American Express Company (AXP) Q2 2025 Earnings Call Transcript
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Overview
The earnings call highlights strong transaction growth, increased net interest income, and strategic investments in technology and risk management. Despite macroeconomic challenges, American Express maintains its revenue growth guidance and demonstrates confidence in its competitive positioning. The Q&A section reveals stable spending trends and effective strategies to counter competition. The $2 billion capital return to shareholders and robust credit metrics further support a positive outlook. However, some concerns about provision expenses and unclear responses on competition impact slightly temper the sentiment, resulting in an overall positive rating.
Key Financial Performance
Revenue Revenues reached a record $17.9 billion, up 9% year-over-year. The increase was attributed to strong performance across spend, transactions, demand for new cards, retention, and credit, despite macroeconomic and geopolitical challenges.
Earnings Per Share (EPS) Earnings per share were $4.08, up 17% year-over-year, excluding last year's gain from the sale of Accertify. The growth was driven by strong revenue performance and operational efficiencies.
Total Card Member Spending Total Card Member spending was up 7% year-over-year. While travel categories like airlines and lodging were softer, spending in other categories reached a quarterly record.
Net Card Fees Net card fees grew 20% year-over-year (FX-adjusted), reaching record levels. This growth was driven by acquiring new customers onto fee-based products, strong retention, and product refreshes.
Transaction Growth Transaction growth was up 9% year-over-year, indicating strong customer engagement and consistent performance over the past few quarters.
Loans and Card Member Receivables Loans and Card Member receivables increased 6% year-over-year (FX-adjusted). Growth was primarily driven by premium products, with Pay Over Time and co-brand portfolios contributing around 80% of the growth.
Provision Expense Provision expense was $1.4 billion, including a reserve build of $222 million. This reflects growth in loan volume and a worse macroeconomic outlook.
Net Interest Income (NII) Net interest income grew at a double-digit pace year-over-year. Growth was driven by balance sheet expansion and margin improvements through better pricing for risk and lending features.
Operating Expenses (OpEx) Operating expenses (excluding Accertify) were up 9% year-over-year. The increase was driven by investments in enterprise risk management capabilities and technology as the company scales.
Capital Return Returned $2 billion of capital to shareholders, including $0.6 billion in dividends and $1.4 billion in share repurchases. The CET1 ratio was 10.6%, within the target range of 10% to 11%.
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Operating Highlights
U.S. Consumer and Business Platinum Cards refresh: Upcoming refresh planned for fall, focusing on enriching value propositions with more benefits and offerings.
Premium card portfolio growth: Recent refreshes of U.S. Consumer Gold, Delta, and Hilton Cards drove double-digit account growth, 30%+ revenue growth, and 60%+ card fee revenue growth.
Global premium card market: The total addressable market is growing globally, driven by value proposition innovations, competitor investments, and generational shifts.
International business growth: International business grew 12% FX-adjusted in Q2, showing double-digit growth.
Revenue growth: Achieved record revenue of $17.9 billion, up 9% year-over-year.
Net card fees: Net card fees reached record levels, up 20% FX-adjusted, driven by premium product focus.
Expense management: Operating expenses as a percentage of revenue reduced from 25% in 2023 to 21% this quarter, showing 4 points of operating leverage.
Premium sector focus: Strategic investments in premium products and partnerships to sustain leadership in the premium card category.
Capital management: Returned $2 billion to shareholders, including $1.4 billion in share repurchases and $0.6 billion in dividends.
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Risk or Challenges
Macroeconomic and Geopolitical Uncertainty: The company acknowledges significant macroeconomic and geopolitical developments, which could impact customer spending and overall business performance.
Softer Travel Spending: Spending in travel categories like airlines and lodging has been softer, which could affect revenue growth in these segments.
Reserve Build Due to Worsened Macroeconomic Outlook: A reserve build of $222 million was recorded, reflecting growth in loan volume and a worsened macroeconomic outlook, indicating potential credit risks.
Competitive Pressures in Premium Card Market: The competition for premium customers remains intense, which could challenge the company's ability to maintain its leadership position.
Expense Growth Outpacing Revenue: Variable customer engagement (VCE) expenses grew faster than revenue, driven by investments in risk management and technology, which could pressure margins.
Credit Risk and Reserve Requirements: The company has strong credit performance but acknowledges the need for reserve builds due to potential macroeconomic challenges, which could impact profitability.
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Guidance & Outlook
Full Year Revenue Growth and EPS Guidance: The company reaffirmed its full-year revenue growth guidance of 8% to 10% and earnings per share (EPS) guidance of $15 to $15.50.
