AXP

• Core Premium Strategy and Product Refresh Results • Management's long-term core strategy focuses on strengthening premium segment leadership via ongoing innovation in membership value propositions to attract high credit quality, high spending premium customers across all age cohorts and geographies. • The U.S. Platinum Card refresh launched in September 2025 has outperformed expectations: it is now the fastest growing segment in the U.S. consumer business, with 600bps of acceleration in spend across the entire U.S. platinum portfolio, driven by both new customer acquisition, increased spend from existing card members, and upgrades from other cards. Retention rates remain very high after the fee increase. • New Platinum Card refreshes have been rolled out in ~80% of international markets where the card is issued, driving 20% FX-adjusted growth in international platinum spending in 2026. Around 70% of new international platinum accounts are from millennials and Gen Z. • 65% of all new U.S. consumer accounts are from millennials and Gen Z, who remain the fastest growing spending cohorts, and represent strong long-term lifetime value.

• Product and Partnership Expansion • The company has expanded premium benefits across key spending categories: expanded airport lounge and luxury hotel networks for travel; acquired Resi and Tok, and proposed to acquire The Fork (a leading European online restaurant booking platform adding 50,000 restaurants across 11 countries) to grow dining capabilities; added new sports sponsorships with the NFL and Fanatics to expand exclusive customer experiences. • New digital capabilities launched: card members can now redeem Membership Reward points directly within Apple Pay for everyday purchases. A new $300 annual Chat GPT statement credit was introduced for U.S. Business Platinum and Gold card members, and a pilot for a new middle market expense management platform was launched. • A new global partnership was announced with Accor, covering 45 hotel brands including Raffles, Fairmont, and Sofitel, to enrich membership value for customers. • All value propositions are tailored to customer segments: Platinum focuses on travel and lifestyle perks; Gold prioritizes everyday benefits like dining and groceries; co-brand cards have segment-specific benefits; business products are tailored to different size business payment and financial management needs.

• Credit and Operational Performance • The focus on high credit quality customers has delivered consistently strong credit performance: delinquency and write-off rates remain below 2019 levels, with delinquency holding between 1.2% and 1.3% for over three years. Q2 2026 saw a $191 million reserve release reflecting improving portfolio credit quality. • Card fee growth is 15% year-over-year through the first half, and management expects it to accelerate in Q3 and exit 2026 at a high teens growth rate. • Marketing and operating expenses each grew 6% in the quarter, with the VCE (variable card member expense) to revenue ratio of 44.6%, up from the prior year due to upfront U.S. Platinum refresh investments. Return on equity (ROE) was 36% for the quarter.

• Full-year 2026 revenue growth guidance was raised to 10%, from prior guidance below this level, reflecting better-than-expected year-to-date performance.
• Full-year 2026 EPS guidance is maintained at $17.30 to $17.90, as the company will reinvest all revenue outperformance into long-term growth initiatives rather than increasing near-term bottom line results.
• Full-year 2026 operating expense growth is expected to remain in the mid-single digits, while marketing expense growth is expected to be ~10% year-over-year in the second half, driven by increased customer acquisition investments. The full-year VCE to revenue ratio is now expected to be between 44% and 45%, up from prior expectations, due to stronger-than-expected overall spending this year.
• Starting in Q4 2026, after both small business co-brand portfolio sales are completed, the annual impact will be ~1pp reduction to overall spend growth, ~2.5pp reduction to NII growth, and ~1pp reduction to total revenue growth; this impact was already incorporated in original guidance and has a negligible impact to pre-tax income.
• Credit metrics are expected to remain generally stable throughout the full year.
• The provided guidance does not include the potential impact from the planned sale of the company's equity stake in Global Business Travel Group, which is expected to close in the second half of 2026.

