American Express Co ($AXP) Q4 2025 Earnings Call

Thank you, Kartik. Good morning and welcome to our fourth quarter earnings call. We had another year of strong performance, continuing the momentum we delivered since introducing our long-term growth aspirations in January of 2022. Full year revenues were up 10% to a record $72 billion, and EPS was $15.38, up 15% over last year excluding the divested gain. Card member spending was strong throughout the year. Card fee growth continued in double digits for 30 straight quarters, and we maintained excellent credit quality. Importantly, we continued to invest in areas that strengthen our membership model and drive our growth. For example, we continued our successful product refresh strategy with refreshes in close to a dozen countries around the world, including the launch of our new US consumer and small business platinum cards. We renewed and expanded our relationships with key international program partners including British Airways, ANA, and Air France KLM. We continued to build our membership assets with new lounges, the expansion of our hotel network, the Toast partnership, and a series of new card member experiences. And we expanded global merchant acceptance to over 170 million locations worldwide. And we continue to deliver innovative mobile experiences. Turning to 2026 guidance, given the strength and stability in our premium consumer customer base, the momentum we're generating from our investments in the business, and the flexibility we have to drive leverage in our business model, we expect 2026 revenue growth of 9 to 10% and EPS of $17.30 to $17.90. We will also continue our strong track record of returning capital to shareholders with a planned 16% increase in the quarterly dividend to 95 cents. For the last several years, we've been managing a company with a focus on accelerated revenue and EPS growth. This has generated consistently strong momentum, which gives me confidence in our ability to not only deliver on our 2026 guidance, but also to continue driving strong growth over the long term.

The key to driving our growth has been our investment philosophy. We consistently invest to strengthen our competitive advantages across key areas including our customer value propositions, marketing, technology, partnerships, and coverage. In 2025, for example, we invested $6.3 billion in marketing, an increase of around 75% since 2019. And in just the last two years, both marketing and technology investments are up 20 plus percent. We apply a rigorous return discipline focusing on outcomes that drive growth. For example, after a product refresh, in addition to its financial results, we measure customer demand and engagement, credit quality, retention, and relationship expansion. In evaluating our marketing investments, we measure the spend and revenue efficiency of our marketing dollars across thousands of campaigns. As a result of this process, we've created a robust marketplace of ideas where we fund the best opportunities from across the company. This return discipline combined with our investment flexibility enables us to dynamically reallocate resources to those opportunities that represent the highest returns. A great example of this is our recent decision to quickly redirect marketing investments to our US platinum products given the strength we saw towards the end of the year. One of the key lessons we've learned in executing this philosophy is that the investments we make in our value propositions pay off in multiple ways, including increasing customer demand and engagement, driving business to our merchant partners, maintaining strong credit performance, and driving efficiencies by enabling marketing dollars to go further. We're seeing this in our new US consumer platinum card, which continues to perform even better than our expectations. Customer demand is high, engagement is up, credit quality continues to be excellent, and we're seeing no change in retention rates as the new fee kicks in. At the same time, investments in our marketing capabilities have driven acquisition incentives to some of the lowest levels in the last couple of years.

Powering the success of our product refresh strategy and our growth overall are the investments we're making in technology. This enables us to quickly introduce new capabilities that drive customer engagement and satisfaction, add new partners in categories that our card members value, and develop new customer experiences that enrich Amex membership. We now spend $5 billion annually on technology. At a high level, we categorize our tech spending into two broad categories: one I would call run-the-business investments, things like infrastructure, software licenses, and cybersecurity, and investments in development activities. Development includes things like new mobile experiences and capabilities and the ongoing modernization of our core systems, which we upgrade regularly similar to our product refresh strategy to stay on the cutting edge. For example, we're rolling out our new third-generation data and analytics platform, which will enable greater personalization and marketing, improve servicing experiences, augment our industry-leading fraud capabilities, and enable new Gen AI and agentic use cases. The new platform, which is built on the public cloud, is already reducing the time for key processes in marketing and fraud by 90%, and we expect to migrate 100% of our data and analytics processes to the new platform by 2027. We continue to invest in enhancing our app experiences in a number of ways, from the new platinum onboarding experience and the launch of our travel app to digital journeys that enable self-service. As a result, we're driving more revenue-generating engagement via the apps, and we're creating operating efficiencies from digital self-service. Over the last three years, for example, the number of calls per account coming into our service centers has dropped by 25%. We're also expanding our digital capabilities for business customers, including the integration of Center's expense management solution, which we plan to launch later this year as part of a suite of offerings for small and middle market commercial customers. And we've created an enterprise AI enablement layer to support the development and launch of Gen AI and agentic capabilities, including those already in market such as our travel counselor assist tool, our dining companion experience, as well as the deployment of Gen AI tools to nearly all our colleagues worldwide.

