On October 18, 2024, American Express Co (AXP, Financial) released its 8-K filing for the third quarter, reporting earnings per share (EPS) of $3.49, surpassing the analyst estimate of $3.28. The company also reported record revenue of $16.6 billion, slightly below the estimated $16,669.30 million, marking an 8% increase from the previous year.
Company Overview
American Express is a global financial institution operating in approximately 130 countries, offering charge and credit card payment products to consumers and businesses. The company operates through three segments: global consumer services, global commercial services, and global merchant and network services. In addition to payment products, American Express provides expense management tools, consulting services, and business loans.
Performance Highlights and Challenges
American Express Co (AXP, Financial) achieved its 10th consecutive quarter of record revenue, driven by an 8% increase in total revenues net of interest expense. The company's net income rose to $2.51 billion, a 2% increase from the previous year. The growth was primarily fueled by higher net interest income, increased Card Member spending, and accelerated card fee revenue growth.
However, the company faced challenges with increased provisions for credit losses, which rose to $1.4 billion from $1.2 billion a year ago. This increase was due to higher net write-offs driven by growth in loan balances. The net write-off rate was 1.9%, slightly up from 1.8% a year ago.
Financial Achievements and Industry Impact
American Express Co (AXP, Financial) reported a significant achievement with a 6% increase in diluted EPS to $3.49, compared to $3.30 in the previous year. This performance underscores the company's robust business model and strategic investments for growth. The company also raised its full-year EPS guidance to a range of $13.75 to $14.05, reflecting confidence in its ongoing financial strength.
“We had another strong quarter that reflects the earnings power of our business model and our continued investments for growth,” said Stephen J. Squeri, Chairman and Chief Executive Officer.
Key Financial Metrics
American Express Co (AXP, Financial) reported a 6% increase in total Card Member spending and an 18% growth in card fee revenue. The company acquired 3.3 million new premium Card Members, maintaining high retention rates and excellent credit performance. Consolidated expenses rose by 9% to $12.1 billion, driven by higher customer engagement costs and increased marketing investments.
| Metric | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Total Revenues (Millions) | $16,636 | $15,381 | 8% |
| Net Income (Millions) | $2,507 | $2,451 | 2% |
| Diluted EPS | $3.49 | $3.30 | 6% |
Analysis and Outlook
American Express Co (AXP, Financial) continues to demonstrate strong financial performance, driven by strategic investments and a focus on premium products. The company's ability to attract new Card Members and maintain high retention rates is a testament to its effective product refresh strategy. Despite challenges with credit losses, American Express remains well-positioned for future growth, as evidenced by its raised full-year EPS guidance.
Overall, American Express Co (AXP, Financial)'s third-quarter results highlight its resilience and adaptability in a competitive industry, making it an attractive consideration for value investors seeking exposure to the credit services sector.
Explore the complete 8-K earnings release (here) from American Express Co for further details.
