American Express Q3 Earnings: Profit Beats Estimate, Card Spending Grows, Revises Annual Outlook

American Express Co’s AXP third-quarter revenue (net of interest expense) grew 8% year-on-year to $16.64 billion, marginally missing the analyst consensus estimate of $16.67 billion. 

The increase was primarily due to higher net interest income, increased Card Member spending, and continued strong card fee growth.

Amex’s stock price went up after the report, but it soon gave up the gains in the premarket session on Friday.

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Adjusted EPS of $3.49 beat the analyst consensus estimate of $3.28. 

Card Member spending or Billed Business grew 6% (or 6% forex adjusted) year-over-year to $387.3 billion. 

U.S. Consumer Services revenue was $7.944 billion, up 10% year over year. Commercial Services revenue was $3.998 billion, up 7% year over year.

International Card Services revenue was $2.936 billion, up 11% year over year, and Global Merchant and Network Services revenue was $1.847 billion, flat year over year.

Total expenses increased by 9% year over year to $12.1 billion, primarily reflecting higher customer engagement costs due to higher Card Member spending, increased usage of travel-related benefits, and higher marketing investments. 

Provision for credit losses stood at $1.4 billion, compared with $1.2 billion a year ago, reflecting higher net write-offs. 

FY24 Outlook: Amex expects revenue growth of 9% or $65.96 billion (versus prior expectations of 9%–11% or $65.96 billion–$67.17 billion) versus consensus of $65.97 billion. It has raised its EPS outlook to $13.75–$14.05 (from $13.30–$13.80 prior) versus the consensus of $13.14.

In August, B of A Securities analyst Kenneth Bruce downgraded American Express, citing continued inflation and the higher rate environment affecting consumer demand. He did not expect the company to deliver its previously guided 9%- 11% revenue growth for fiscal 2024.

At least 3 Wall Street firms, including JP Morgan, HSBC, and BTIG, downgraded the stock in October.

American Express stock is up 89% in the last 12 months.

Price Action: AXP stock is down 2.79% at $277.80 premarket at the last check on Friday.

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