American Express Company ((AXP)) has held its Q4 earnings call. Read on for the main highlights of the call.
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American Express Shines with Record Performance Amidst Future Growth Uncertainty
American Express’s recent earnings call painted a picture of robust financial health, characterized by record-breaking revenues and net income. The company demonstrated impressive card acquisition rates and international growth, although it faces some challenges such as moderated loan growth and uncertainty about sustained spending momentum. Nevertheless, American Express remains optimistic about its strategy and growth potential in 2025.
Record Revenue and Net Income
American Express reported an impressive $66 billion in revenue for 2024, marking a 10% increase on an FX-adjusted basis. Net income also soared to $10 billion, with earnings per share hitting $14.01, a 25% year-over-year increase. These figures highlight the company’s strong financial performance over the past year.
Strong Card Acquisition and Retention
The company achieved record net card fees and acquired 13 million new cards, showcasing its ability to attract new customers. Additionally, high card member retention rates further emphasized the strength of American Express’s value proposition to its customers.
International and SME Growth
American Express’s international business grew by 15% in the fourth quarter of 2024. The company sees significant opportunities for further growth in underpenetrated markets. Moreover, there was a notable improvement in the spending and customer base of small and medium-sized enterprises (SMEs).
Merchant Network Expansion
American Express expanded its merchant network by adding millions of new merchant locations globally. It achieved 80% merchant coverage in its top 12 international countries, a significant milestone in its global expansion strategy.
Moderation of Loan Growth
Loan growth moderated throughout the year, a trend that was anticipated as customers no longer felt the need to build revolving balances post-pandemic. This moderation aligns with the company’s expectations and broader economic trends.
Potential Spend Growth Uncertainty
While spending growth in the fourth quarter was robust, there remains uncertainty about whether this momentum will continue into 2025. This potential variability in spending trends is an area of focus for the company.
FX Impact on Revenue
The strong U.S. dollar posed a headwind for American Express, impacting revenue growth by 1 percentage point in the fourth quarter of 2024 due to foreign exchange adjustments.
Forward-Looking Guidance
Looking ahead, American Express provided optimistic guidance for 2025, anticipating revenue growth between 8% and 10%, and an EPS range of $15 to $15.50, reflecting a 12% to 16% increase over the previous year. The company plans to sustain its growth momentum through continued investments in product refreshes and further expansion of its merchant network.
In conclusion, American Express’s recent earnings call highlighted a successful year with record revenues and strong performance metrics. Despite some uncertainties, the company remains optimistic about its growth trajectory and strategic initiatives for 2025. Investors and stakeholders will be keenly watching how American Express navigates these challenges and capitalizes on opportunities in the coming year.
