American Express Company (AXP) KBW Fintech Payments Conference (Transcript)

American Express Company (NYSE:AXP) Conference Call Summary Company Overview - Company: American Express Company - Date: February 27, 2024 - Participants: Christophe Le Caillec (CFO), Sanjay Sakhrani (KBW) Key Points Company Performance and Growth Strategy - The stock has performed well, with a 25% revenue growth in 2022 and 15% in 2023, indicating a successful growth plan post-pandemic [3][4] - The company is focused on executing its existing strategy without the need for M&A or major transformations, which provides confidence in its growth trajectory [4][5] - The revenue pool for payments is growing at 7-8% CAGR, providing a solid foundation for American Express to achieve double-digit growth [8] Revenue Growth Drivers - Card fees are expected to grow, with a 17% increase anticipated, particularly in late 2024 [7] - The company plans to refresh 40 products in 2024, up from 20 in 2023, which is expected to drive growth [11][14] - The growth of card fees is attributed to onboarding more fee-paying members and high renewal rates, demonstrating strong customer loyalty [12][13] Target Demographics - American Express is successfully attracting younger cohorts (Millennials and Gen Z), which are contributing significantly to growth [21][22] - The average FICO score for younger card members is 750, indicating a strong credit profile [23] - The company expects relationships with younger members to last 18 years longer, enhancing long-term value [24] Travel and Entertainment (T&E) Spending - T&E spending increased by 9% in Q4, with restaurant spending up 11%, indicating continued consumer engagement [31] - Corporate T&E spending has not returned to pre-COVID levels, with variations across industries [32] Small Business Segment - Demand for new small business card members is strong, but existing members are spending less, leading to negative organic spend [34][35] - The company anticipates that spending levels will stabilize around Q4 levels [35] Net Interest Income (NII) - NII grew by 30%, with lending balances up 17%, indicating effective management of funding costs and asset growth [38] - The introduction of the "pay over time" feature for premium products is a significant contributor to balanced growth [38] International Markets - International growth is strong, particularly in key markets like Japan, Australia, the UK, Canada, and Mexico, with potential for sustained double-digit growth [40][41] Competitive Landscape - Increased competition in the premium space is viewed positively, as it expands the category and benefits American Express as the market leader [43] - The merger between Capital One and Discover is not expected to impact American Express's growth plans significantly [46] Conclusion - American Express is well-positioned for continued growth through its strategic focus on premium products, younger demographics, and international markets, while effectively managing competition and economic challenges [44][46]