The company achieved 10% year-over-year total revenue growth for the quarter, with 11% revenue growth and 14% EPS growth through the first half of 2026. Total billed business spend grew 9.4% FX-adjusted (0.9pp higher than Q1 2026): U.S. Consumer spending grew 11% (the highest growth rate since Q1 2018 excluding pandemic-impacted periods), Commercial spending grew 5% (with both U.S. SME and large/global customers growing at the same 5% rate), and International spend grew 12% FX-adjusted (with 4 of the top 5 markets growing at double-digit rates). By revenue category: Net card fees grew 15.4% year-over-year (the fastest growing revenue line, reaching record levels, and has grown at double-digit rates for 32 consecutive quarters; 75% of new accounts in the quarter were on fee-based products, the highest share in the company's premium-focused era). Net interest income (NII) grew 11% year-over-year, with a 1pp headwind from the completed sale of one small business co-brand portfolio. Total card balances grew 9% FX-adjusted year-over-year, in line with billed business growth. U.S. consumer and small business deposit balances grew 9% year-over-year.

• Geopolitical events have created minor localized impacts: gas spending has increased significantly but represents only ~2% of total billings, and travel to the Middle East has declined. However, these impacts are offset by growth in other categories and are not visible at the macro level, with no evidence of broad consumer spending slowdown as of Q2 2026.
• Agentic commerce and AI innovation are still in early stages of development, with uncertainty about customer adoption and competitive dynamics in the emerging space.
• Future economic downturns are an inherent cyclical risk, though management notes the company's current premium, high credit quality customer base delivers more resilient credit performance through downturns than historical peer and company results.
• Delayed impact of the Platinum Card refresh on card fee revenue creates near-term cyclicality in the revenue line as the price increase amortizes over 12 months, with full impact taking up to two years to appear in financial results.

Q: With revenue upside being reinvested, what are the key areas of new investment, and how will this sustain double-digit top-line growth into 2027? / A: Investments will go to three primary areas: 1) Integration and transaction costs for the proposed acquisition of The Fork, which was not in the original 2026 plan. 2) Accelerated technology platform upgrades across all business units (U.S. consumer, international, commercial, merchant acquiring, network) to deliver updates sooner than originally planned. 3) Increased investment in customer acquisition of high-spending, high-value cardholders to sustain long-term revenue growth. Additional investments are also being made in emerging agentic commerce capabilities, which were not planned at the start of the year. Management notes this long-term reinvestment strategy has already delivered four consecutive years of double-digit revenue growth and mid-teens EPS growth, and is the best approach for long-term shareholder value.

Q: What is the advantage of American Express's closed-loop model in the emerging agentic commerce space, and how is the company positioned for this new market? / A: Agentic commerce is still in the very early "pre-season" stage of development, so adoption is just beginning. The closed-loop model gives American Express unique advantages: the company has data on both the card member and the merchant, allowing it to verify customer intent, reduce fraud, and correct for AI hallucinations that are common in the space. This data advantage, combined with the company's long track record of standing behind customers, addresses common consumer concerns about security and trust in agentic commerce, positioning American Express to capture share as the market grows.

Q: How should investors think about the fundamentally changed durability of American Express's growth flywheel compared to historical performance? / A: The core business model focus on premium, high credit quality customers is unchanged, but the company has adapted to evolving customer needs: it now tailors premium value propositions to all age cohorts (not just older generations), creating a flexible, expandable product ecosystem that works for boomers through Gen Z. The company has also expanded its strategic focus to global growth, prioritizing key large markets with tailored premium offerings, and built a broader partner ecosystem that adds value to membership and creates new customer acquisition opportunities. Financially, the business now has faster momentum, stronger credit resilience (with lower projected peak loss rates in stress scenarios than historical levels), growing contribution from high-margin card fees, and a younger customer base that supports long-term durable growth.

Q: Why did NII growth slow 150bps from Q1 to Q2, and what is the outlook for NII going forward? / A: The slowdown is almost entirely attributable to the April 2026 transfer of the first sold small business co-brand portfolio (the Lowe's portfolio) to the new issuer, which created a 1pp headwind to NII growth. This impact was fully expected and baked into original guidance, with a negligible impact to net income. A second portfolio (the Amazon portfolio) will transfer in Q3, and by Q4 2026 the full 2.5pp annual headwind to NII will be in place until the company laps the sale. Excluding this portfolio impact, core NII growth remains strong, in line with balance and spending growth.