American Express Company (AXP) Barclays 22nd Annual Global Financial Services Conference (Transcript)

Summary of American Express Company (NYSE:AXP) Conference Call Company Overview - Company: American Express Company (AXP) - Event: Barclays 22nd Annual Global Financial Services Conference - Date: September 11, 2024 - Participants: Christophe Le Caillec (CFO), Terry Ma (Barclays) Key Points Consumer Spending Trends - U.S. Consumer Services network volumes grew approximately 8% in Q1, decelerating to about 6% in Q2, with stability observed in Q3 [2][3] - Consumer engagement with American Express products remains high, with transaction growth outpacing billings [4] - Card fee revenue increased by 16%, expected to rise further in the remainder of the year [4] Travel and Entertainment (T&E) Spending - T&E growth has moderated, particularly in comparison to the previous year, but remains strong, especially in dining [6] - Younger generations (Millennials and Gen Z) show disproportionate growth in spending, with a reported growth rate of 13% in Q2 [6] Small and Medium Enterprises (SME) - The SME segment has shown organic spend softness, but acquisition and credit profiles of new small businesses are strong [10][11] - A recovery in organic spend is anticipated, but more than one quarter of improvement is needed to confirm a trend [11] Product Refresh and Card Acquisition - American Express has implemented around 40 product refreshes in 2024, with positive reception for the Gold Card and Delta portfolio [12][13] - The Gold Card's new features, including dining credits, have driven engagement and interest among card members [15] Revenue and Earnings Guidance - American Express has guided for 9% to 11% revenue growth for 2024, with a year-to-date average of 10% [31][34] - The company expects net interest income (NII) to grow faster than revenue, driven by improved pricing and funding strategies [28][29] Marketing Strategy - A marketing budget of $6 billion is planned for 2024, representing a 15% increase year-over-year, aimed at personalized offers and customer acquisition [42][47] - The marketing strategy is designed to maximize returns while maintaining profitability metrics [44] Credit Performance - American Express has maintained strong credit performance, outperforming industry peers, with metrics better than pre-pandemic levels [56][57] - The focus on premium card members has been a key driver of credit quality and performance [56] Long-term Aspirations - The company aims for mid-teens EPS growth, supported by a strong customer base and innovative product offerings [38][41] - American Express is committed to enhancing its value proposition to attract younger generations while retaining existing premium members [53][54] Additional Insights - The company has successfully shifted its brand perception among younger consumers, making it a preferred choice for this demographic [53] - The credit portfolio is described as resilient and less volatile compared to industry standards, with a strong performance in stress tests [58][59] This summary encapsulates the key insights and data points discussed during the conference call, highlighting American Express's current performance, strategic initiatives, and future outlook.