Q2 2025 American Express Co Earnings Call
Unknown Executive: Q2 2025 earnings call. At this time, all participants are on a listen-only mode. Later, we will conduct a question-and-answer session. If you wish to ask a question, please press star then 1 on your touchtone phone. You will hear a tone indicating that you have been placed in queue. You may remove yourself from the queue at any time by pressing star then 2. If you are using a speakerphone, please pick up the handset before pressing the numbers. Should you require assistance during the call, please press star then 0. As a reminder, today's call is being recorded.
Ladies and gentlemen, thank you for standing by. Welcome to the American Express Q2, 2025 earnings call. At this time, all participants are on a listen-only mode. Later, we will conduct a question and answer session. If you wish to ask a question, please press star, then 1 on your touchtone phone, you will hear a tone indicating that you have been placed in queue.
You may remove yourself from the Queue at any time by pressing star then 2.
Kartik Ramachandran: I would now like to turn the conference over to our host, Head of Investor Relations, Mr. Kartik Ramachandran. Thank you. Please go ahead.
Kartik Ramachandran: Thank you, Donna. And thank you all for joining today's call.
Speaker Change: If you are using a speaker-phone please pick up the handset. Before pressing the numbers. Should you require assistance during the call? Please press star then zero as a reminder, today's call is being recorded. I will now like to turn the conference over to our host head of investor relations Mr. Karthik ramachandran. Thank you. Please. Go ahead.
Kartik Ramachandran: As a reminder, before we begin, today's discussion contains forward looking statements about the company's future business and financial performance. These are based on management's current expectations and are subject to risks and Factors that could cause actual results to differ materially from these statements are included in today's presentation slides and in our reports on file with the editor.
Speaker Change: Thank you, Donna, and thank you all for joining today's call. As a reminder. Before we begin today's discussion contains forward-looking statements about the company's future business and financial performance.
Speaker Change: These are based on Management's, current expectations and are subject to risks, and uncertainties.
Kartik Ramachandran: The discussion today also contains non-GAAP financial measures. The comparable GAAP financial measures are included in this quarter's earnings materials as well as the earnings materials for the prior periods we discussed. All of these are posted on our website at ir.americanexpress.com.
factors that could cause actual results to differ materially from these statements are included in today's presentation slides and in our reports on file with the SEC,
Stephen Squeri: We'll begin today with Steve Squeri, Chairman and CEO, who will start with some remarks about the company's progress and results.
The discussion today also contains non-gaap Financial measures the comparable. Gaap Financial measures are included in this quarter's earnings materials as well as the earnings materials for the prior periods. We discussed all of these are posted on our website at I americanexpress.com.
Kartik Ramachandran: And then Christophe Lecayac, Chief Financial Officer, will provide a more detailed review of our financial performance. After that, we'll move to a Q&A session on the results with both Steve and Christopher.
Speaker Change: We'll begin today with Steve's query, chairman and CEO who will start with some remarks about the company's progress and results.
Kristoff Lack: And then Kristoff lack Chief. Financial Officer will provide a more detailed review of our financial performance.
Stephen Squeri: With that, let me turn it over to you. Thank you, Kartik. And good morning, everybody. And thanks for joining us on a beautiful Friday morning here in the summer. So thank you. We had another strong quarter. Revenues reached a record $17.9 billion, up 9% year-over-year. Earnings per share, $4.08, up 17%, excluding last year's gain from the sale of the Certify. Total card member spending was up 7%, which was consistent with the pattern we've seen this year. While spend in some of the travel categories like airlines and lodging was softer overall, spending was a quarterly record.
After that, we'll move to a Q&A session on the results with both Steve and Kristoff.
With that, let me turn it over to Steve.
Steve: Thank you, Karthik. Um, and good morning, everybody and thanks for joining us on a beautiful Friday morning here in the summer, so thank you. Uh, we are no strong quarter revenues reached the record uh 17.9 billion of 9% year-over-year earnings per share.
Stephen Squeri: Based on our strong performance year-to-date, we are reaffirming our full-year revenue growth and EPS guidance that we provided in January. Last month, we received the results of the Fed's annual CCAR process, which set our preliminary stress capital buffer requirement at the lowest permissible level of 2.5%. The results once again demonstrated that we had the lowest projected credit card loss and highest profitability rates under the Fed's stress test among all banks subject to CCAR. These results are a testament to the earnings power of our resilient business model and our strong capital position.
Steve: Total Card members spending was up 7%, which was consistent with the patent. We've seen this year while spending some of the travel categories like Airlines. And lodging softer overall spending was a quarterly record.
Steve: Based on our strong performance year to date. We are reaffirming our full year Revenue growth and EPS guidance that we provided in January.
Steve: Last month, we received the results of the feds annual car process, which set our preliminary stress Capital buffer requirement at the lowest permissible level of 2.5% the results. Once again, demonstrated that we had the lowest projected credit card loss in. Highest profitability, rates under the FED stress, test, among all Bank, subjects to see car,
Stephen Squeri: Looking ahead, we're very excited about the upcoming refresh of our U.S. Consumer and Business Platinum Cards this fall. The competition for premium customers, while always intense, has been especially heated for over a decade. And it's been a very good thing for our customers, for the category, and for us. In fact, the past decade has been one of the very best in terms of growing our premium card portfolios and scaling our card membership. As the industry leader in premium cards, we benefit from the strong interest in the category. The total adjustable market is growing at a healthy rate globally, driven by several factors, including our own value proposition innovations, the investments of competitors, and generational shifts in the appeal of premium products.
Steve: These results were Testament to the earnings power of our resilient business model, and our strong Capital position.
Steve: Looking ahead. We're very excited about the upcoming refresh of our us consumer and business, Platinum cards, this fall.
Steve: The competition for premium customers. While always intense has been especially heated for over a decade
Steve: And it's been a very good thing for, for our customers, for the category and and for us.
Steve: In fact, the past decade has been 1 of the very best in terms of growing our premium card portfolios and scaling our card member base.
Stephen Squeri: As a result, the basis of competition has shifted, especially among affluent consumers away from cashback and no-fee products and towards partner-rated value, access, experiences, and superior customer service, where we do excel. We believe we can continue to lead in this space as the category and competitive interests continue to grow, but let me tell you why. We've led the premium card category for over 40 years. We achieved that position by creating a multifaceted, membership-focused business model, which includes a wide range of assets that set us apart, and when taken together, are very difficult to replicate. To build on our success, we've increased our focus on the premium space over the last several years, strategically invested in refreshing our products regularly all around the world.
Steve: As the industry leader in premium cards, we benefit from the strong interest in the category. The total addressable Market is growing at a healthy rate, globally driven by several factors including our own value, proposition Innovations, the Investments of competitors and generational, shifts in the appeal of Premium products. As a result, the basis of competition is shipped
Steve: Especially among consumers away from cash back and no fee products and towards partner added value access experiences and Superior customer service where we do excel.
Steve: We believe we can continue to lead in this space as the category and competitive interests continue to grow, but let me tell you why.
Steve: To start with. We've led the premium card category for over 40 years. We achieved that position by creating a multifaceted membership focused business model, which includes a wide range of assets that set us apart. And when taken together are very difficult to replicate
Stephen Squeri: Our refresh strategy focuses on enriching our value propositions with more benefits and offerings in areas that our customers value most, at a price point that delivers outstanding value. A key element of this strategy is our ability to attract a growing number of premier partners who fund offerings to gain access to our large-scale, high-spending customers. Beyond the individual product value propositions, we're also constantly evolving our suite of experiences and benefits that set the competitive standard, giving our card member access to over 27,000 of the most sought-after restaurants, wineries, and other venues through Resi & Top, the largest airport lounge network in the industry, which includes 30 proprietary Centurion lounges today, with more on the way, as well as access to all Delta exclusive experiences across sports, fashion, and entertainment, and a wide range of benefits at over 2,600 premium hotels and resorts worldwide.
Steve: To build on our success, we've increased our focus on the premium space. Over the last several years strategically invested in refreshing. Our products regularly all around the world.
Steve: Our refresh strategy focuses on enriching. Our value, propositions with more benefits and offerings in areas of our customers, Val that areas that our customers value most at a price point, that delivers outstanding value, a key element of this strategies are ability to attract a growing. Number of Premier Partners who fund offerings to gain access to our large scale, High spending customer base.
Steve: Beyond the individual product value propositions. We're also constantly evolving our suite of experiences and benefits that set the competitive standards, giving our card member access to over 27,000 of the most sought after restaurants, Wineries and other venues through resi and top the largest airport lounge Network in the industry which includes 30 Proprietors.
Steve: Inventory and lounges today, with more on the way as well as access to all Delta lounges.
Stephen Squeri: This strategy has worked especially well for us.
Exclusive experiences across Sports fashion and entertainment and a wide range of benefits at over 2,600, premium hotels and resorts worldwide.
Stephen Squeri: For example, in each of the recent refreshes we've done for our U.S. consumer gold, delta, and Hilton cards over the last two years, customer demand has increased, driving double-digit account growth. Revenue growth in each of the three portfolios is up over 30%, with card fee revenues up at least 60%. and Spend Retention remains very high at 98% and we've seen no meaningful change after the refresh. Additionally, the high credit quality of the new customers we're bringing in has helped us widen the gap between our credit metrics and the rest of the industry.
Steve: This strategy has worked, especially well for us. For example, in each of the recent refreshes we've done for our us consumer gold, Delta and Hilton cards over the last 2 years. Customer demand has increased driving double digit account growth. Revenue growth in each of the 3 portfolios is up over 30% with card fee, revenues up, at least 60% and spend retention remains very high at 98% and we've seen no meaningful change after the refreshes.
Steve: Professionally.
The credit quality.
Stephen Squeri: As we look ahead to our U.S. Platinum launches, you can expect to see this same formula, providing the best premium experience to card members with more differentiated benefits and more world-class partners joining us to offer card members more value that substantially exceeds the annual fee. Longer term, when you combine our proven product refresh strategy with our global premium customer base at scale, our network of world-class partners, our lifestyle-orientated membership-defined brand, and an addressable market that is growing at a healthy annual rate globally, especially in key areas where we're focused on the premium sector and younger consumers.
Steve: Of the new customers were bringing in has helped us widen the gap between our credit metrics and the rest of the industry.
Stephen Squeri: These are all the reasons why we believe we have a long runway for growth and can sustain our momentum and our leadership in the premium space going forward.
