Yahoo Finance American Express Co (AXP) (Q1 2024) Earnings Call Transcript Highlights: Robust Growth and ...
Revenue: $15.8 billion, up 11% year-over-year.
Net Income: $2.4 billion.
Earnings Per Share (EPS): $3.33, up 39% year-over-year.
Spending Growth: Overall up 7% on an FX-adjusted basis; U.S. Consumer Card spending up 8%, International Card Members up 13%.
Fee Revenues: Increased by 16% on an FX-adjusted basis.
New Cards Acquired: 3.4 million new cards in the quarter.
Credit Metrics: Continued to show strong performance.
Provision Expense: $1.3 billion due to a $148 million reserve build and net write-offs.
Net Interest Income: Up 26% year-over-year.
Marketing Spend: $1.5 billion, with plans to increase in 2024.
Operating Expenses: $3.6 billion, flat year-over-year.
Capital Return: $1.6 billion returned to shareholders in Q1.
2024 Full Year Guidance: Revenue growth of 9% to 11%, EPS of $12.65 to $13.15.
Release Date: April 19, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: What is driving the softer spending environment mentioned, and what could potentially reinvigorate spending? A: Stephen Joseph Squeri, Chairman & CEO, explained that while overall spending grew by 7%, with consumer spending in the U.S. at 8% and international consumer spending at 14%, there was noticeable softness in SME spending, which only grew by about 1%. He attributed this to the unique dynamics faced by small businesses but remained optimistic about future opportunities for growth as SME spending rebounds.
Q: Can you elaborate on the Membership Rewards expense and the impact of model enhancements? A: Christophe Y. Le Caillec, CFO, clarified that the $196 million benefit from model enhancements to the Membership Rewards program is a one-time adjustment. The ultimate redemption rate (URR) remains at 96%, and the benefit represents a minor fraction of the total Membership Rewards balance, emphasizing its insignificance in the broader financial context.
Q: What drove the reacceleration in new card growth this quarter? A: CEO Stephen Joseph Squeri attributed the increase in new card acquisitions to heightened marketing investments and a series of product refreshes, including new offerings in partnership with Delta, Hilton, and British Airways. These initiatives have successfully stimulated demand and engagement.
Q: How are assumptions about the macroeconomic environment influencing your financial strategy for the upcoming quarters? A: CFO Christophe Y. Le Caillec noted that while they are observing a firmer macroeconomic environment, they are maintaining their EPS guidance due to the unpredictability of various factors that could impact financial performance throughout the year.
Q: Could you discuss the impact of the Visa and Mastercard settlement on your operations? A: CEO Stephen Joseph Squeri remarked that the ongoing legal proceedings and potential outcomes of the Visa and Mastercard interchange rate case are still uncertain. However, he assured that American Express's strategy remains unchanged, focusing on premium customer engagement and maintaining competitive parity.
Q: What are your strategies for maintaining customer loyalty and retention as the portfolio grows? A: CEO Stephen Joseph Squeri emphasized the importance of continuous engagement with customers through analytics, targeted offers, and personalized services. This approach not only helps in acquiring new customers but also ensures ongoing engagement and retention by adapting offers based on individual spending behaviors and preferences.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
