American Express Company (AXP) U.S. Financials, Payments & CRE Conference (Transcript)

Summary of American Express Company Conference Call Company Overview - Company: American Express Company (NYSE: AXP) - Event: U.S. Financials, Payments & CRE Conference on June 12, 2024 Key Points Industry and Economic Context - The current economic environment is characterized by slow growth, with American Express (AmEx) experiencing a continuation of trends observed in the previous quarter [3][4] - Billing growth for Q1 was approximately 7%, while Q2 is trending around 6% [3][4] - U.S. consumer billing grew by 8% in Q1, and international billing grew by 13% [4] Consumer Behavior and Market Position - High-income consumers using AmEx are holding up better compared to the broader consumer market [2] - The small and medium enterprise (SME) segment is showing low-single-digit growth, indicating softness in that area [4] Premium Card Strategy - AmEx has successfully increased its share in the fee-paying U.S. Premium Card segment from 20% to 25% [5] - The strategy focuses on acquiring more premium card members, ensuring renewals, and injecting value into products to justify fee increases [7][8] - Card fee growth has been in double digits for the past six years, with a notable resilience even during COVID-19 [8] Future Growth Expectations - AmEx expects to accelerate card fee growth as the year progresses, with a target of 9% to 11% revenue growth for the full year [9][32] - The company is on track to refresh 40 card products this year, which is expected to create momentum in member acquisition [11] Credit Quality and Risk Management - The write-off rate for AmEx is reported at 2.1%, which is strong compared to peers, and delinquency rates are also best-in-class [38][39] - The company maintains a disciplined approach to underwriting, focusing on credit profiles rather than age demographics [21][22] Technology and Innovation - AmEx is investing approximately $2.1 billion in technology development, which has increased by 40% over the past three years [49] - The company emphasizes the integration of technology and data to enhance customer experience and operational efficiency [50][51] Market Challenges - The recent decision by eBay to stop accepting AmEx is noted, but it is considered not materially impactful, representing less than 20 basis points of network volumes [34][35] - The strength of the U.S. dollar is expected to impact revenue growth, particularly for international operations [33] Investor Outlook - The management expresses confidence in the company's strategy and growth potential, aiming for revenue growth exceeding 10% and mid-teens earnings per share growth [54] - The current trading multiple is viewed as a discount compared to historical performance, with hopes for a revaluation based on growth and credit profile [54] Conclusion - American Express is navigating a slow growth economy with a strong focus on premium card offerings, disciplined credit management, and significant investments in technology, positioning itself for future growth despite market challenges.