Steve: As we look ahead to our us Platinum launches, you can expect to see the same formula, providing the best premium experience to Card members, with more differentiated benefits, and more world-class Partners joining us to offer Card members more value that substantially exceed exceed, the annual fee longer term. When you combine our proven product refresh strategy, with our Global premium customer base at scale, our network of world-class Partners our lifestyle oriented membership, defined Brands and an addressable Market that is growing at a healthy annual rate globally, especially in key areas. We're focused on the premium sector and younger.
Christophe LeCayac: I'll now turn it over to Christophe to provide more detail on the second quarter. Thanks, Steve, and good morning, everyone. Let me start with the highlights for the quarter on slide. Steve noted, we're reporting revenue growth of 9% and earnings per share of $4.08 up 17%, excluding the gain from a certified loss. On slide two, you'll see a list of several notable developments in the quarter. We've selected these highlights because they are great indicators of the progress we're making towards our long-term strategy across key areas of the business, like technology, partnerships, or products.
Steve: Consumers. These are all the reasons why we believe we have a long runway for growth and can can sustain our momentum in our leadership. In the premium space going forward, I'll now turn it over to Kristoff to provide more detail on a second quarter results.
Kristoff Lack: Of 4 dollars of 17%, excluding the gain from a certified last year.
Kristoff Lack: On slide 2. You'll see a list of several notable developments in the quarter. We've selected this highlights because they are great. Indicators of the progress, we're making towards our long-term strategy, across key areas of the business like technology.
Christophe LeCayac: Before we get into the detail of this quarter's results, let me step back for a moment to reflect on what the trends from this quarter in 2020 have been. When you look at our performance across spend, transactions, demand for new cars, retention, and credit in the context of the significant macroeconomic and geopolitical developments of the past few months, what you see is remarkable resilience across our customer base. And while there may be a bit of prudence around the edges, this performance indicates the strength of our business model and strategy.
Kristoff Lack: Partnerships or products.
Before we get into the detail of this quarter's result, let me step back for a moment to reflect on what the transfer from this quarter indicate.
Kristoff Lack: When you look at our performance across span transactions, demand for new cars, retention and Credit, in the context of the significant macroeconomic and geopolitical developments of the past few months, what you see is remarkable resilience across our customer base.
Christophe LeCayac: Turning to Build Business Trends. At the overall level, spend was consistent with Q1, up 7% for the quarter. Goods and Services Spending, which accounts for over 70% of our business. continue to grow at a similar pace to Q1. TNE growth was down a bit versus Q1, driven by softer airline and lodging spend. Why restaurant spending continues to be very strong, up 8% FX-adjusted. Our fastest growing cohorts kept up their momentum.
And why there may be a bit of prudence around the edges. This performance indicates the strength of our business model and strategy.
Kristoff Lack: Turning to build business trends.
Kristoff Lack: At the overall level spend was consistent with q1 up 7% for the quarter.
Kristoff Lack: Goods and services spending which accounts for over 70% of our business continued to grow at a similar Pace to q1.
Kristoff Lack: Tiene growth was down a bit versus q1 driven by softer. Airline and lodging span while restaurants spending continued to be very strong.
Kristoff Lack: Up 8% affect adjusted.
Christophe LeCayac: In the U.S. consumer business, millennial spend was up 10%. And Gen Z spend was growing around 40%, though starting from a smaller base. and our international business continued to grow in double digits, up 12% FX-adjusted in the quarter. Transaction growth up 9% is another indicator of strong customer engagement and is largely consistent with what we've been seeing over the past few quarters. We acquired 3.1 million new cars in Q2 within the range of recent quarters.
Kristoff Lack: Our fastest growing cohorts kept up the momentum.
Kristoff Lack: In the US consumer business. Millennials spend was up, 10%.
And jenzie spend was growing around. 40%, those starting from a smaller base.
Kristoff Lack: And our international business continued to grow in double digits of 12%, affects adjusted in the quarter.
Kristoff Lack: Transaction growth. What up 9% is another indicator of strong. Customer engagement and is largely consistent with what we've been seeing over the past few quarters.
Christophe LeCayac: We sometimes get asked how we can sustain this space. Starting this quarter, we're breaking out the number of carts we acquired by segment. As you can see, we've acquired about 1.5 million new carts per quarter in the U.S. consumer business over the past few quarters. When you compare that to industry-wide new account origination. even among customers with FICO scores above 660.
Kristoff Lack: We acquired 3.1 million new cars in Q2 within the range of recent quarters.
Kristoff Lack: We sometimes get asked how we can sustain this space.
Kristoff Lack: Starting this quarter. We're breaking out the number of cards. We acquired by segment. As you can see, we've we've acquired about 1.5 million new cars per quarter in the US consumer business over the past few quarters.
Christophe LeCayac: It's a relatively small share, indicating continued runway for Turning to Balance Growth and Credit. Loans and car member receivables increased 6% year-over-year FX-adjusted. Growing at a Similar Pace to Build Business This quarter's results are about a one percentage point impact from the health of sales portfolios that we previously disclosed. Our premium products continue to be the primary driver of that. with our pay over time and co-rent portfolios driving around 80% of growth in card member revolving loans in the quarter. Our growth in premium products over the past few years has further strengthened the credit quality of our portfolio, resulting in very strong credit performance.
When you compare that to industry-wide new account, originations even among customers with FICO scores above 660.
Kristoff Lack: It's a relatively small share indicating continued, runway for growth.
Kristoff Lack: Turning to balance growth and credit.
Kristoff Lack: Loans and con member receivables, increased 6% year-over-year FX adjusted.
Kristoff Lack: Growing at a similar Pace to build business.
Kristoff Lack: These quarters results at about a 1% impact from the health for sale portfolios that we previously disclosed.
Kristoff Lack: Our premium products continue to be the primary driver of that group.
With our pay of the time and Co portfolios driving around 80% of growth in card member revolving loans in the quarter.
Christophe LeCayac: Q2 delinquency and write-off rates remained low, with delinquency rates flat to Q1. while write-offs rage the clock. Our strong credit performance is remarkable across all age groups. In fact, the delinquency rate for our U.S. Millennial and Gen Z customers are not only better than the industry average for those age groups, but they are also nearly 40% better than the industry average for older age groups. The strength of our premium model also holds in a stressed environment, as demonstrated by their Fed's CCAR results, which show that we have the highest ROA and lowest credit card loss rate across all banks subject to the stress.
Our growth in premium products over the past few years as further, strengthened, the credit quality of our portfolio resulting in very strong credit performance.
Kristoff Lack: Q2, delinquency and ride of rates, remained low with delinquency rates flat to q1.
While write-offs rates decline.
Our strong credit performance is remarkable across all age groups. In fact, the delinquency rate for our us Millennial and gen Z customers are not only better than the industry average for those age groups, but they are also nearly 40% better than the industry average for older age groups.
Christophe LeCayac: Total provision expense was $1.4 billion for the quarter, which includes a reserve bill of $222 million, reflecting growth in loan volume and a worse macroeconomic outcome. As a reminder, the scenarios used in the reserve model at the end of Q1 did not incorporate the changes in the outlook that we started to see in early April.
Kristoff Lack: The strength of our premium model, also holds in a stress environment as demonstrated by their fed CCall results. Which show that we have the highest Roa and lowers credit card loss rate across all Bank subject to the stress test.
Kristoff Lack: Total provision expense was 1.4 billion for the quarter, which includes a reserve build of 222 million, reflecting growth in loan volume and a worse macroeconomic Outlook.
Kristoff Lack: As a reminder, their scenarios used in The Reserve model, at the end of q1 did not incorporate the changes in the Outlook that we started to see in early April.
Christophe LeCayac: Turning to revenue on slide 14, I'll hit on a few of the key points. FX-adjusted revenue growth was 9%, both for the quarter as well as for the first six months of the year. We continue to see strong momentum in net card fees, which reached record levels and were up 20% FX-adjusted again this quarter. The exceptional growth we've seen in car fees over the past several years, averaging 17% per year since 2019. really speaks to our strategy as we increase our focus on the premiums. This is the result of FIRST, acquiring new customers onto fee-based products.
Kristoff Lack: Turning to revenue on slide 14, I'll hit on a few of the key points.
Kristoff Lack: FX Has just.
% both for the quarter as well as for the first 6 months of the year.
We continued to see strong momentum in net card fees, which reached record levels and were up 20% affect adjusted. Again, this quarter
Kristoff Lack: The exceptional growth we've seen in car fees over the past several years. Averaging 17% per year. Since 2019, really speaks to our strategy strategy. As we've increased, our focus on the premium space.
Christophe LeCayac: then driving strong retention of our customer base, and finally, consistently increasing value through product refreshes and pricing accordingly. The result is a net card fee line that has more than doubled since 2019. Taking a look next at our premium lending business, net interest income grew at a double-digit pace against this quarter.
This is the result of first acquiring new customers onto fee based products.
Then driving strong retention of our customer base. And finally consistently, increasing value through product refreshes and pricing accordingly.
Kristoff Lack: The result is a net card fee line that has more than doubled since 2019.
Christophe LeCayac: One question we sometimes get is around the drivers of our strong growth in NII over the past several years. Starting this quarter, we've aimed to give you a picture of how both volume and margin have led to this. The takeaway here is that since 2019... A bit more than half of the increase in NII has come from balance This volume growth has been about the same as growth in con member spending. The reason that NII has grown faster than volume. because we've increased the margin generated on this balance. We have achieved that margin expansion by improving pricing for risk.
Kristoff Lack: Taking a look next at our premium lending business, net interest income grew at a double-digit pace against this quarter.
Kristoff Lack: 1 question we sometimes get is around the drivers of our strong growth in knee over the past several years.
Kristoff Lack: Starting this quarter, we've aimed to give you a picture of how both volume and margin have led to this growth.
Kristoff Lack: the takeaway here is that since 2019 a bit more than half of the increase in knee has come from balance sheet growth
Kristoff Lack: This volume growth has been about the same as growth in con member spending.
Kristoff Lack: The reason that knee has grown faster than volumes is because we've increased the margin generated on these balances.
Christophe LeCayac: by rolling out more lending features, especially across our historically painful charge card products. And by growing, I would have positive. Most importantly, we've achieved this growth while maintaining very low credit risk, in fact, widening the gap.
Kristoff Lack: We have achieved that margin expansion by improving pricing for risk.
By rolling out more Landing features especially across our historically painful charge card products.