U.S. Consumer and Business Platinum Card Refresh: The company is planning a refresh of its U.S. Consumer and Business Platinum Cards in the fall, aiming to enhance value propositions with more benefits and offerings.
Premium Card Market Growth: The total addressable market for premium cards is growing globally, driven by value proposition innovations, competitor investments, and generational shifts. The company expects to sustain its leadership in this space.
Premium Lending Business Growth: The company sees a long runway for growth in its premium lending business, driven by balance sheet growth and margin expansion while maintaining low credit risk.
Expense Management: For the full year, operating expense growth is expected to be in the mid-single digits, driven by investments in risk management and technology.
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Shareholder Return Plan
Dividend Payments: The company returned $0.6 billion to shareholders in the form of dividends during Q2 2025.
Dividend Increase: In Q1 2025, the company increased its dividend by 17%.
Share Repurchases: The company repurchased $1.4 billion worth of shares during Q2 2025.
Capital Return Strategy: The company returned a total of $2 billion to shareholders in Q2 2025, including dividends and share repurchases.
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Key Q&A
Q:How is American Express planning for intermediate-term spending trends given macroeconomic uncertainty?
A:American Express is planning for spending trends to remain consistent. They observe stable spending patterns despite some slowdown in airline and lodging sectors. SMBs are more cautious, but revenue from this segment remains strong due to robust credit metrics and fee-based business.
Q:What is the impact of the Amazon portfolio loss on SMBs?
A:The Amazon portfolio loss is not expected to have a significant impact on SMBs. American Express views such portfolio movements as common in retail and believes their SMB revenue and credit metrics remain strong.
Q:How does American Express view the competitive landscape in the premium card space?
A:American Express acknowledges the competitive landscape but believes it has always been competitive. They emphasize their focus on delivering value and maintaining pricing power through product refreshes and innovation. They are confident in their ability to compete effectively.
Q:What are the expectations for the upcoming U.S. Platinum Card refresh?
A:The Platinum Card refresh will add significant value relative to any fee increase. American Express aims to make benefits easy to use and provide a wide range of value to ensure customers feel they are getting their money's worth.
Q:How is American Express performing internationally in terms of acceptance growth and competition?
A:American Express is experiencing double-digit growth internationally, focusing on five key markets. They continue to expand merchant acceptance and see significant growth opportunities in premium products and small business segments.
Q:How does American Express plan to sustain 8%-10% revenue growth despite macroeconomic challenges?
A:American Express focuses on customer needs, innovative products, and exceptional service. They believe their strategy of product refreshes and investments will continue to drive growth and deliver value to shareholders.
Q:What is the timing of expenses and revenues associated with the Platinum Card refresh?
A:Expenses for the Platinum Card refresh will precede revenues. Benefits will be available to cardholders immediately, while fee increases will be recognized over a 12-month period after the cardholder's renewal cycle.
Q:How is American Express addressing concerns about lounge overcrowding and competition in airport lounges?
A:American Express is expanding lounge sizes, introducing innovative concepts like smaller satellite lounges, and collaborating with partners like Delta to manage traffic. They aim to enhance the customer experience while addressing demand.
Q:What is the impact of competition on acquisition strategies and returns in the premium card space?
A:Competition has expanded demand for premium products, allowing American Express to deploy more marketing dollars at attractive returns. They maintain a strong acquisition mix and see stable or increasing returns in the premium card space.
Q:What are American Express's views on stablecoins and blockchain technology?
A:American Express sees a role for stablecoins in cross-border transactions and is exploring partnerships and potential entry points. They believe stablecoins complement existing payment systems but will not replace them due to the benefits of current payment rails.
Q:Review of Unclear Management Responses
A:Management avoided directly addressing the question about how competition in the premium card space might impact acquisition strategies and returns. They provided general statements about competition expanding demand but did not offer specific data or detailed insights.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
CCAR result
Card Member
Cards
Fed CCAR
Inc Research
LLC Research
Member spending
Members
NII
Research Division
Securities
Unidentified
age group
area
average age
base VCE
buffer requirement
capital buffer
card loss
class partner
credit card
credit quality
decade
detail result
gap
highlight
industry average
lounge
margin
market rate
momentum
network
portfolio Card
premium lending
requirement level
runway
share gain
shift
space
stress
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AXP Slides
AXP Report
Frequently Asked Questions
Where does this earnings call transcript come from?
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
How soon is the transcript available after the earnings call ends?
Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
Is the transcript edited or altered in any way?
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
Why do some answers appear as “Unclear” or “Inaudible”?
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
