American Express reported second-quarter profits rose 8% from a year earlier, beating Wall Street’s expectations, but shares fell roughly 6% Friday as investors focused on unchanged full-year earnings guidance and rising expenses rather than the headline beat.
The New York-based card issuer earned $3.11 billion, or $4.53 a share, in the quarter, topping the analyst consensus of $4.40 a share. Revenue net of interest expense came in at $19.64 billion, up 10% from a year earlier, just shy of the $19.69 billion analysts had expected. Billed business — the total amount charged on AmEx cards — climbed 9% to $455.8 billion, the strongest card member spending growth in three years on a currency-adjusted basis.
The average AmEx cardholder spent $6,759 in the quarter, up from $6,393 a year earlier, reflecting continued strength among the affluent customers who make up the bulk of the company’s base. AmEx added 3 million new card members during the quarter, with three-quarters signing up for a card that carries an annual fee — a sign that demand for its premium Platinum and Gold card products remains robust even as competition intensifies.
That competition is the central tension in the AmEx story right now. JPMorgan Chase’s Sapphire Reserve, Citigroup’s Strata card and Capital One’s Venture X have all stepped up their challenges to AmEx’s dominance in the premium travel rewards segment, forcing the company to spend more to attract and keep customers. Consolidated expenses rose 12% to $14.5 billion in the quarter, outpacing revenue growth, and the effective tax rate jumped to 24% from 19% a year ago.
CEO Stephen Squeri said the company is deliberately funneling its better-than-expected first-half performance back into growth initiatives rather than allowing it to flow through to the bottom line, citing what he described as significant opportunities ahead. The company raised its full-year revenue growth guidance to 10% from a prior range of 9% to 10%, but held its full-year earnings guidance unchanged at $17.30 to $17.90 a share — the combination that disappointed investors on Friday.
Credit quality was a bright spot. Provisions for credit losses came in at $1.1 billion, well below the $1.4 billion booked a year ago, and the net write-off rate held flat at 2%, suggesting AmEx’s customer base continues to pay its bills reliably.
AmEx also disclosed a proposed acquisition of TheFork, a European restaurant booking platform operating across 50,000 restaurants in 11 countries, a move consistent with its broader strategy of building lifestyle and dining benefits into its premium card ecosystem.
Shares of Visa and Mastercard held roughly flat on Friday, indicating the AmEx selloff was company-specific rather than a broader signal about the payments sector. AmEx stock entered the week already down about 7% year to date.