AmEx Q4 Earnings Beat Estimates on Strong Billed Business

Core Viewpoint - American Express Company (AXP) reported strong fourth-quarter 2024 earnings, with earnings per share (EPS) of $3.04, a 16% year-over-year increase, and total revenues of $17.2 billion, an 8.7% year-over-year improvement, both exceeding consensus estimates [1][2]. Financial Performance - The fourth-quarter earnings were driven by record high card member spending and fee growth, alongside new card acquisitions, particularly among Millennials and Gen-Z [3]. - Network volumes reached $464 billion, a 7% year-over-year increase, surpassing the consensus estimate of $458.7 billion [4]. - Total interest income was $6.1 billion, a 9% year-over-year increase, but fell short of the consensus estimate of $6.2 billion [4]. - Provision for credit losses decreased by 10% year over year to $1.3 billion [4]. - Total expenses rose by 11% year over year to $13.1 billion, primarily due to increased customer engagement and marketing costs [5]. Segment Performance - The U.S. Consumer Services segment reported pre-tax income of $1.5 billion, a 5% year-over-year increase, and total revenues of $8.3 billion, up 12% year over year [6]. - The Commercial Services segment's pre-tax income was $814 million, a 22% year-over-year increase, with total revenues of $4.1 billion, growing 8% year over year [7]. - The International Card Services segment saw a significant decline in pre-tax income to $34 million, down 76% year over year, despite total revenues improving 11% to $2.99 billion [8]. - The Global Merchant and Network Services segment reported pre-tax net income of $853 million, a 4% year-over-year increase, but total revenues declined by 2% to $1.9 billion [9]. Balance Sheet and Capital Deployment - As of December 31, 2024, cash and cash equivalents were $40.6 billion, down from $46.6 billion at the end of 2023, while total assets increased to $271.5 billion [10]. - Long-term debt rose to $49.7 billion, and shareholders' equity improved by 8% year over year to $30.3 billion [10][11]. - The company repurchased 3 million common shares in the fourth quarter and plans to increase its dividend to 82 cents per share starting in the first quarter of 2025 [12]. Future Outlook - For 2025, AXP anticipates revenue growth between 8% and 10% from the 2024 level of $65.9 billion, with EPS expected in the range of $15-$15.5, indicating an 8.9% improvement from 2023 [13]. - The company projects long-term revenue growth of over 10% and mid-teens growth in EPS [14].