Amex earnings beat Wall Street estimates on strong revenue growth

SUSANA GONZALEZ/BLOOMBERG NEWS

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American Express posted strong earnings Friday morning, showing little signs of impact from economic volatility.  

"Our second-quarter results continued the strong momentum we have seen in our business over the last several quarters," Amex CEO Steve Squeri said in a release.

For the quarter ending June 30, Amex reported earnings per share of $4.08, compared to $4.15 the prior year, and revenue of $17.85 billion, compared to $16.30 billion the year before. That outdid analyst estimates of $3.88 and $17.70 billion, according to Capital IQ.  Net income was $2.88 billion, compared to $3.05 billion the prior year. 

The company affirmed its full-year outlook of 8% to 10% revenue growth and EPS of $15.00 to $15.50 "subject to the macroeconomic environment." Amex's stock was up more than 3% in pre-market trading.

Amex released its earnings amid broader economic uncertainty over the impact of President Donald Trump's tariffs and renewed inflation, an issue that has worried payment company investors for months.While banks have reported relatively strong consumer performance and solid earnings this week, economic data shows some  potential weakness, officials have warned. 

Federal Reserve Gov. Adriana Kugler this week said recent data such as consumer and producer price indexes from the Bureau of Labor Statistics show increases in core goods prices, which she attributed to higher import costs and portends more price increases. 

Amex recently said it would make its "largest investment ever" in a credit card refresh program, covering both U.S. consumer and business Platinum cards. The company regularly updates its card and other products, usually with a mix of site and card redesigns. The cost also includes new or updated financial incentives that require Amex to spend more on the program. 

The card updates are part of a strategy to compete in the premium card arena, which includes JPMorgan Chase's Sapphire Reserve and Capital One's Venture X rewards cards.  

"Looking at the upcoming refresh of our U.S. Consumer and Business Platinum Cards this fall, we are confident in our ability to sustain our leadership in the premium space," Squeri said. 

Amex has at least three dozen refreshes underway. While the company has hedged the refreshes and other product campaigns as depending on market conditions, Amex's management also noted it has not halted card refreshes during prior crises such as the COVID-19 pandemic. 

The company has also long held that its relatively high-end consumer base makes it better protected from economic weakness than other lenders. Amex got a bit of good news ahead of its earnings report, as its cobrand partner Delta Airlines reported earnings per share of $2.10 on revenue of $15.5 billion, better than FactSect analyst expectations of $2.06 EPS and revenue of $15.5.

More importantly, Delta said it expects full-year EPS between $5.25 and $6.25, lower than its January outlook of $7.35 but ahead of analyst estimates of $5.38. Delta also pulled its full-year guidance in April, shortly after Trump initially imposed tariffs. Analysts said the airline's decision to put out full-year earnings guidance now was a signal that a tariff-related travel slowdown may not be as bad as initially feared, at least in the premium segment. 

In a research note prior to Thursday's earnings report, analysts from Jeffries said Amex's recent credit metrics were "generally flat," with delinquencies of 1.3% as of June 25 steady month over month, with little change year over year. Net chargeoffs of 2.10% were also flat over the prior month and year. Amex's other activities during the second quarter include introducing a co-branded card with Coinbase.

The cryptocurrency exchange is offering 2% to 4% in bitcoin rewards for purchases based on the amount of cryptocurrency the customer holds. The incentives are directly deposited into the user's Coinbase wallet. Among other large payment companies, Visa and PayPal are scheduled to report earnings July 29, Mastercard July 31, and Block August 7.