American Express (AXP) – Get Free Report published better-than-expected second quarter earnings Friday, but missed Street revenue forecasts and set aside a much higher amount of cash to cover potential bad consumer debts.
American Express said earnings for the three months ending in June came in at $2.89 per share, up 9.31% from the same period last year and 8 cents shy of the Street consensus forecast of $2.81 per share.
Group revenues, American Express said, rose 12.3% to $15.05 billion, a company record that fell shy of analysts’ estimates of a $15.48 billion tally. Total network volumes were up 8% to $426.6 billion, an all-time high.
The company also said credit provisions rose nearly three-fold from last year, to $1.198 billion, while expenses were up 7% to $11.1 billion.
Looking into the second half of the year, American Express confirmed that it sees group revenues rising by between 15% and 17%, with earnings in the region of $11.00 to $11.40 per share.
“We saw continued strong demand for our premium products, with over 70 percent of the new accounts we acquired in the quarter on our fee-based products,” said CEO Stephen Squeri. “Millennial and Gen Z consumers remained our fastest-growing customer cohort, representing over 60% of new consumer accounts acquired globally in the quarter, and spending by this cohort increased 21% over the prior year in the United States.”
“Our credit performance remains best-in-class, reflecting the strength of our premium customer base and continued thoughtful risk-management decisions,” he added. “A key element of our differentiated model is our partnerships, which play a critical role in our ability to deliver unique value to our customers.”
$AXP: Card member spending ATH up 8% driven by DD growth in U.S. Consumer and International Card Member spend. T&E spend up 14%. Reservations at Resy restaurant platform at a quarterly high & bookings in consumer travel business at highest levels since before the pandemic.
— Stephanie Link (@Stephanie_Link) July 21, 2023
American Express shares were marked 2.72% lower in pre-market trading Friday following the earnings release to indicate an opening bell price of $172.30 each.