On July 19, 2024, American Express Co (AXP, Financial) released its 8-K filing for the second quarter of 2024. American Express, a global financial institution operating in about 130 countries, provides consumers and businesses with charge and credit card payment products and operates a highly profitable merchant payment network. The company operates in three segments: global consumer services, global commercial services, and global merchant and network services.
Performance Overview
American Express Co (AXP, Financial) reported a significant increase in its second-quarter net income, reaching $3.0 billion, or $4.15 per share, compared to $2.2 billion, or $2.89 per share, a year ago. This includes a $0.66 gain from the sale of Accertify. Excluding this transaction gain, adjusted EPS was $3.49, up 21% from the prior year, surpassing the analyst estimate of $3.26.
Revenue Growth and Key Metrics
Quarterly revenue reached an all-time high of $16.3 billion, an 8% increase from $15.1 billion a year ago, below the analyst estimate of $16.59 billion. The revenue growth was driven by higher net interest income, increased Card Member spending, and continued strong card fee growth. The company also reported a 6% growth in billings and strong new card acquisitions of 3.3 million.
| Metric | Q2 2024 | Q2 2023 | YoY % Change |
|---|---|---|---|
| Total Revenues Net of Interest Expense | $16.3 billion | $15.1 billion | 8% |
| Net Income | $3.0 billion | $2.2 billion | 39% |
| Diluted EPS | $4.15 | $2.89 | 44% |
| Adjusted EPS Excluding Transaction Gain | $3.49 | $2.89 | 21% |
Financial Achievements and Challenges
American Express Co (AXP, Financial) demonstrated robust financial performance with a 39% increase in net income and a 44% rise in diluted EPS. The company’s consolidated provisions for credit losses were $1.3 billion, up from $1.2 billion a year ago, reflecting higher net write-offs. Consolidated expenses were $11.3 billion, a 1% increase from $11.1 billion a year ago, primarily due to higher variable customer engagement costs and increased marketing investments.
"We delivered strong second-quarter results, with quarterly revenue reaching an all-time high of $16.3 billion, up 8 percent, or 9 percent on an FX-adjusted basis, and significant EPS growth," said Stephen J. Squeri, Chairman and Chief Executive Officer.
Analysis and Future Outlook
The strong performance of American Express Co (AXP, Financial) underscores its ability to drive growth through increased Card Member spending and strategic investments. The company’s decision to raise its full-year EPS guidance to $13.30 - $13.80 from $12.65 - $13.15 reflects confidence in its core business and growth strategies. However, challenges such as higher credit losses and increased expenses could impact future performance.
Overall, American Express Co (AXP, Financial) has shown resilience and growth potential, making it an attractive consideration for value investors. For more detailed insights and analysis, visit GuruFocus.com.
Explore the complete 8-K earnings release (here) from American Express Co for further details.
