American Express Q2 Earnings Beat Estimates on Premium Customers

Core Insights - American Express Company (AXP) reported Q2 2025 earnings per share (EPS) of $4.08, exceeding the Zacks Consensus Estimate by 5.7% and reflecting a 17% year-over-year increase [1][9] - Total revenues net of interest expense reached $17.9 billion, surpassing the Zacks Consensus Estimate by 1% and showing a 9% year-over-year growth [1][9] Financial Performance - The strong Q2 results were driven by increased Card Member spending and a premium customer base, alongside rising revolving loan balances and robust card fee growth [2] - Network volumes amounted to $472 billion, a 7% year-over-year increase, beating the Zacks Consensus Estimate by 1.3% [3] - Total interest income rose to $6.3 billion, an 8% year-over-year increase, also exceeding the consensus mark by 0.4% [3] - Provision for credit losses increased by 11% year over year to $1.4 billion due to higher net write-offs and net reserve build [3] Expense Analysis - Total expenses grew by 14% year over year to $12.9 billion, driven by higher operating expenses and elevated customer engagement costs [4][9] Segment Performance - U.S. Consumer Services segment pre-tax income was $1.7 billion, a 7% year-over-year increase, but fell short of the Zacks Consensus Estimate by 4.7% [4] - Commercial Services segment pre-tax income was $905 million, consistent with the prior year but below the consensus estimate [5] - International Card Services segment pre-tax income surged 60% year over year to $465 million, exceeding the consensus mark [6] - Global Merchant and Network Services segment pre-tax net income decreased by 31% year over year to $1.1 billion, yet still beat the Zacks Consensus Estimate [7] Balance Sheet Overview - As of June 30, 2025, cash and cash equivalents stood at $57.9 billion, up from $40.6 billion at the end of 2024 [8] - Total assets increased to $295.6 billion from $271.5 billion at the end of 2024 [8] - Long-term debt rose to $58.2 billion from $49.7 billion at the end of 2024 [10] - Shareholders' equity improved to $32.3 billion from $30.3 billion at the end of 2024 [10] Capital Deployment - In Q2 2025, American Express repurchased 5 million common shares for $1.4 billion and paid $600 million in dividends, with a per-share dividend of 82 cents [11] 2025 Outlook - The company anticipates revenue growth of 8% to 10% in 2025 from the 2024 level of $65.9 billion, with EPS expected in the range of $15-$15.50, indicating an 8.9% improvement from 2024 [12]