American Express Shares Drop as Earnings Beat, Record Revenue Fail to Impress

American Express posted record revenue in the second quarter. (Patrick T. Fallon/Bloomberg)

American Express reported record revenue for the second quarter on Friday as its typically affluent cardmembers boosted spending by 7% from a year earlier, even as consumers grapple with lingering inflation and uncertainty about the economy’s direction.

The credit card company’s net income declined 4% to $2.89 billion and earnings per share slipped 2%. Its sale of the fraud-prevention company Accertify in 2024 added a big gain to last year’s second-quarter earnings.

Excluding that sale, on an adjusted basis, per-share earnings of $4.08 increased by 17% and topped the $3.89 analysts were calling for.

Still, shares dropped by 2.5% in afternoon trading, while the S&P 500 slipped 0.1%.

The stock hit a record high earlier this month and is now trading around 21 times earnings, Truist Securities analyst Brian Foran noted in a report. “So some investors have moved to a ‘being good is not good enough’ mindset,” he wrote.

Amex is best known for card offerings that cater to high earners. The New York-based company is pushing to hold onto those cardmembers at a particularly competitive moment, as rivals JPMorgan Chase and Citigroup announce changes to their own card lineups.

Amex dismissed the notion that the environment was more competitive than in recent years.

“For anybody in this space, complacency is a death knell,” Chief Executive Stephen Squeri told analysts Friday morning. “You can’t be complacent, which is why we’re on a very regular cycle of refreshing these products. Anybody who thinks that we’re refreshing the product in response to what our competitors are doing is crazy. We have our own schedule.”

Squeri added: “May the best company win.”

In a sign that Amex expects its cardmembers to maintain a healthy level of spending, the company said it is leaving its full-year guidance for earnings and revenue unchanged. It has forecast earnings per share of between $15.00 and $15.50, with a gain of 8% to 10% in revenue.

Still, Amex said its provisions for credit losses increased by 11% from last year as it set aside more reserves and recorded higher net write-offs. Its net write-off rate ticked down to 2% from 2.1% a year prior.

“The economic outlook is less supportive than the one we had at the end of [the first quarter],” Amex Chief Financial Officer Christophe Le Caillec said in an interview with Barron’s.

Some financial firms built up bigger reserves to cover potential loan losses last quarter as uncertainty increased with the Trump administration’s early April tariff announcements. Amex didn’t add to its reserves at the time, but chose to do so this quarter as the backdrop shifted, Le Caillec noted.

Revenue of $17.86 billion climbed 9% from a year ago, topping estimates. Cardholder spending, which Amex refers to as billed business, rose by 7% from a year earlier to $416.3 billion. Net card fees jumped 20% to $2.48 billion thanks to growth in its premium cards.

Write to Rebecca Ungarino at rebecca.ungarino@barrons.com