Key Moments
- American Express reported a 10% year-over-year revenue increase to $19.6 billion for the second quarter.
- Billed business climbed 9% on a foreign exchange-adjusted basis to $455.8 billion as affluent customers kept spending.
- The company now projects full-year revenue growth of 10% and kept its profit growth forecast unchanged.
Resilient High-Income Customers Drive Strong Quarter
American Express Co (NYSE:AXP) raised its full-year revenue growth outlook and delivered second-quarter earnings that topped Wall Street estimates, as its higher-income customer base continued to spend on travel and dining in the face of ongoing economic uncertainty.
In contrast to many competitors that serve a wider spectrum of borrowers, the company focuses heavily on wealthier cardholders. These consumers are generally better able to manage inflationary pressures while sustaining discretionary purchases, a dynamic that supported American Express’s latest results.
Second-Quarter Performance and Spending Metrics
Billed business – the company’s measure of total spending on its cards – increased 9% on a foreign exchange-adjusted basis to $455.8 billion. Revenue for the quarter rose 10% year over year to $19.6 billion.
“Six months into the year, we’re seeing stronger momentum than we expected. The investments we made in our value propositions have driven accelerated spend and revenue growth,” said CEO Stephen Squeri in a statement.
For the three months ended June 30, American Express reported earnings of $4.53 per share, up from $4.08 per share in the same period a year earlier. Analysts had been expecting earnings of $4.40 per share.
| Metric | Current Period | Year-Ago Period |
|---|---|---|
| Billed business (FX-adjusted) | $455.8 billion | Not specified |
| Revenue | $19.6 billion | Not specified |
| Earnings per share | $4.53 | $4.08 |
| Credit loss provisions | $1.1 billion | $1.4 billion |
Updated Outlook and Market Signaling
American Express now anticipates full-year revenue will grow 10%, which aligns with Wall Street expectations based on estimates from LSEG. The company left its profit growth guidance unchanged.
The card issuer’s results offer investors an early indication of spending trends among affluent consumers, providing a preliminary view on discretionary outlays ahead of earnings reports from other major card networks.
Credit Provisions and Consumer Backdrop
The New York-based company recorded $1.1 billion in consolidated provisions for credit losses in the quarter, compared with $1.4 billion in the same period last year.
U.S. consumer sentiment improved from record lows in June, even as households remained concerned about elevated living costs, according to The University of Michigan’s Surveys of Consumers.
Loan-loss provisions – often described as rainy-day reserves – represent the funds a lender allocates to cover loans it does not expect to be fully repaid. These reserves provide insight into a firm’s view of borrowers’ ability to stay current on their obligations.
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