$American Express (AXP.US)$ second-quarter revenue (net of interest expense) grew 8% year-on-year to $16.33 billion, slightly missing the analyst consensus estimate of $16.59 billion. The firm also said consumer spending on its cards declined, and it would have to spend more on marketing efforts in the future.
Amex's stock price went up after the report, but it soon gave up the gains in the premarket session on Friday. The increase was primarily due to higher net interest income, increased Card Member spending, and continued strong card fee growth. Adjusted EPS of $3.49 beat the analyst consensus estimate of $3.26.
Card Member spending or Billed Business grew 5% or 6% forex adjusted) year-over-year to $388.2 billion.
U.S. Consumer Services revenue was $7.73 billion, up 12% year over year. Commercial Services revenue was $3.95 billion, up 6% year over year.
International Card Services revenue was $2.82 billion, up 9% Y/Y, and Global Merchant and Network Services revenue was $1.87 billion, up 1% Y/Y.
Total expenses increased by 1% Y/Y to $11.3 billion, primarily reflecting higher customer engagement costs due to higher Card Member spending, increased usage of travel-related benefits, and higher marketing investments.
Provision for credit losses stood at $1.3 billion, compared with $1.2 billion a year ago, reflecting higher net write-offs.
Chair and CEO Stephen J. Squeri said, "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."
FY24 Outlook: Amex reiterated revenue growth of 9% – 11% or $65.96 billion – $67.17 billion (versus consensus of $66.41 billion). It has raised its EPS outlook to $13.30 – $13.80 from $12.65 – $13.15 prior, versus the consensus of $12.96.
"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, "CEO Squeri added.