American Express Earnings Call Signals Confident Growth

American Express Company ((AXP)) has held its Q1 earnings call. Read on for the main highlights of the call.

American Express struck an upbeat tone on its latest earnings call, pointing to double‑digit revenue growth, an 18% jump in EPS, and still‑pristine credit as evidence that its premium, spend‑centric model is delivering. Management acknowledged a few near‑term headwinds and higher reinvestment, but framed them as deliberate choices to extend the current momentum rather than signals of strain.

Strong Top‑Line and Earnings Growth

Revenue rose 11% in the first quarter, or 10% on a currency‑neutral basis, underscoring healthy customer activity across the franchise. Diluted EPS climbed to $4.28, up 18% year over year, and the company reiterated its 2026 targets for 9%–10% annual revenue growth and EPS in the $17.30–$17.90 range.

Robust Card Member Spending and New Account Acquisition

Card member spending increased 10%, the fastest quarterly pace in three years, with 9% growth after currency effects. American Express added about 3.1 million new accounts, more than 70% on fee‑based products, as the refreshed U.S. Platinum card drove stronger spend, high retention, and big gains in travel and dining categories.

Strong Revenue Mix: Net Card Fees and NII Expansion

The top line is increasingly powered by recurring and interest income, with net card fees the fastest‑growing line, up 16% on an FX‑adjusted basis. Net interest income rose 12% on a currency‑neutral basis, outpacing 7% growth in total card balances, while high‑yield savings and CD deposits expanded 9% year over year.

Consistent International Momentum

International operations remain a standout growth engine, delivering their 20th straight quarter of double‑digit FX‑adjusted billings gains. Management highlighted roughly 13% FX‑adjusted growth in International Card Services and cited around 20% spend growth in some non‑U.S. markets, reinforcing the global breadth of the spending recovery.

Excellent Credit and Solid Capital Returns

Executives described credit metrics as “best in class,” with delinquency rates flat from the prior quarter, slightly lower write‑off rates, and only a modest 4% increase in write‑off dollars. Provision expense totaled $1.3 billion and included a small reserve release, while capital returns remained robust at $2.3 billion through dividends and buybacks alongside a 35% quarterly ROE and a 16% dividend hike.

Strategic Partnerships, Product Roadmap and AI Investment

American Express leaned into its premium brand with new and renewed sports and stadium partnerships and expanded airport lounge access, while adding about 300 more hotels to its travel programs. The company also outlined an eight‑part commercial product roadmap and unveiled early AI and agentic commerce tools, including the ACE Developer Kit and Amex Agent purchase protection.

Airline Spending Softness and Travel Disruption

The only notable blemish came from softer airline spending late in March and into April, as conflict in the Middle East and related disruptions drove a spike in ticket refunds. Management stressed that airline billings were still up earlier in the quarter and that the drag, while visible in the data, remains immaterial to overall billed business trends.

Held‑for‑Sale Small Business Co‑Brand Portfolio Impacts

The decision to exit certain small‑business co‑brand portfolios will temporarily weigh on a few headline growth metrics even as earnings impact stays negligible. Executives expect roughly a one‑point drag on balance growth and a low‑single‑digit hit to small and mid‑sized enterprise spend growth in the second quarter, a headwind that should fade as the portfolios roll off.

Higher Near‑Term Expense Ratio from Reinvestment

Profitability metrics reflected a conscious choice to reinvest outperformance, with the value capture ratio at 44.7% versus a full‑year target near 44%. Marketing spend was $1.5 billion in the quarter, flat year over year but now projected to rise mid‑single digits for 2024 as the company funds card refreshes, tech upgrades, and AI initiatives that may modestly cap near‑term EPS upside.

Macroeconomic and Geopolitical Uncertainty

Management flagged lingering macro and geopolitical uncertainty as a reason for maintaining a cautious stance on reserves despite the quarter’s reserve release. Even so, executives emphasized that current credit trends, spending patterns, and customer behavior remain consistent with their base‑case outlook, and they see no need for a shift in risk posture.

Guidance and Forward‑Looking Outlook

Looking ahead, American Express reaffirmed its 2026 financial algorithm after a strong start to the year, signaling confidence that mid‑teens EPS growth is achievable even as it steps up investment. The company plans to keep marketing and technology spending elevated while sustaining sizable capital returns and targeting a value capture ratio around 44%, suggesting a balanced focus on growth and shareholder payouts.

American Express’s latest earnings call painted the picture of a franchise firing on multiple cylinders, from fee and interest income to international billings and premium card engagement. While selective headwinds and heavier reinvestment may blur near‑term operating leverage, management’s stance implies that the current spending momentum and credit strength can support both ambitious growth targets and continued rewards for shareholders.