Kristoff Lack: And by growing our deposit business.
Christophe LeCayac: And looking ahead, we believe we have a long runway for growth in our premium lending business. To sum up our revenue performance, we feel good about the momentum we have had through the year. with the overall revenue growth tracking in line with our full year guidance.
Kristoff Lack: Most importantly, we've achieved this growth while maintaining very low credit risk. In fact widening, the Gap to peers and looking ahead. We believe We Are The Long runway for growth in our premium lending business.
Kristoff Lack: To sum up our Revenue performance. We feel good about the, the momentum we have halfway through the year.
Christophe LeCayac: Let's turn to Expanse Performing from Slide 8. If you think about the way we manage the expense base, we generally expect... to grow a bit faster than revenue as a result of the mixed shift towards premium products and the investment we make in products to drive acquisition, engagement, and strong credit outcomes. At the same time, we look to drive leverage from marketing and op-ecs over time as we generate efficiencies and economy of scale. That continues to be how you should think about our expense base for the full year. In Q2, VC expenses grew a bit faster than revenue and marketing grew in the mid-single digit.
Kristoff Lack: With the overall Revenue growth tracking in line with our full year guidance.
Kristoff Lack: Let's turn to expense performance on slide 18.
Kristoff Lack: If you think about the way we manage the expense base, we generally expect vce to grow a bit faster than Revenue, as a result of the mixed shift towards premium products and the investment. We make in products, to drive acquisition engagement and strong credit outcomes.
Kristoff Lack: At the same time.
Kristoff Lack: We look to drive leverage from marketing and Opex over time as we generate efficiencies and economy of scale.
Kristoff Lack: That continues to be how you should think about our expense base for the full year.
Christophe LeCayac: OPEX, excluding a certified, was up 9% in the quarter, a bit higher than our expectation coming into the year. The year-over-year growth is predominantly driven by investment in our enterprise risk management capabilities and technology at the company scale. Looking ahead, for the food year, we expect APEX growth to be in the mid-single digits versus last year, XF-Certified, predominantly driven by the weaker dollar.
In Q2, we see expenses, grew a bit faster than revenue and marketing grew in the mid single digits.
Kristoff Lack: Opex, excluding a certify was up 9% in the quarter a bit higher than our expectation coming into the year.
The year-over-year growth is predominantly driven by investment in our Enterprise risk management capabilities and Technology as the company scales.
Christophe LeCayac: As you think about the ability of our business model to drive expense leverage, I'd note that since 2020 We've driven all points of operating leverage with operating expenses as a percentage of revenue down from 25% in 2023. 21% the score.
Looking ahead for the full year. We expect Opex growth to be in the mid single digits versus last year except certify predominantly driven by the weaker dollar.
Christophe LeCayac: Moving on to capital, our CET1 ratio was 10.6% within our 10 to 11% target range. We return $2 billion of capital to our shareholders, including 0.6 billion of dividends and 1.4 billion of share repurchase. In Q1, we increased our dividend by $17. Based on the CCAR results, our preliminary stress capital buffer requirement remains at 2.5%. The lowest prescribed level, allowing us to continue executing our disciplined capital management strategy. Why returning excess capital to our children? Our business continues to generate very strong with an ROE of 36% in the quarter, providing us with capital flexibility.
Kristoff Lack: As you think about the ability of our business model to drive expense leverage. I know that since 2023, we've driven 4 Points of operating leverage with operating expenses as a percentage of Revenue down from 25%. In 2023 to 21% this quarter
Kristoff Lack: Moving on to Capital.
Our cet1 ratio was 10.6% within our 10 to 11% target range.
We return 2 billion dollars of capital, to our shareholders, including 6 billion of dividends and 1.4 billion of share repurchases.
Kristoff Lack: In q1, we increase our dividend by 17%.
Kristoff Lack: Based on the ccar results, our preliminary stress Capital buffer requirement remains at 2.5%.
The lowest prescribed level allowing us to continue executing our discipline Capital Management strategy. Why returning excess Capital to our shareholders
Christophe LeCayac: That brings me to our 2025 guidance. We're now halfway through the year, having delivered 9% FX-adjusted revenue growth and EPS of $7.71. Trends across the business have been largely stable.
Kristoff Lack: Our business continues to generate Theory, strong returns with an Roi of 36% in the quarter, providing us with capital flexibility.
Kristoff Lack: That brings me to our 2025 guidance.
Kristoff Lack: Halfway through the year having delivered 9% effects, adjusted Revenue growth and EPS of $7.71.
Christophe LeCayac: While there continues to be uncertainty in how the coming quarters will play out, we have increased confidence in our past fall. As a result, we are reaffirming our full year guidance of revenue growth of 8% to 10% and earnings per share between 15% and 15.50%.
Kristoff Lack: Trends across the business have been largely stable.
Kartik Ramachandran: With that, I turn the call back over to Kartik and we'll take your questions. Thank you, Christophe.
Kristoff Lack: For their continues to be uncertainty in how the coming quarters will play out. We have increased confidence in our past forward. As a result, we are reaffirming our fully your guidance of Revenue, growth of 8 to 10% and earnings per share between 50 and 1550.
Kristoff Lack: With that, I turn the call back over to the Karthik and we'll take your questions.
Unknown Executive: Before we open up the lines for Q&A, I will ask those in the queue to please limit yourself to just one question. Thank you for your cooperation, and with that, the operator will now open up the line for questions. Ladies and gentlemen, if you wish to ask a question, please press star, then one on your touchtone phone. You'll hear a tone indicating that you've been placed in queue. You may remove yourself from the queue at any time by pressing star, then two. If you're using a speakerphone, please pick up the handset before pressing the numbers.
Speaker Change: Thank you Christophe. Before we open up the lines for Q&A. I will ask those in the queue to please limit yourself to just 1 question.
Speaker Change: Thank you for your cooperation. And with that, the operator will now open up the line for questions, operator.
Unknown Executive: One moment, please, for the first question.
Sanjay Sakhrani: Our first question comes from Sanjay Sakhrani of KBW. Please go ahead. Thank you. Good morning. Steve, Christophe, I know bill business trends have been pretty resilient in the face of this uncertainty on the macro side. I'm just curious how you guys are planning for maybe just the intermediate term on spending trends. I assume it's stable. But what gets things going? I know SMB has been sort of the hardest hit, airline spend as well.
Ladies and gentlemen, if you wish to ask a question, please press star then 1 on your touchtone phone, you'll hear a tone indicating that you've been placed in queue. You may remove yourself from the Queue at any time by pressing star then 2. If you're using a speaker-phone, please pick up the handset. Before pressing the numbers 1 moment, please for the first question.
Sanjay Sakrani: Our first question comes from Sanjay sakrani of KBW. Please go ahead.
Sanjay Sakrani: First off, I know.
Stephen Squeri: And if I could just ask on that same vein on SMB, maybe you could just address that Amazon portfolio loss and sort of how we should think about how that plays into SMB. Thanks. So I think. You know, look, I think we're just planning for it to continue to be consistent as it is, and I don't know what gets it going. I'm not sure anybody really knows what gets it going. We live in uncertain times, but I think people are continuing to live their lives. And, you know, what we're seeing right now is very consistent spending.
In the face of of this uncertainty, on the macro side, I'm just curious how you guys are planning for. Maybe just the intermediate term uh on spending Trends. I assume it's stable but what gets things going? I know smbs been sort of the hardest hit Airline spend as well and if I could just ask on that same Vein on SMB, maybe you could just address that Amazon portfolio loss and sort of how we should think about how that plays in test and be. Thanks.
Sanjay Sakrani: Yeah. Um,
Sanjay Sakrani: so I, I think
Stephen Squeri: You're seeing a little bit of a slowdown in airline, not necessarily front of the cabin. You're seeing a little bit of a slowdown in lodging, but again, not necessarily on the high transactions, which are up. But goods and services continue to be resilient. And, you know, our Gen Zs and our millennials continue to be. So, and obviously we've said all along, it really had nothing to do with the stock market. When the stock market was all the way down, people continued to spend what they're spending now. The stock market is high, people are continuing to spend what they are now.
Sanjay Sakrani: You know, look I think the we're just planning for it to continue to be consistent as it is and um I don't know what gets it going. I'm not sure anybody really knows what gets it going. We live, we live in uncertain times, but I think people are continuing to live their lives and and, and um, you know what we're seeing right now is, um, very consistent spending. You're seeing a little bit of a Slowdown in Airline not necessarily front of the cabin. You're seeing a little bit of a Slowdown in lodging but again not necessarily on the high transactions which which are up. Um but goods and services continue to be resilient and
You know.
Sanjay Sakrani: our our gen Z's and our Millennials continue to be, um,
Stephen Squeri: So, you know, we're just going to ride this out as it is, and I think it's going to continue to be very, very consistent. In terms, and look, in terms of the Amazon portfolio and, you know, other portfolios that, that happen, you know, Amazon and Lowe's as well. They're both good card accepting merchants and we're going to continue to do business with them. But sometimes things just don't work out economically. And I think one of the things that we've seen in this space, unlike in the T&E space, is you've seen portfolios move in retail. I mean, it's not an unusual thing to see portfolios move in retail.
Sanjay Sakrani: So um, and obviously we've said all along it really had nothing to do with the stock market, when the stock market was all the way down people continued to spend what they're spending. Now, the stock market is high, people are continuing to spend what they are now. So, um, you know, we'll we'll just, we're just going to ride this out as it is and I think it's going to continue to be very, very consistent.
Sanjay Sakrani: In terms and look in terms of the Amazon uh portfolio and and you know, in other portfolios that that happen, you know. Um
Stephen Squeri: And for us, it really just wasn't working out. And that's just the way it is. I don't think it really is going to have much of an impact from an SMB perspective for us, either one of those portfolios.
Stephen Squeri: I think from SMB, I think SMBs are a little bit more circumspect, I think than the consumers are right now. And so, you know, not buying maybe as much inventory and maybe not spending as much. And so I think they're going to need probably a little bit more assurance from an economic perspective longer term for that to get going. So, but having said all that, I think, you know, from an SMB perspective, while billings are, you know, probably not where we want them to be, our revenue from this segment continues to be strong, our credit metrics continue to be strong, our lending book is strong, and our fee-based business here is strong.
