businesses first. - Credit risks: Dependence on white collar unemployment and FICO scores, though historical data shows cardholders' spending not strongly tied to consumer confidence or stock market.

Q: Sanjay Sakhrani asked about pull forward of spending and how far to cut expenses if revenues weaken.

A: Steve Squeri said no significant pull forward seen, no intention to cut expenses to hit numbers if good growth opportunities exist.

Q: Mark DeVries asked about tariffs and which segments under pressure.

A: Steve Squeri said small businesses might be first, and card base is more premium with better credit profiles.

Q: Don Fandetti asked about card refresh and fee growth.

A: Steve Squeri said committed to refreshes, raise fees when adding value, fee decision based on value.

Q: Richard Shane asked about investing tactically and capital.

A: Stephen Squeri and Christophe Le Caillec discussed investing for long-term, returning about 80% of earnings to shareholders, CET1 ratio target 10%-11%.

Q: Erika Najarian asked about revenue guide and spend resilience.

A: Stephen Squeri said spend was consistent Jan-March, April to watch, and comfortable with guidance despite unemployment.

Q: Jeffrey Adelson asked about Millennial/Gen-Z spend and student loan repayment.

A: Steve Squeri said Millennial/Gen-Z spend growth strong, delinquency rate better than industry.

Q: Craig Maurer asked about wealth effect and SMB e-commerce.

A: Stephen Squeri said history shows cardholders' spending not tied to wealth effect, SMB e-commerce info not available.

Q: Cristopher Kennedy asked about SME technology investments.

A: Stephen Squeri discussed building SME capabilities with acquisitions like Kabbage, Center, and integration plans.

Q: Terry Ma asked about refresh strategy and marketing budget.

A: Steve Squeri said no changes to marketing budget, refreshes continue as they're in progress.

Q: Gus Gala asked about enhancing restaurant value proposition for Gen-Z.

A: Stephen Squeri discussed initiatives like Resy, Tock, Rooam to enhance restaurant value for card members.

Q: Robert Wildhack asked about SMB technology integration.

A: Stephen Squeri discussed integration of Kabbage, Center, and timeline for full suite.

Q: Mihir Bhatia asked about cost structure and expense flex.

A: Stephen Squeri said there's expense flexibility in marketing and OpEx but won't cut to hit EPS if good growth opportunities exist.