American Express (AXP, Financial) reported strong financial results for Q2 2025, exceeding EPS expectations for the sixth consecutive quarter. Billed Business, a key indicator of card member spending, increased by 7% year-over-year to $416.3 billion, slightly up from the 6% growth in Q1 2025. This growth highlights the spending power of the company's younger, higher-income customer base.
Despite the solid performance, AXP maintained its FY25 guidance of 8-10% revenue growth and EPS of $15.00-$15.50. Investors were disappointed by the lack of an upward revision, especially with shares trading near all-time highs.
- Billed Business growth was driven by a balanced performance across categories. Goods and Services spending rose by 7% year-over-year, surpassing the 5% growth in Travel and Entertainment (T&E). Although T&E growth has slowed from the double-digit increases seen in 2023 and early 2024, it remains robust, supported by AXP’s premium cardholders, especially in international markets.
- New card acquisitions were strong, with AXP adding 3.1 million new proprietary cards in Q2. This growth reflects the brand's appeal and effective marketing, with 63% of new global consumer accounts coming from Millennials and Gen Z, who prefer premium, fee-based products.
- Of the new global accounts, 71% were on fee-paying products, showcasing AXP’s strategic focus on high-value, premium offerings like the Consumer and Business Platinum Cards, which are set for major updates in the U.S. this fall.
- Credit quality remains a key strength for AXP, with a net write-off rate of 2.0% and a 30+ days past due rate of 1.3%, both outperforming industry averages. The Federal Reserve’s CCAR results affirmed AXP’s robust risk management, showing the lowest projected credit card loss rate and highest projected return on assets among banks in the stress test.
AXP posted a 17% year-over-year increase in adjusted EPS, driven by record card member spending of $416.3 billion. However, the decision to maintain rather than raise its FY25 EPS and revenue growth guidance has left investors wanting more, especially with shares recently at record highs.