Sanjay Sakrani: Amazon and Lowe's, uh, as well. They're, they're both, you know, good card accepting merchants and we're going to continue to do, you know, do business with them. But sometimes, um, you know, things just don't work out economically. And I think 1 of the things that we've seen in this in this space, unlike in the in the tene space is you've seen portfolios move in retail. I mean it's not an unusual thing to see portfolios move in retail and you know for for us it just it really just wasn't working out and and you know that that's just the way it is. I don't think it really is going to have uh much of an impact um from an from an SMB perspective for us, either 1 of those either 1 of those portfolios and I think from SMB, I think smbs are a little bit more. Um,
Sanjay Sakrani: Circumspect. I I think then the consumers aren't right now.
Stephen Squeri: So overall, we're happy with SMB.
Christophe LeCayac: We'd like to see, we'd like to Hey Sanjay, just one thing in terms of the billing and the outlook. One of the things that provides support to our billing growth is the strength of our new account origination. You know, you certainly saw that we added a little bit more disclosures and details on our new cars acquired and 3.1 million new cars this quarter and one and a half million in the U.S. consumers. So, you know, we see a lot of stability there and with the upcoming, you know, launch of the Platinum car that gives us confidence in our ability to originate new cars in the balance of Europe that will certainly support their ability.
And so, um, you know, uh, not buying maybe as much inventory and maybe not and not spending as much. And so I think um they're going to need probably a little bit more insurance from an economic perspective longer term uh for that to get going. So um but having said all that I think, you know, from an SMB perspective while Billings are, you know, probably not where we want them to be our revenue from this segment continues to be strong, our credit metrics continue to be strong. You know, our lending book is strong and our and our fee based business here is strong. So overall, we're we're happy with SMB. We'd like to see, we'd like to see more of those.
Sanjay Sakrani: Closures and details on on our uh new cards required and 3.1 million new cars. This quarter and 1 and a half million in the US consumer. So, you know, we see a lot of stability there and with the upcoming, you know, launch of the platinum card that gives us confidence in our ability to originate new cards in their, in the balance of your, that will certainly, uh, support their the billing growth.
Ryan Nash: Thank you.
Ryan Nash: The next question is coming from Ryan Nash of Goldman Sachs. Please go ahead.
Stephen Squeri: Good morning, everyone. Good morning. So Steve, you know, you spent a decent amount of time talking about the refresh of the U.S. Platinum that's coming in the fall. We obviously had a refresh from Chase, Citi's coming out with a new card, obviously Kaf coming out after that part of the market. Now, I know that it's always competitive, but how do you think about the risk of too many players going after the same customer? Many of them are copying your value proposition and inevitably, what do you think this means for pricing power over time? Thank.
Thank you. The next question is coming from Ryan, Nash of Goldman Sachs, please go ahead.
Ryan Nash: Good morning everyone. Good morning, good morning.
Stephen Squeri: May the best company win. That's what I think. Look, I think that, you know, it really hasn't, it's not all that different. I mean, remember, Citi took a hiatus for a while. I mean, you know, when you, when you think about this space over the last 10 years, it's been extremely competitive. You know, and you saw that Chase, Chase came out, it was like 10, 11 years ago. And, you know, since that time, we've done three refreshes. And, you know, Citi was in the market, and then they popped out. Now they're back in. So, and you have Capital One.
So Steve um you know you spent a decent amount of time, talking about the refresh of the US Platinum that's coming in the fall. We obviously had a refresh from Chase cities coming out of the new card obviously cough coming out after that part of the market. Now, I know that it's always competitive. But how do you think about the risk of too many players going? After the same customer, many of them are copying your value proposition and and inevitably what do you think this means for pricing power over time? Thank you.
Ryan Nash: Um, May the best company win. Uh, that's what I think. Um, look I think that, um, you know, it really hasn't, it's not all that different. I mean, remember, City took a Hiatus for a while. I mean, you know, when you, when you think about this space, over the last 10 years, it's been extremely competitive. Um, um, you know and you you you saw that chase chase came out. It was like 10 11.
Stephen Squeri: But I think what's happened is this focus by the banks in general, and us on this premium space has been good for customers. I think it's been good overall for the industry. And if you look at the track record, it's been really good for us. I think since our last refresh, we've pretty much doubled our base. I think what the industry has proven is that consumers will pay for value. And as long as you're delivering value, I think you still have that pricing power. I mean, I think it's all about, I think when you look at who we're all acquiring here, and we're acquiring, you know, lots of Gen Zs and lots of millennials with these cards, they're very value conscious, and they look at this, and they basically say, look, you know, for whatever the fee may be, I'm getting the value.
Ryan Nash: years ago and you know, since that time we've done 3 refreshes and you know, city was in the market and then they popped out now they're back in so and you have Capital 1 but I I I think what's happened is
Ryan Nash: Um, this focused by the banks in general. And us on on this premium space has been good for customers. I think it's been good overall for the industry. And if you look at the look at the track record, it's been, it's been really good for us. I think, since our last refresh, we pretty much doubled. Doubled our base.
Ryan Nash: I think what?
Proven is that?
Stephen Squeri: And if they don't feel they get the value from the platinum card, they can look at the gold card, and they get that. So, I think it's good for the industry. I think pricing power is much more tied to the value that you provide. And I think, as I said before, as long as we continue to do what we're doing, which is, I believe, offer the best product, you know, in the industry and leverage the assets that we do have, which, you know, some of them I'm obviously not going to go through again, but I mentioned them, you know, in my opening remarks, I think we're going to be, you know, continue to be in good shape.
Consumers will pay for Value. Um, and as long as you're delivering value, um, I think you still, you still have that pricing power. I mean, I think it's all about, I think when you look at who who were all acquiring here and we're acquiring um, you know, lots of lots of gen Z's and and and lots of Millennials with these cards they're very value conscious and they look at this and they basically say look, you know, for whatever the fee may be, I'm getting the value. And if they don't feel, they get the value from the Platinum Card. They can look at the gold card and and and they get that. So I think it's good for the industry. I think, um, pricing power is is much more tied to, um, to the value that you provide. And I think, as I said before, as long as we continue to to do what we're doing, which is I believe off of the best product, um, you know, in the industry and Leverage, The assets that we do have
Stephen Squeri: I think, you know, for anybody in this space, complacency is a death nail, and you can't be complacent, which is why we're on a, you know, a very regular cycle of refreshing these products. And anybody thinks that we're refreshing the product in response to, you know, what our competitors are doing is crazy. We have our own schedule.
Stephen Squeri: And I think, you know, we'll see what we see in the fall, but we feel really good about what we're going to launch. on both on both products, consumer and small. Thank you.
Ryan Nash: Have which, you know, some of mine, obviously, I'm not going to go through again, but I mentioned them, you know, my opening remarks. Um, I think we're we're going to be, you know, continue to be in good shape. I think you know, for anybody in this space complacency is is a is a is a death nail and you can't be complacent, which is why we're on a um you know a very regular cycle of of of refreshing these products and anybody thinks that we're refreshing the product and responds to, you know what, you know what our competitors are doing is crazy. We have our own, we have our own schedule. And and I think, you know, we'll, we'll see what we see in the fall, but we feel really good about, uh, what we're going to launch.
Ryan Nash: On both on both products consumer and small business.
Mark Devries: The next question is coming from Mark DeVries of Deutsche Bank. Please go ahead. Yeah, thanks.
Speaker Change: Thank you. The next question is coming from Mark deise of Deutsche Bank. Please go ahead.
Stephen Squeri: I had a related question on the upcoming Platinum refresh. I know you're not going to preview it now, but I was just wondering if you could just comment kind of qualitatively. Should we expect the same type of, you know, meaningful step up in added value relative to the fee that we've seen in past refreshes? And then also, how do you just think about the risk that as you do that, you're kind of asking more of the customer to both kind of track what all those incremental sources of value and engage more deeply to kind of justify the added step up in fee?
Stephen Squeri: Well, I'll tell you what, if you don't tell anybody, I'll give you a preview. Um, the, uh, look, I think that, um, yeah, you know, look, you know, I'm not going to get into ratios here, but, uh, what I would say is, you know, our strategy has always been to, if we do raise the fee, it has always been to add incrementally a lot more value. In terms of so yeah, that's the same. That's the same playbook. In terms of You know, as you think about the consumer, you know, years ago when we used to do these things, we used to try and figure out how the consumer couldn't use the products and services.
Yeah, thanks. Um, I had a related question on the, the upcoming Platinum, refresh. Um, I know you're not going to preview it now, but I was just wondering if you could just comment kind of qualitative issue, we expect the same type of, you know, meaningful step up in in added value relative to the fee that we've seen in the past refreshes. And then also, how do you just think about the risk that as you do that you're kind of asking more of the customer to both kind of track what all those incremental sources of value and and engage more deeply to kind of justify the added step up and fee.
Speaker Change: Well, I'll tell you what, if you don't tell anybody, I'll give you the preview. Um, the uh, look I think that um, yeah. You know, look, I, you know, I'm not going to get into ratios here but uh, what I would say is, you know, our strategy has always been to. If we do raise the fee, it has always been to add incrementally a lot more value.
In terms of. Um, so yeah, that's the same, that's the same Playbook.
Speaker Change: um,
Stephen Squeri: But what we find is we make these things really easy for consumers to use now, and we make it such that it's a wide range of value. And so, you know, while not every consumer will use 100% of the value, getting back to your second point, we have enough disparity in the price and the value that you don't need to use all the value to get the value out of the product. I know that's a lot of value words there, and that's what we'll continue to do. And I think that, you know, one of the things that we've done here is we really have expanded over our last refresh the set of services and benefits and premium partners that are in the product.
Stephen Squeri: And, you know, not every card member uses every benefit, but that's okay because it gives people the opportunity to pick and choose. But they do use enough of the services and the benefits that it more than outweighs whatever fee they're going to pay.
Speaker Change: you know, as you think about the consumer, you know, years ago when we used to do these things. Uh we used to try and figure out how the, how the consumer couldn't use the the uh the the products and services. But what we find is we make these things really easy for consumers to use now and um we make it such that it's a wide range of of value. And so you know, while not every consumer will use 100% of the value getting back to your to your your second point. We have enough disparity in the price and the value that you don't need to use all the value to get to get the value out of the product unless a lot of value words there. But, um, and that's what we'll continue to do. And I think that, you know, 1 of the things that we've done here is we really have expanded overall, last refresh, the set of services and benefits and premium partners that are in the product. And um, you know, not every card member you
Speaker Change: Uses uses every benefit. But, but that's okay because it gives people the opportunity to pick and choose, but they do use enough of the of the services and the benefits that it more than outweighs, whatever fee they're going to pay.