By successfully executing this investment philosophy over the last several years, we've delivered on our goals of accelerating revenue and EPS growth while maintaining best-in-class credit performance. At the same time, we are substantially increasing capital returns to shareholders. Our expectations for 2026 are no different. We expect to continue delivering the pace and quality of growth we've seen in recent years while also continuing to invest in areas to sustain our growth and deliver strong capital returns to shareholders. In summary, we are operating from a position of strength thanks to our loyal premium customers and the dedication of our world-class colleagues. And I'm confident in our colleagues' ability to continue to innovate for our customers as we invest for growth to drive long-term consistent results. Now I'll hand it over to Christophe for more details about the quarter and full year results, and then we'll take your questions.

Morning.

Yeah. So I think, as I said in my comments, we have the ability when we see opportunity to be really flexible with our marketing investments, and we saw tremendous demand for premium products, particularly the platinum card. And as we go forward, we'll continue to adjust as necessary. I don't think this affects the overall results because we don't really focus so much on acquiring cards as much as we focus on acquiring revenue, and we're hitting all our revenue targets and we're hitting our return on investment targets. So again, I wouldn't focus too much. I mean, if you look at it sequentially, it's a little bit down. If you look at it year-over-year, it's 100,000 cards, and that led to an increase in platinum cards. So we're really happy with those decisions, and we think it was obviously the right thing to do.

Yeah, look, I think when you tease out SMB, you've got to look at middle market and you've got to look at small business. I think small business is really, really strong. I think middle market is where you see a little bit of the slowdown. I think as far as the competitive space, look, you just saw Capital One just acquired Brex. You've got Ramp out there. We acquired Center last year, which we'll be launching probably by mid-year, and it's a highly competitive space. Having said that, we're still three times larger than anybody else. Our platinum refresh has gone very, very well, and we're looking for a pickup as the year goes on, and we'll be communicating more in terms of just what's going to go on in our overall commercial strategy as the year goes on from a product refresh perspective. So yes, it's a highly competitive market. I think the other thing to look at is it's not just us that is sort of slow on the overall growth as it relates to SMB, and I think most of it is middle market from an industry perspective. So again, competitive, I like the hand we have. I like the plans that we have going forward, and we'll be communicating more as the year goes on on that.

Look, we saw a big uplift in platinum over the holidays, and I think the momentum that the new platinum launch has given us, the momentum that gold has given us, we're really bullish from a consumer perspective. Will it go ahead of 9%? I don't know. But I like what our card members are doing with the product. They're really engaging. I think one of the big things that is sort of lost on a lot of people was the platinum app that we launched and the ability for our card members to really engage with the product and to go out there and spend. I mean, if you look at restaurant spending, for example, for the quarter, it's up 9%. If you look at Resy restaurant spending, it's up 20%. And that's really due to the engagement of our platinum card holders and it's due to the engagement of our gold card holders with our Resy restaurant. So that synergy has really worked out very, very well for us. So again, I'm not projecting more than 9%, but we do have very, very strong momentum, and that momentum, as Christophe just talked about as well, that momentum from a platinum acquisition perspective, we expect to continue.

Hey, good morning, Erica. So yes, you're right. The overall portfolio is slowly getting more premium. The platinum portfolio is growing at a very fast pace. The spend, because of the strong engagement, is also growing at a faster pace.

Yeah, I think with existing customers, they don't uptake it as much as quickly as new customers do. But what I will tell you is that it goes very quickly. The engagement with Lululemon, the engagement with Resy, the engagement with the hotel credit was pretty quick with our existing customers. With the new customers, it's what draws them immediately. And I think what's really important there is that draw is why as you move forward, when you have a new value proposition, you don't need to heavy up as much on marketing. I mean, and Christophe's point about movement between lines. So there's movement between VCE marketing, there's better credit performance, there's operating expenses. You got to look at the entire thing. But the bottom line is new customers, you know, look at the product, they're very rational about it and they engage in everything they want to engage in. The existing customers have a little bit of inertia but then all of a sudden they start to engage in it. One of the things that really made a huge difference for us was the Platinum travel app. The Platinum app, it made it so easy to enroll in all the benefits and we had an uptick of 30% in our travel bookings in the fourth quarter. That is a direct result of that Platinum launch and the engagement of our cardholders. So, you get a lot more engagement across the board and you just see what's going on with Resy. Our restaurant spending is up 20%. So, all of the metrics that we look at speaks to the fact that this was a wildly successful product launch. It attracted new cardholders and it engaged existing cardholders to spend even more.

