American Express Shatters Records with Strong Q2 Results – Revenue Hits All-Time High!
American Express Company (NYSE:) has reported robust results for the second quarter of 2024, achieving record-breaking revenue and significant earnings per share (EPS) growth. According to Stephen J. Squeri, Chairman and Chief Executive Officer, the company delivered strong second-quarter results with quarterly revenue reaching an all-time high of $16.3 billion, an 8% increase from the previous year. On a foreign exchange (FX) adjusted basis, revenue grew by 9%.
The company’s net income for the quarter was $3.0 billion, or $4.15 per share, compared to $2.2 billion, or $2.89 per share, in the same quarter last year. This represents a 44% increase in EPS. Adjusted EPS, excluding a $0.66 gain from the sale of Accertify, was $3.49, reflecting a 21% increase from the prior year.
Key drivers for this performance included stable growth in billings, strong new card acquisitions totaling 3.3 million, and double-digit growth in card fee revenues for the 24th consecutive quarter. American Express also reported excellent credit performance, maintaining its status as best in class. Higher net interest income, increased Card Member spending, and strong card fee growth bolstered consolidated total revenues net of interest expense.
Despite the impressive results, American Express slightly missed Wall Street’s revenue expectations for the quarter. Analysts had projected revenue of $16.59 billion, whereas the company reported $16.3 billion. This shortfall, though minor, represents a crucial metric for investors and market analysts who closely monitor such figures.
On the earnings front, American Express surpassed expectations. The anticipated EPS for the quarter was $3.23, but the company delivered an adjusted EPS of $3.49, excluding the Accertify transaction gain. This exceeded projections by a notable margin. Including the $0.66 gain from the Accertify sale boosted the EPS further to $4.15, significantly surpassing market forecasts.
Several factors, including increased Card Member spending and higher net interest income, drove the company’s strong performance metrics. Additionally, the company managed to keep its consolidated expenses relatively stable, with a modest 1% increase to $11.3 billion. This was primarily due to higher variable customer engagement costs, offset by lower operating expenses resulting from the Accertify sale.
Based on the strong performance in the second quarter, American Express has raised its full-year EPS guidance to a range of $13.30 to $13.80, up from the previous range of $12.65 to $13.15. The company continues to expect revenue growth in line with its initial guidance of 9% to 11% for the full year. This optimistic outlook is supported by the company’s increased scale, high credit quality customers, and well-controlled expense base.
Stephen J. Squeri emphasized that the company’s ability to increase its marketing investments by around 15% over the previous year without utilizing the transaction gain demonstrates its financial strength. This strategic decision aims to enhance further the company’s Membership Model, which has been a significant growth driver. Since the end of 2021, American Express has significantly expanded its business, increasing revenues by nearly 50% and Card Member spending by almost 40%.
In conclusion, American Express has delivered outstanding results in the second quarter of 2024, with record-breaking revenue and significant EPS growth. Despite falling slightly short of revenue expectations, the company exceeded earnings projections and raised its full-year guidance. This performance demonstrates American Express’ strong financial position and growth potential, making it an attractive investment opportunity for investors looking to capitalize on the company’s success.