Christophe LeCayac: And maybe just to build on, you know, the how this is going to play out in the financials, the way to think about it, Mark, is that as we launch the new, the new value proposition, you should expect to see a step up in the cost of card member service . And as you know, what we do is just like we wait until the renewal anniversary of the card member to increase, you know, to move the card member to the new price point. So and then we amortize it over 12 months. So the cost of card member services moves kind of like immediately and it takes, you know, like maximum two years for the card fee benefit to flow through the P&L.
Speaker Change: And maybe just to build on, you know, the how this going to play out in the financials. The way to think about it Mark, is that, um, as we launch the new, uh, the new value proposition, you should expect to see a step up in the cost of card member services. And as you know, uh, what we do is just like we wait until the renewal anniversary of
Christophe LeCayac: But all of that was was was kind of like building our guidance in our planning and expectations since the very.
Our member to increase uh, you know, to move the economy to the new price points. So so and then we advertised it over 12 months. So the cost of card member services moves, kind of like immediately and it takes, you know, like maximum 2 years for the card fee benefit to flow through the p&l, but all of that was, was, was kind of like built in our guidance, in our planning and and expectations since the very beginning
Christophe LeCayac: Thank you.
Don Fandetti: The next question is coming from Don Fandetti of Wells Fargo. Please go ahead.
Stephen Squeri: Yes, Steve, can you talk a little bit about international in terms of your acceptance, growth and how you're tracking versus your targets and maybe, you know, a bit on the competitive dynamics? I think you generally felt like it's less competitive Well, I don't know about left competitive, I think, you know, international has its own own set of challenges and own set of regulations. I think sometimes, you know, the regulations can, you know, make it a little less maybe a little less interesting for certain players to get into the market. But overall, we feel really good about international.
Speaker Change: Thank you. The next question is coming from Don fandetti of Wells Fargo. Please go ahead.
Speaker Change: Uh, yes. Um Steve can you talk a little bit about International in terms of your acceptance growth and how you're tracking versus your targets? And maybe you know, a bit on the competitive Dynamics, I think you generally felt like it's less competitive internationally.
Speaker Change: Well, I, I don't know about less competitive, I think, you know, International has its own.
Speaker Change: Own set of of challenges and own set set of regulations. I think sometimes, you know, the the regulations can, you know, make it a little less.
Stephen Squeri: I mean, look, it's been double digit growth. I don't know how many, you know, take a couple of years after COVID. It's been double digit growth since international really opened up again. And, you know, for us, we've been focusing on, you know, a small set of those. We talk about the five big markets that we that we focus on and we've been doing really well there. We talk about our city strategy and that's on track from a coverage perspective. And, you know, we continue to add millions and millions of merchants internationally and we will continue to do that.
Speaker Change: Uh, maybe a little less interesting for certain players to get into get into the market. But um overall, uh, we feel really good uh, about International. I mean, look, it's been double digit, double digit growth. I don't know how many, you know it takes a couple years. After Co it's been double digit growth since International really opened up again, and
you know, for us we've been focusing on um you know, uh, uh,
Stephen Squeri: So I think our acceptance gets better day by day. And, you know, we feel good about the progress that that we've made.
Stephen Squeri: And we'll talk about a lot of that, I think, you know, when we have our next investor day. But international continues to make great strides. And I think it's ultimately a huge source of growth for us because when you look at the international markets, premium plays really well in a lot of cases, just about every market, actually. Our premium products are priced higher than they are in the US. And I think when you look at our share internationally, it's very, very low. And the other part about it, when you look at small business, which I think there's big opportunity for us in small business, it really is a market that's really nascent at this point.
Speaker Change: A small set of those, uh, we talk about the 5, big markets, that we, that we focus on and we've been doing really well. There, we talk about our city strategy and that's on track from a coverage perspective. Um, and you know, we continue to add millions and millions of merchants internationally, and we will continue to do that. So I think our acceptance gets better day by day. Um, and um, you know we we feel good about the progress that that we've made and and we'll talk about a lot of that. I think it, you know, when we have our our next investor day, but um, International continues to make um great strides and and I think it's ultimately a huge source of growth for us. Because, um, when you look at the international markets, um, premium plays really well, uh, in a lot of cases, just about every Market, actually,
Erika Najarian: So we're very excited about international. And, you know, we're getting those growths with coverage that is still in. Thank you.
Our our premium products are priced higher than they are. Um, in the US and I think, when you look at our share internationally, it's very, very low. Um, and the other part about it, when you look at small business, which uh I think there's big opportunity for us in small business, it really is a market, that's really nice in this point. So um, we're very excited about International and you know, we're getting those growths with coverage that is still improving.
Erika Najarian: The next question is coming from Erika Najarian of UPS. Please go ahead. Hi, good morning. I thought I'd ask the question that I've been getting. And it's that it's almost that you become a victim of your success a little bit. You know, given your premium valuation and, you know, your previous performance, you know, it feels like there's sort of a bearish case out there. I'm building for building on the stock, meaning like, you know, you've raised the bar on yourself. So what's next? And I guess the question that I have here is, is how do you address that?
Erica narian: Thank you. The next question is coming from Erica narian of UBS. Please go ahead.
Stephen Squeri: You know, you talked a little bit, Steve, about the spend, a little bit of slowdown in airline spend, a little bit of slowdown in lodging. But obviously, you also have this platinum refresh. So as you think about maybe spend not accelerating, you know, how does American Express continue to deliver this 8 to 10% revenue growth, you know, continued consistency and build businesses, you know, perhaps in an environment where the macro, the underlying spend is not necessarily accelerating. And like Brian said, you know, all of a sudden, we have fierce competition, even fiercer competition among your peers for your natural client base.
Become a victim of your success a little bit. Um, you know giving your premium valuation and you know your previous performance you know it feels like there's sort of a bearish case out there um building for building on the stock meaning like you know, you've raised the bar on yourself. So so what's next. And I guess the question that I have here is, is, how do you address that? You know, you you talked a little bit Steve about to spend a little bit of slowdown in Airlines, and a little bit of slowdown in lodging, but obviously, you also have this Platinum refresh. So, as you think about, um, maybe spend not accelerating, you know, how does American Express continue to deliver this, 8 to 10% Revenue growth, you know, continued consistency and build businesses, you know, perhaps in an environment where the macro the underlying spend is not necessarily accelerating and like Ryan said, you know, all of a sudden we have Fierce competition, even the fears are
Competition, um, among your peers for your um, natural client base.
Stephen Squeri: Well, I think, you know, we've been getting this question for, you know, a number of years now, and we've been continuing to deliver against that. But, you know, and again, I've been around this business a long, long time, and I'm not so sure it's much fiercer the competition than it was. I think, you know, there may be a little bit more noise around it, people may talk about it, but when you're in the trenches, the competition is there. And I think, you know, look, for us, we continue to deliver the EPS we need to deliver, and we continue to deliver within that revenue range.
Erica narian: um,
Erica narian: Well, I think, you know, we've been getting this question for uh, you know, a number of years now uh and we've been continuing to to deliver against that. But
Erica narian: You know, and again, I've been around this business, a long, long time. And I'm not so sure. It's much Fierce to the competition than than it was. I think, you know, there may be a little bit more noise around it. People may talk about it, but when you're in the trenches, the competition is there.
Erica narian: Um, and I think
Erica narian: You know, look.
Stephen Squeri: And we're a hell of a lot bigger company than we were when we set these targets out. I mean, you know, when you look at this, the numbers that we're putting up year over year continue to be, you know, if I may say, quite impressive.
Stephen Squeri: But I think for us, it all starts with the customer. And I think what people lose sight of is customers are not widgets. Customers are people that you really need to focus on what their true needs are. You need to provide phenomenal service and you need to be there for them. And to us. Customers. We treat every customer as if it's the only customer we have. And if you ever call into our servicing center, there is quite a difference between how American Express treats their customers and how a lot of our competitors treat their customers.
For us. Um, we continue to deliver the EPS, we need to deliver, and we continue to deliver within that, within that Revenue range, and we're a hell of a lot bigger companies than we were when we set these targets out. I mean, you know, when you, when you look at this, the numbers that we're putting up year-over-year continue to be, you know, uh, if I may say quite impressive. Um, but I, I think, for us, it, it all starts with the customer and, and I think, what, what people lose sight of is customers are not widgets. Um, customers are people that you really need to focus on, um, what their true needs, are you need to provide phenomenal service and you need to be there for them. Um, and to us
Erica narian: Customers.
Stephen Squeri: It is a huge difference.
Stephen Squeri: I think the other thing that I would say is, you know, when you think about So what we're doing with this product refresh strategy, it's not just platinum. You know, we've refreshed hundreds of products over the course of the last few years and we'll continue to refresh hundreds of products around the world. And so, you know, look, the bearish case can continue, you know, to develop, but we will continue to do what we do best, which is focus on our customers, continue to create innovative products and services, and continue to make investments that are providing returns to our shareholders.
Erica narian: We treat every customer as if it's the only customer we have. And if you ever call in to our Servicing Center, there is quite a difference between how American Express treats their customers and how a lot of our competitors treat our customers, their customers. It is a it is a huge difference. I think the other thing that I would say is, you know, when you think about
Erica narian: So, to what we're doing with this product, refresh strategy. It's not just Platinum, you know, we we've refreshed hundreds of products.
Stephen Squeri: So, you know, look, I mean, as I said, I've been around a long time. I think the competitive environment to me hasn't been all that much different than it's been for the last 10 years. I think there's probably a lot more press about it, but we feel it every single day and I think it makes us a lot better. Thank you.
Erica narian: Um, over the course of the last few years, and we'll continue to refresh hundreds of products around the world. And so, you know, look the various case can continue, um, you know, to develop, um, but we will continue to, um, do what we do best, which is focus on our customers continue to create Innovative products, and services, and continue to make investments that, um, are providing returns to our shareholders. So, uh, you know, look, I, I mean, as I said, I've been around a long time, I think the, uh, the competitive environment to me hasn't been, um, all that much different, um, than it's been, uh, for the last 10 years. I think there's probably a lot more press about it. Um, but we we feel that every single day, and I think it makes us a lot better.
