American Express has announced a remarkable quarterly revenue of $17.9 billion, which reflects a significant 9% increase compared to the same period last year. This surge in revenue is closely tied to a notable uptick in total Card Member spending, which rose by 7% year-over-year, reaching an impressive new high of $416.3 billion in 2024. These figures serve as a crucial indicator of financial confidence among affluent Americans and their willingness to engage in spending.
The data indicates that American Express card members are not only spending more but are also demonstrating a keen interest in premium products and experiences. Despite criticisms that the phenomenon surrounding premium cards may be cyclical or overhyped, American Express continues to innovate and enhance its offerings for wealthy customers. However, this growth comes with a caveat: the company has seen a 14% rise in expenses year-over-year as it reinvests in technology and expands its risk management efforts.
Moreover, American Express noted “higher variable customer engagement costs driven by increased Card Member spending and usage of travel-related benefits.” This suggests that the attractive perks of premium cards may be impacting the company’s profit margins. Nevertheless, American Express remains optimistic, maintaining its forecast of 8% to 10% revenue growth and full-year earnings per share of between $15 and $15.50.
During a recent conference call with analysts, company management highlighted the strong momentum among younger generations, particularly millennials and Gen Z consumers, who are increasingly embracing the brand’s luxurious value proposition. Notably, spending among millennials increased by 10%, while Gen Z cardholders exhibited a remarkable 40% growth in spending, albeit from a smaller base. This generational trend underscores the expanding appeal of premium offerings to both established and upwardly mobile clients.
The enthusiasm for premium experiences is reflected in the 20% year-over-year increase in net card fees (FX-adjusted), indicating a growing number of users opting for these exclusive benefits. American Express has seen card fee revenues more than double since 2019, driven by recent updates to its Gold, Delta, and Hilton cards, which have led to double-digit account growth and an impressive 98% retention rate.
American Express's Chief Financial Officer, Christophe Le Caillec, emphasized that the company’s strategy focuses on acquiring customers through fee-based products, ensuring strong retention, and increasing value through product enhancements. As part of this strategy, American Express is preparing a significant refresh of its U.S. Consumer and Business Platinum Cards this fall, aimed at amplifying the luxury perks and rewards that attract wealthy millennials and aspiring Gen Z consumers. Additionally, the introduction of the new Coinbase One Card on the American Express network targets younger, high-earning professionals interested in digital assets.
In terms of credit performance, American Express reported the lowest projected credit card loss rate and the highest projected return on assets in the Federal Reserve’s 2025 stress tests. These statistics reflect the resilience and financial stability of its cardholders, even in hypothetical economic downturns. For the second quarter, American Express’s net write-off rate slightly decreased to 2.0%, indicating that the vast majority of its customers are not only spending but also reliably paying their bills.
Interestingly, delinquency rates among U.S. millennial and Gen Z customers are significantly better than the industry average for their age groups, showcasing the reliability of younger card members. However, the popularity of premium American Express cards has led to challenges, particularly regarding overcrowding in airport lounges, which are experiencing heightened demand from affluent cardholders. CEO Steve Squeri acknowledged the need for innovative solutions to accommodate the growing number of lounge visitors.
The record revenue and increasing expenses indicate a promising future for American Express. The company is confident that it has a “long runway for growth” as the premium segment continues to expand. With a focus on enhancing the customer experience and maintaining strong financial health, American Express is well-positioned to capitalize on the evolving landscape of consumer spending among affluent individuals.
In conclusion, American Express’s strong quarterly performance highlights the increasing spending trends among affluent Americans, particularly millennials and Gen Z consumers. As the company continues to innovate and expand its premium offerings, it is set to navigate potential challenges while maintaining a robust outlook for future growth.