Yeah, let me make a couple comments and I'll let Christophe go a little bit further. But I think that, look, we launched on September 18th or so, and I think we got to certain engagement levels. I think those are probably the engagement levels we're going to get to. I think what you'll see is as new people come on, they will engage, but I think the existing card base has planted their flag, if you will. This is what they're going to use out of the new product. And a new card base, they've done what they're going to do. So, as we plan for this, and we're fine with where the VCE levels are. I mean, it's expected. But as we plan for this, I think Craig, you're right. I think you get to a point where it sort of stabilizes, right? Not every card member uses every single benefit. It's just, and that's not how we really designed the product, right? We designed the product so that it appealed to a wide variety of people. There are core benefits that a lot of people eat, right? So, they'll use the Resy credit and people take Ubers and things like that, but then there are other credits on the side that they may not use. They may not use a Walmart Plus. They may not use a Lululemon and so forth. So you get to that sort of balance, if you will, where it's a lot easier to project what's going to happen. Some things you get more uptake than you thought you were going to get and other things you get less uptake than you thought you were going to get. But in balance, we're very happy with the overall engagement, which then leads to a wide variety of spend and more spend on the product.

Look, I think everybody's pretty much said everything that there is to say on this. I think look, affordability is really important. I don't think a 10% credit card cap is the answer to that. I think it would reduce the number of cards ultimately in the marketplace. I think it would reduce line sizes. America pretty much runs on credit. I think that would impact small businesses and so forth and it just has this sort of effect of a downward spiral from my perspective. So I don't think that's the answer. And obviously we have conversations and I'm not going to get into those but we just don't think it's a good idea.

I would say it's, you know, if you look at risk, it's more macroeconomic or political. The competitive dynamic has been here since the financial crisis. I mean this became a very interesting business after the financial crisis because it's a great return. It's a category that continues to grow about 8% every year. It's a great return on assets for people and it's a great way to deploy capital. So the competitive dynamic in consumer is as tough as it's ever been. JP Morgan's out there, Citi's out there, Capital One's out there. And the challenge for us has been the challenge that we faced for the last 15 years is to stay one or two or three steps ahead of our competitors. And when you look at what our competitors are doing, they are following our playbook. And so our goal is to continue to move that playbook to a higher level and that's what we'll continue to do and to execute and provide fantastic service to our customers. The one thing I'll say that nobody has really been able to replicate is our customer service. I mean we continue year-over-year to perform and win the J.D. Power award for service. And I think service is sometimes an underlooked component of the overall value proposition and it's one that we invest in quite heavily. So, it's a highly competitive market. We never rest on our laurels and we'll keep fighting and keep anticipating where the competition is going to go and beat them to that point.

Yeah. Look, I think that as I said with our Center acquisition, especially from a small business perspective, rather than partnering with expense management providers as we've done with whether it was Concur or IBM before that, we'll now have our own expense management offering. And I think it's what small businesses want. It's what middle market companies want. I think additionally, and I'm not going to get into the details on this call but we will be sharing over the next couple of months just a roadmap of where we are going from a commercial perspective both from a product perspective, an integration perspective and other technical capabilities that we will be adding. I think the small business and middle market space is highly competitive. It's been very competitive as it relates to a value proposition perspective and I think now the puck is now moving and has moved to from a software perspective. I think the combination of Capital One and Brex is a very good move for Capital One. It's probably a good move for Brex as well. It's great software and you put a balance sheet together and I think that works. They'll work on their integration issues and challenges like you do when you have an acquisition like that. But I think when we're out in the marketplace, I feel that we're going to be able to compete quite effectively. So more to come on it, but it's a battleground just like it has been. It's just that it's going to be a battleground on even more multiple fronts.