Rick Shane: The next question is coming from Rick Shane of J.P. Morgan. Please go ahead. Thanks for taking my questions this morning. I just want to follow up on Christophe's point about the timing of revenues and expenses associated with the refresh. The revenue explanation was very helpful. Can you talk about the timing of expenses associated with it? Have you pulled some of that forward in anticipation? Or should we see a step function over the next year or two consistent with what you're describing on the revenue side?
Rick Shane: Thank you. The next question is coming from Rick. Shane of JP Morgan. Please go ahead.
Thanks for taking my questions this morning uh I just want to follow up on Kristoff's point about the timing of revenues and expenses associated with the refresh the the revenue explanation was very helpful. Um can you talk about the timing of expenses associated with it? Have you pulled some of that forward in anticipation or should we see a step function over the
Christophe LeCayac: Copyright © 2020, New Thinking Allowed Foundation We haven't pulled anything either from the very beginning. This was our plan and we planned accordingly and guided accordingly. So there, maybe let me kind of like reiterate what I just said previously, right? So what you should expect is an increase in our cost of call number services. after the launch of the Platinum Card. So, you know, most like, you know, thank you for. And the card fee increases will take a little bit more time to filter through the P&L. And all in all, this will be value accretive for us and for our show.
Next year to consistent with what uh, you're describing on the revenue side.
Rick Shane: um, so, um
Rick Shane: We haven't pulled.
Christophe LeCayac: Yeah, I mean, just, you know, just to say really simplistically, the expenses become come before the revenues here, right? Because what happens is, once we relaunch, the card members have the ability to take advantage of those benefits on day one, they don't get billed, if there's an increase in the fee, until they come up to their cycle. And those, those fees are recognized over a 12 month period, they're not recognized in the in the month that you get billed. But yet, the benefits and that's, that's a huge benefit to our cardholders. And it's something that we plan for.
And and the the card fee increases will take a little bit more time to filter through through the p&l. Uh, and and all in all this will be value or creative for, for us, and for our shoulders,
yeah, I mean just you know just to say it really simplistically the expenses become
Rick Shane: Come before the revenues here. Right because what happens is once we relaunch the card members, have the ability to take advantage of those benefits on day 1.
Rick Shane: they don't get billed, if there's an increase in the fee until they come up to their cycle and those
Christophe LeCayac: And it's something that we've always done.
Rick Shane: those fees are recognized over a 12-month period. They're not recognized in the in the month that you get billed, but yet the benefits and that's, that's a huge benefit to our partners.
Rick Shane: Holders. And it's something that we plan for, and it's something that we've always done. Yeah.
Jeff Adelson: Thank you.
Jeff Adelson: The next question is coming from Jeff Adelson of Morgan Stanley. Please go ahead. Hey, good morning, Stephen, Christophe, just wanted to focus on the airline lounges. Obviously, that's, you know, a really important part of the Amex offering. But I guess longer term, as you, you know, kind of continue to put up this really robust growth in card members, how do you navigate some of the concerns about lounge access and overcrowding? Is that something you'll maybe look to address in the next round of refresh? And, you know, we've continued seemingly to see a step up in competition from the base of Chase and Capital One with their own build out.
Jeff Aiden: Thank you. The next question is coming from Jeff. Aiden of Morgan Stanley. Please go ahead.
Hey, good morning. Um, Stephen Kristoff, just just wanted to focus on the airline lounges, obviously that's, you know, a really important part of the MX offering but I guess longer term as you, you know, kind of continue to put up this really robust growth in Card members. How do you navigate some of the concerns about lounge access and overcrowding is that something you'll maybe look to address in the next round of refresh? And, you know, we've continued seemingly to see a step up in competition from
Jeff Adelson: And I think there's been more of a focus from the airlines lately to kind of build their own offering or enhance their own offering. So I guess, how do you think about navigating that competition longer term and just maybe addressing the concern of overcrowding? Thanks.
Stephen Squeri: Yeah, I think that, you know, look, we've what we try to do is a couple of things. Well, number one, we've tried to like a lot of the airlines done, a lot of the other cards have done. We did this probably before people did it. But, you know, provide some priority. The other thing is, you know, we're built you know, we're trying to make the lounges bigger. I think this whole lounge game has been a has been a boom for airport authorities in terms of, you know, how many lounges they can put in. And the other thing, we get innovated.
Stephen Squeri: Look, in Vegas, we just did what we call sidecar, right, which is a more of a small kind of I don't know, maybe call it a speakeasy kind of kind of lounge where if you just want to go in for a quick drink or grab something quickly, you can do that. And I think we work really, really closely with our partner Delta in those airports where we have, you know, we don't have a lounge or we do have lounges together to try and to try and move traffic around a little bit. But I think you'll continue to see more innovation here.
Jeff Aiden: Likes of chasing Capital 1 with their own build out. Um, and and I think there's been more of a focus from the airlines lately, um, to to kind of build their own offering or enhance their own offering. So, I guess, how do you think about navigating that competition longer term and just maybe addressing the concern of overcrowding? Thanks. Yeah, I think that, you know, look, we we've what we've tried to do is a couple of things. What number 1, we've tried to like, a lot of the airlines done a lot of the other cards have done. We did this probably before people did it, but, you know, P provide some priority. The other thing is, you know, we're built, you know, we're trying to make the lounges bigger. Um, I think this whole Lounge game has been a um, has been a boom for airport, authorities. Um, in terms of you know how many lounges they can put in and the other thing we get innovated, look in Vegas, we just did what we call sidecar right? Which is a uh more of a small kind of, I don't know, maybe call it a Speak Easy kind of kind of Lounge. Where if you just want to go in for a quick drink or grab something quickly, you
Stephen Squeri: You'll look at more expansion of existing lounges where we can get space. And you'll look at a strategy that looks at satellite locations so that, you know, we can we can handle the demand that we get. Thank you.
Jeff Aiden: you you can you can do that. And I think we work really really closely with our partner Delta uh in in those airports where we have, you know, um, either we don't have a lounge or we do have uh, lounges together to try and to try and move move traffic around a little bit. But I think you'll continue to see more Innovation here. You'll look at more expansion of existing lounges where we can get space. And you'll look at a strategy that looks at Satellite locations. Um, so that you know, we can uh we can
Jeff Aiden: Can handle the, uh, the demand that we get.
Brian Foran: The next question is coming from Brian Foran of Truist Securities. Please go ahead. Hey, good morning, guys. So I want to ask about one other pushback I keep getting on the stock lately, and before I do, you know, these slides you're adding, like slide 12 and 9, I think there was 16, you know, kind of addressing key investor issues head on and giving that next level of detail. I really appreciate it. They're great. So I want to give that context to that. I think you guys have been really open and kind of sharing your thought process on these key pushbacks.
Speaker Change: Thank you. The next question is coming from Brian. Foreign of truist Securities. Please go ahead.
Brian: Hey, good morning guys morning.
Brian Foran: So the other one I guess, You know, if you do this walk, spend volumes plus seven, but then discount is a little lower, plus five, and then if you back out rewards to do discounts, you know, with rewards as a contra, it's like plus one to two, and then some people are even backing out new account contribution and saying like, well, discount, net of rewards, net of new accounts is actually quite negative, and I know that's like net of eight things, and your actual revenue is growing, but maybe you could just speak to any part of that dynamic, you know, for investors who are focused on, you know, kind of the discount revenue being a little lower, the discount revenue net of rewards being a little lower still, you know, how would you think about that?
Brian: Um so I want to ask about 1 other, push back, I keep getting on the stock lately and before I do, you know these slides, you're adding like slide 12 and 9. Uh, I think those 16, you know, kind of refreshing the investor issues head on and getting that next level of detail. Uh, I really appreciate it, they're great. Uh, so I, I want to get that contacted to that. I think you guys have been really open and kind of sharing your thought process on these key pushbacks. Um, so the other 1 I get is, you know, if you do this walk, spend volumes plus 7 but then discount is a little lower plus 5 and then if you back out rewards to do discount, uh, you know, with rewards as a contractor, it's like plus 1 to 2 and then some people are even backing out new account. Uh, uh, contribution and saying like, well discount, net of rewards. Net of new accounts is actually quite negative and I know that's like net of 8 things and your actual revenue is growing, but maybe you could just speak to any part of that Dynamic, you know, for invest
Brian Foran: Is that a valid concern, or is that a wrong path to go down?
Stephen Squeri: Well, Christophe will answer, but the one thing I would say is, you know, thinking about only one component of revenue associated with rewards is not really how we think about it. We think about overall revenue associated with it, but I'll let Christophe sort of go.
Brian: Investors who are focused on, you know, kind of the discount Revenue being a little lower, the discount Revenue, net of rewards being a little lower still, you know, how would you think about that? Is that a valid concern or is that a a wrong path to go down?
Christophe LeCayac: Hey, Brian. You know, the way we think about this and this type of decision and relationships between the expenses and the revenue, and we've been very transparent on it, right, probably more so than many competitors, is the VCE ratio to revenue, variable customer engagement expenses as ratio to revenue, and we've provided a lot of details and transparency on the makeup of this VCE ratio, and that has been, like, pretty stable over the years, and as we've said, you know, this is not an objective function for us, this is an outcome, we make decisions product by product by product, and they're, here, Here's what you should not do.
Speaker Change: Well, Kristoff will will answer it. But the 1 thing I would say is, you know, thinking about only 1 component of Revenue associated with rewards, is not really how we think about it. We think about overall Revenue, uh, associated associated with it, but first off, hey, Brian, so there,
Speaker Change: A decision in relationships between the expenses and the revenue and we've we've been very transparent on it right. Probably more so than many competitors is the vce ratio to revenue variable customer engagement expenses, its ratio to revenue and we've provided a lot of details and transparency on the makeup of these vce ratio. And that has been like pretty stable over the years. And as we've said, you know, this is not an objective function for us. This is an outcome. We met decisions product by product by product and they're they're here.
Christophe LeCayac: You should not equate a low VCE ratio to something positive because the highest VCE ratios that we have are on our more premium, more attractive, more value-accretive products, right? Because we get a lot of that investment back in the form of efficiencies on the marketing line, in the form, importantly, of credit and positive selection on the credit line. So the overall balance, to your point, is a complicated one. We think we're really good at managing that balance and finding the optimum point to generate value, to generate growth and sustainable value for our shareholders. So, I don't quite follow your math, but I think we've got a good control over that expense to revenue ratio component.