I mean look the priorities are pretty much, if you think about even the Platinum refresh, you go back to sort of strategic priorities that we have from a company perspective which is really to win in the premium space, to continue to build our position in commercial, obviously our coverage and our network initiatives and we're going to continue to focus on those things. I mean, the Platinum card is launched right now, we want to continue to get value out of that Platinum launch in both consumer and in small business. We're going to continue to build coverage obviously in international as that continues to grow and continues to be the fastest growing overall part of our business. And we're going to continue to build more capabilities both digital capabilities and capabilities as we just discussed for our small business customers. And then we've got Resy and Tock and we're going to be combining those as the year goes on and I think those two acquisitions have been really great for us as you see the differential in overall restaurant spending and overall Resy spending which is not only good for our card members, is good for us but good for the restaurants as well. So, I mean, as I said to somebody on one of our calls recently, I think when you sort of look at this year, it's more of the same for us, right? We're still going to have product refreshes, not as big as we had from a Platinum perspective this year, but the fact that we continue to refresh our products, that we continue to refresh our technology base, that we continue to make more things available to our consumers, that we continue to build on partnerships, and that we continue to use those partnerships to bring value to our card members is something that we're going to continue to lean into.

Well, I'll let Christophe comment after I comment. I'd look at the last four or five years and I'd look at what our guidance is. And what we're basically saying here is consistently we're going to grow 10% and consistently we're going to deliver you mid-teens EPS growth. Not a lot of companies do that and we are committed to doing that. And one of the earlier questions was, well, if you have extra flexibility, you're going to drop it down to shareholders. A couple years ago, we had extra flexibility with the CertiFit gain. We dropped it down to shareholders. I think one of the reasons we have been able to have this consistent growth trajectory over the last really five years now and going into this year is the plan is because we have stayed true to who we are and we have made investments for the longer term and not taken any short-term shortcuts. And so, while people may not be happy all the time that, hey, you had some extra money and you invested it. Why didn't you drop that to shareholders this year? It's because our goal is to drive consistent shareholder returns year after year after year to continue to grow our dividend in line with how we're growing EPS to continue to do our share buyback program to continue to return capital to shareholders which has allowed us to drive our market cap up and has allowed us to be consistent. It's really been the same old story with AXP for the last four or five years and that's what we're going to continue. So, I don't look at the cost to grow as all that expensive right now. We stay out of things that we think are non-economical. And there are portfolios out there that we do not think are economical. We do not bid on it. We have a large co-brand portfolio and we believe that that portfolio is a 1 plus 1 equals 3 for us. And we have a great premium customer base. We're growing very strongly internationally. And we still see those growth prospects over the horizon. As I said earlier, this is a market that continues to grow on a global basis by about 8%. So, again, I don't share the it looks like it's too expensive to be in this business. I think you may see from time to time you'll see some rewards costs that get a little bit higher. You might see some incentives get a little bit higher. But I think what people fail to do is to look in aggregate at the entire expense base and how one investment plays off another investment. And so when Christophe and I sit down and look at the expense base, we look at an investment, how it impacts our operating leverage, how it impacts our credit performance, how it impacts our ability maybe to dial back marketing or maybe we have to dial up marketing. So there's a lot of levers that we're pulling. We've been doing this a long time now. And so we feel really good about '26 and beyond at this point given the macro environment that we have, with all the contingencies that are out there. But yeah, I don't view this as an overheated market in any way, shape, or form for us. It's competitive, no doubt, but I don't think it's overheated from a cost perspective.

Well, I think as you know, look, we're constantly, this is I think in the last 10 years the third big data mart conversion that we've done here as you know the technology gets better and better. I think what's really exciting for us is to be able to take large language models that are out there and take our data and insert that in and really come up with great card member offers, great card member insights. Be able to create archetypes of various cardholders and be able then to treat cardholders in a and target cardholders in a much more effective way. And so and we'll roll those tools out and access to that entire data mart across the entire company. And so it takes till 2027 because you're doing it sort of organization by organization, process by process, application by application, but we're already seeing some benefits of that in some of our card member marketing, which again leads to some of the reduction in overall cost. So we're excited by that. We're excited that it's on the cloud, which gives us the ability to expand that on a very dynamic basis. And so as we go on, we'll be able to talk more about just how the proof points of that comes out. But this is a business that not only you have to invest in value propositions but you really have to invest in a light way in the technology behind it because ultimately it's a technology that drives those value propositions and it's a technology that drives the appropriate engagement with your cardholders.