Speaker Change: They're the the here's what you should not do, you should not equate. A low vce ratio to something positive because the highest vce ratios that we have are on our remote premium, more attractive, more value or creative products, right? Um, because we get a lot of that investment back in the form of efficiencies, on the marketing line in the form, importantly of credit and positive selection uh, on the credit line. So the overall balance is are to your point is a complicated 1.
Christophe LeCayac: We are managing it thoughtfully and every time there's a product refresh, that's where we spend a lot of our time in finance to find the right balance. So, I think you shouldn't worry too much about where this is going and where it's trending. We feel that we're in a good place. Thank you.
We think we're really good at managing that balance and finding the optimum point to generate value to generate growth and sustainable value for our shareholders. So, uh, so I don't quite follow your math. But, you know, I think we've got a good control over that expense to revenue ratio component. We are managing it uh, thoughtfully and every time there's a product refresh, that's where we spend a lot of our time in finance to find the right balance. So I think we you know you shouldn't worry too much about where this is going and where it's trending. Um, you know, we feel that we're in a good place there.
Moshe Orenbuch: The next question is coming from Moshe Orenbuch of TD Cowen. Please go ahead. Great, thanks. And apologies, you know, for going back to the, you know, the competition kind of issue. But if you put together, you know, the questions from a couple of people, and Steve, your answers, you know, to them, I guess, what strikes me is that this may be the first time that you're doing this US Platinum refresh kind of into the teeth of a competitive environment. And, you know, you've got cross currents, obviously, you know, you have in the past benefited from some of the, you know, advertising and marketing of your competitors.
Thank you. The next question is coming from Moshe Arbok of TV Cowen. Please go ahead.
Moshe Arbok: Great, thanks and apologies. You know, for going back to the uh you know, the competition kind of issue. But if you put together, you know, the questions from a couple of people and Steve your answers, you know, to them.
I guess.
Speaker Change: Doing this.
Platinum, read.
Moshe Orenbuch: And at the same time, there is this idea of, you know, kind of competing for a limited number of people.
Stephen Squeri: So could you, is there a way to just talk about how you think it's going to play out this time versus others in terms of, you know, what, you know, what you kind of are expecting any, any kind of things that you're thinking about that would differentiate, you know, your, you know, your set of product refreshes from what you've seen from those competitors? Thanks. Well, I would disagree with the characterization. It's the first time we're playing into the teeth of it. Actually, we did our first the first platinum refresh. Well, one of the platinum refresh we did 10 years ago, Chase just launched Sapphire with a huge, huge bang.
Moshe Arbok: Into the teeth of a competitive environment. And, you know, you've got cross-currents. So obviously, you know, you have in the past benefited from some of the, uh, you know, advertising and marketing of your competitors. And uh, at the same time there is this idea of, you know, kind of competing for a limited number of people. So could you is, is there a way to just talk about how you think it's going to play out this time versus
Others in terms of, you know what, you know what you kind of are are expecting any any kind of things that you're thinking about that would differentiate, you know, your uh, you know, your set of product refreshes from what you've seen from those competitors, thanks.
Stephen Squeri: I mean, the amount of money and the amount of press that they got with that and the with the with the intensity they went after. Our book, we played right into it. And the second one, we were around the same time. So I don't think it's that much different. And really, if you think about it right now, Citi hasn't said when. And, you know, they're coming off of not having a product, not really having a product, and Chase is refreshing their product. So I think it's, it's actually, if I if I look at it, it's probably less intense this time than it was 10 years ago.
Speaker Change: Well, um, I would disagree with the characterization. It's the first time we're playing into the teeth of it. Actually, we did, um, our first the first Platinum refresh. Well, 1 of the Platinum, refresh, we did 10 years ago, Chase just launched Sapphire, uh, with a huge, huge bang. I mean, the amount of money and the amount of press that they got with that and the
With the with the intensity they went after. Um,
Speaker Change: Our book, um, we played right into it. Uh, and the second 1 we were around the same time, so I don't think it's that much different. And and really, if you think about it right now,
Stephen Squeri: Because I think there was so much So much hype around Chase coming out with this new card versus this just being an upgrade. That's just my opinion. Having said that, you know, I'll just go back to what I said. I think we've learned a lot, and we believe that what we're going to come out with will be more than hold its own, be very, very competitive, and will continue to be innovative.
City hasn't said when um, and you know, they're coming off of uh, not having a problem. Not really having a product and Chase is refreshing their products. So I think it's, it's actually, if I, if I look at it, it's probably less intense this time than it was 10 years ago. Because I think there was so much
Stephen Squeri: And, you know, we're just going to have to wait and see, and you guys are going to have to wait and see, because I can't really go into more detail than that. Contrasting the two, all I can do is basically say every time we've done this, it's worked out pretty well for us, and I think it's worked out pretty well for consumers, and it's worked out well for the industry. But I just, the characterization of this is different, I don't think that's the case at all.
So much hype around. Chase coming out with this new card um versus this is being an upgrade that's just my that's just my opinion. Having said that um you know, I'll just go back to what I said. I think we learned a lot. Um, and we believe that what we're going to come out with will be uh more than hold its own. Be very, very competitive and will continue to be Innovative and, you know, we're just going to have to wait and see. And you guys are going to have to wait and see cuz I can't really go into more detail in that contrasting, the 2, all I can do is basically say, every time we've done this, it's worked out pretty pretty, pretty well for us and I think it's worked out pretty well for for consumers. And it's worked out, well, well for the industry, but I I just the characterization of this is different. I don't, I don't think that's the case at all.
Mihir Bhatia: Thank you. The next question is coming from Mihir Bhatia of Bank of America. Please go ahead. Hi, thank you for taking my question. So it is another question on this, you know, competition and premium card space. But really what I would like to focus maybe a little bit on is, you've talked about how the customer value propositions have changed and evolved. But how has this impacted the acquisition strategy? Is it becoming more expensive to attract these fee-paying customers? Is the acquisition mix changing? And really putting it all together at the end of the day, our returns in the premium card space.
Thank you. The next question is coming from Mia Bhatia of Bank of America. Please go ahead.
Mia Bhatia: Hi uh, thank you for taking my question. Um,
Mihir Bhatia: Stable, increasing, decreasing, because, like, yes, value propositions are increasing, but fees are increasing, card usage is increasing. So I'm just trying to get a sense of that. Thank you.
So it is a it is another question on this uh you know, competition and premium card space. But really what I would like to focus. Maybe a little bit on is you've talked about how the customer value proposition has changed and evolved. But how is this impacted the acquisition strategy? Is it becoming more expensive to attract these people paying customers is the acquisition mixed changing and really putting it all together at the end of the day, our returns in the premium card space.
Mia Bhatia: Stable. Increasing decreasing? Because like yes, value propositions are increasing but fees are increasing. Card usage is increasing. So I'm just trying to get a sense of that.
Christophe LeCayac: So I can I can help you a little bit with that, you know, the way this competition is materializing is that it's expanding The Demand for Premium Products. So it's definitely giving us the opportunity to deploy more marketing dollars at very, very attractive. That's the way it's materializing, right? Because there are a lot more consideration now among the prospect population for premium products than there was 10 years ago. where we were the only player in that space. And every time crowd members look at or consider either a platinum card or premium card, they consider the platinum card.
Mia Bhatia: Thank you.
Mia Bhatia: So, I can, um, I, I can help you a little bit with that. You know, the the way this competition is materializing, um, is that it's expending
Mia Bhatia: Uh, the demand for premium products.
Mia Bhatia: So it's definitely giving us the opportunity to deploy more marketing dollars at very, very attractive returns. That's the way it's materializing, right? Because there are a lot more consideration now among the prospect population for a premium product than there was 10 years ago.
Christophe LeCayac: It's almost inevitable. And so that opens up an opportunity for us to put an offer in front of them. So, you know, the biggest benefit for us here, like it's really hard to compare the ROI 10 years ago to the ROI today, but they're, you know, the level of marketing dollars, the quantity of marketing dollars we're deploying today is much bigger than what we were doing, say, 10 years ago. And I attribute a lot of that to a lot more activity in the marketplace, a lot more competition. Thank you.
Where we were the only player in that space and every time con members look at or consider either platinum card or premium card, they consider the platinum card, it's almost inevitable and so that opens up an opportunity for us to to put an offer in front of them. So, you know, the the biggest benefit for us here like it's really hard to compare the ROI 10 years ago to the ROI today, but they're either the level of marketing dollars, the quantity of marketing dollars with deploying today's much bigger than what we were doing in say, 10 years ago and attribute a lot of that.
To, uh, a lot more activity in the marketplace, a lot more competition.
Terry MA: The next question is coming from Terry Ma of Barclays. Please go ahead. Hi. Thank you. Good morning. I just want to ask about net card fee growth. It continues to be strong, coming in at 20% year-over-year this quarter. As we think about the go-forward, should the Platinum refresh be kind of additive to that growth or just kind of sustain it as you lapse some of the refreshes from last year? Thank you. Yeah.
Thank you. The next question is coming from Terry ma of barklay, please. Go ahead.
Christophe LeCayac: So it's a complicated dynamic, Terry, but you might remember at the beginning of the year, we said that you should expect the card fee growth rate to kind of like moderate in the balance of a year. We still believe that's going to happen. So you should expect to see that in Q3 and Q4. And given the previous conversations that we had about the timing of the Platinum fee increase, it's only sometimes in the new year in 2026. That you should see that inflection point and a bit more acceleration. But, you know, you should still expect some moderation in the back of this year in terms of that card fee growth.
Mia Bhatia: Hi, thank you, good morning. Um, I just wanted to ask about net card fee growth. It continues to be strong coming in at 20% year-over-year this quarter as we think about the go forward. Should the Platinum refresh be kind of additive to that growth or just kind of sustain it as you lap someone to refresh this from last year. Thank you. Okay. So it's a it's a complicated Dynamic Terry but you might remember the beginning of the year, we said, you know that you should expect the card fee growth rate to kind of like moderate in the balance of your uh, we still believe that's going to happen. So you should expect to see that in Q3 and Q4 and given the previous conversations that we have.
Mia Bhatia: About the timing of the Platinum fee increase. It's only sometimes in in the New Year in 2026 that you should see that inflation point and a bit more acceleration. But, you know, you should still expect, uh, some moderation in their, in the back of this year, in terms of that, um, you know, card fee growth rates,
Christophe LeCayac: Thank you.
Craig Maurer: The next question is coming from Craig Maurer of FT Partners. Please go ahead. Yeah, hi, thanks. I wanted to, you know, competition aside and Amex's right to win aside, you know, wanted to ask about how perhaps the mix of new acquisition is changing. And the reason why I'm asking is, does the slowdown in travel spend put at risk the fantastic new acquisition channels you have with your co-brand partners like Marriott and Delta? Do we have to think about that at all when it comes to net new card growth? And, you know, just secondly, just quickly on the EPS guide, you had nice outperformance in EPS, but am I just reading it correctly that the projected increase in BCE spend is a percentage of revenue in the back half of the year, which seems to be related at least in part to the platinum refresh is what's keeping you from raising the range?
Craig Moore: Thank you. The next question is coming from Craig Moore of SP Partners. Please go ahead.
Craig Moore: Yeah. Hi thanks. Um, wanted to, you know, competition aside and MX is right to win aside. You know, wanted to ask about how perhaps the mix of new acquisition is changing. And the reason why I'm asking is does the slow down in travel spend, uh, put at risk, the Fantastic, uh, new acquisition channels, you have with your co-brand partners like Marriott and Delta. Do we have to think about that at all when it comes to uh, net new, uh, card growth? And, you know, just secondly, just quickly on the EPS guide, um, you had nice outperformance and EPS. But am I just reading it correctly? That the projected increase in BCE spend as a percentage of Revenue in the back half of the year, which seems to be related at least in part to the Platinum. Refresh is what's keeping
Craig Maurer: Thanks.
Craig Maurer: So under, hi Craig, under, on the acquisition mix, there's been, there's not been like a big change in terms of our mix over the past few quarters and like almost should say over the past few years, right? And one way, you know, we're trying to characterize it for you is just by coding out the percentage of these new cards that are coming on a fee paying product, right? And has been in that 70% range for a few quarters now. And I don't really expect to see a change there.
Craig Moore: You from raising the range? Thanks.
Hi Craig under on the acquisition.
Christophe LeCayac: To your second question about the earnings per share and the VCE in the balance of years. So listen, we're not giving guidance specifically, you know, let alone quarter by quarter on the VCE ratio. There's just like so many moving parts here. And we also, you know, lapping, you know, some product refreshes from the past. So, you know, the way I think about that VCE ratio over time, it's not new, it's just, you should expect that VCE ratio to slightly tick up over time as more and more as the mix, not only in terms of acquisition, but in terms of engagement of the portfolio is trending a lot more towards premium product and fee paying product.
Christophe LeCayac: So that's gonna put a little bit of upward pressure on the VCE ratio, but that's as far as we'd go in terms of commanding on where this is gonna go.
Has been in that 70% range for a few quarters now. And I don't really expect to see a change there, um, to your second question about about the earnings per share and the vce in the balance of your. So, listen, we're not giving guidance, specifically, you know, let alone quarter by quarter on the vce ratio. Uh, there's just like so many moving Parts here and we also, you know, lapping, you know, some product refreshes from from the past. So, you know, the way I think about that dce ratio over time, it's not new. It's just, you should expect that VC ratio to slightly pick up over time, as more and more, as the mix. Not only in terms of acquisition, but in terms of Engagement of the portfolio is training a lot more towards premium product and seeing product. So that's going to put a little bit of upward pressure on, on the vce ratio. Uh, but but that's
Craig Moore: That's far. I would go in terms of commenting on on where this is going to go in the balance of your
Terry MA: Thank you.
Chris Kennedy: Our final question is coming from Chris Kennedy of William Blair. Please go ahead. Good morning. Thanks for taking the question. Just wanted to change the topic a little bit. You have the announcement with Coinbase and Amex Ventures does a lot of investing in the space.
Thank you. Our final question is coming from Chris. Kennedy of William Blair. Please go ahead.
Stephen Squeri: Can you give your latest views on Stablecoin and implementing blockchain technology into your tech stack? Yeah, well, let me just talk about sort of stablecoin. I think it's been A lot of conversation around around stablecoin and cryptocurrencies and what have you and I think you know when you start to look at Digital currencies, you know, we've got the cryptocurrencies XRP Bitcoin Ethereum and things like that That has sort of proven out that that's not really going to take the place of any fiat currency. It's more of a sort of an investment vehicle at this point.
Chris Kennedy: Good morning. Thanks for taking the question. Just wanted to change the topic a little bit. You have the announcement with coinbase and Amex Ventures. Does a lot of investing in the space. Can you just give your latest views on stablecoin and implementing blockchain technology into your Tech stack?
yeah, well let me just talk about sort of stablecoin, I think it's been
Chris Kennedy: Uh, a lot of conversation around around stablecoin and cryptocurrencies. And what have you? And I think, you know, when you start to look at
Digital currencies, you know, we've got the cryptocurrencies, xrp, Bitcoin, ethereum and things like that. I think that has sort of proven out that that's not really going to take the place of any Fiat, Fiat currency. It's it's more of a
Stephen Squeri: And I think, as we've said for a long time now, that when you think about. When you think about digital currencies, you need to think about sort of stable coins and you need to think about government digital currencies. And it looks like now, while there hasn't really been a lot of progress on government digital currencies, there has been a lot of activity, at least a lot of noise around stable coins. And I think there is a role in the payment systems for stable coins. There is a role in the value system for cryptocurrencies. And I think when you look at what we did with Coinbase.
Chris Kennedy: um, sort of an investment vehicle, a vehicle at this point and I think as we've said for a long time, now that when you think about, um,
Chris Kennedy: When you think about digital currencies, you need to think about. So the stable coins that you need to think about government digital currencies, and it looks like now.
While there hasn't really been a lot of progress on government digital currencies that has been a lot of a lot of activity.
Stephen Squeri: As we see stablecoins, stablecoins, we believe, will be used for lots of cross-border transactions, small businesses, things like that. But remember, with stablecoins, you are trapping out liquidity, and you do need off-ramps. And I think the partnership that we have with Coinbase does two things. Number one, it does provide that off-ramp. But number two, what they've decided to do from a rewards perspective is allow you to earn digital currency. And obviously, they're one of the largest keepers of digital currencies. And so I think that's a really interesting thing. As we think about stablecoins a little bit into the future here, you can see this as a way for SMBs, large corporations, to do cross-border transactions, especially when you are doing lots of cross-border transactions with the same group of people.
Um, at least a lot of noise around around stable coins and I think there is a role, um, in the payment systems, uh, for stable coins, uh, there is a role, um, in the story, in the value in the value system for cryptocurrencies. And I think, when you, when you look at what we did, uh, with coinbase, um, as we see stable,
Stephen Squeri: You avoid all the currency conversion. It makes it a lot easier to do business, I think, potentially cross-border. That's not a big revenue driver for us, foreign currency exchange. currency revenue for us, but it is an opportunity and it's one that we are seriously looking at and potentially to figure out how we think about either partnering or how we think about our own foray into stablecoins, especially for small businesses where we do have a large share. So, I think there's a lot more to come here, I think the bill will be signed today in terms of overall regulation, and there's more to play out, but I think what you will see is companies like American Express, Visa, and MasterCard being off-ramps for digital currencies, and I think that's an important part that we play.
Chris Kennedy: Stable coins, We Believe will be used for lots of cross border, um transactions, small businesses, things like that. But remember with stable coins you are trapping trapping that liquidity and you do need off-ramps. And I think the partnership that we have with um with coinbase does does 2 things number 1. It does provide that off-ramp. But number 2 um what they've decided to do from a rewards perspective is allow you to uh uh earn you know, digital currency. Uh and obviously they're 1 of the largest keepers of of digital currencies and so I I think that's a that's a really interesting thing as we think about stable coins, a little bit, you know, into the future here. Um you could see this as a way for smbs uh, large corporations to do cross-border transactions, especially when you are um, doing lots of cross border transactions with the same group of people, you just you will.
Chris Kennedy: Avoid, uh, all the currency, all the currency conversion, makes it a lot easier, um, to do business. I, I think potentially cross border that's not a big sort of Revenue, uh, driver for us, uh, you know, for foreign currency exchange and, and, and, and, and, and currency, uh, revenue for us. But it, it is an opportunity and it's 1 that we are seriously looking at and potentially, to figure out how we think about
Stephen Squeri: Will they replace the existing payment rails? No, they're not going to replace the existing payment rails. Are they a good proxy and a good change and a good alternative to ACH and SWIFT payments and wires and things like that? I think so. And the reason I don't believe they're going to replace what we have today is what we have today is not broken, it provides lots of other benefits such as rewards, it provides contingent liability in terms of lending, and it also provides lots of dispute resolution and things like that, and tremendous acceptance, and it's just easy to use.
Stephen Squeri: So, that's probably all I have to say on that, but it is something that we are working with and we'll continue to monitor and just figure out what's the right entry point for us, but we felt, and we're very happy about our partnership with Coinbase, and I think we're going to be able to do some good.
Kartik Ramachandran: With that, we will bring the call to an end. Thank you again for joining today's call and for your continued interest in American Express. The IR team will be available for any follow-up questions. Thank you.
Good proxy and a, and a good change, and a, and a, and a good alternative to AC and Swift payments and wires and things like that. I think so. And the reason I don't believe they're going to replace. Um, you know, uh, what we have today is what we have today is not broken, it provides. Uh, lots of other benefits such as rewards, it provides um, you know, contingent liability in terms of lending and it also provides lots of dispute, um, dispute resolution and things like that and tremendous acceptance and it's just easy to use. So, um, you know, that's, uh, probably all I have to say, to say on that. But, um, it is something that we are, um, uh, that we are working with and we'll continue to, uh, to Monitor and, and just figure out, uh, what's the right entry point for us. But we felt and we're very happy about our partnership with with coinbase. And, uh, I think we're going to be able to do some some good things with them.
With that, we will bring the call to an end. Thank you again for joining today's call and for your continued interest in American Express, the IR team will be available for any follow-up questions.
Unknown Executive: Ladies and gentlemen, the webcast replay will be available on our Investor Relations website at ir.americanexpress.com shortly after the call.
Thank you, ladies and gentlemen.
Unknown Executive: You can also access a digital replay of the call at 877-660-6853 or 201-612-7415. Access code 1-375-4529 after 1 p.m. Eastern Time on July 18th through July 25th.
Chris Kennedy: In the webcast replay will be available on our investor relations website at IR americanexpress.com. Shortly after the call, you can also access a digital replay of the call at 877-660-6853 or 201-612-7415 access code. 13754529 after 1 pm Eastern Time on July 18th, through July 25th,