American Express's (AXP) Q2 2024 earnings missed forecasts due to lower-than-expected revenues, despite beating expectations in other areas such as EPS and net income. The company reported a diluted EPS of $4.15, which was higher than the forecasted $3.211, and a total revenue of $16.33 billion, however, this was lower than the anticipated $16.6 billion23. The revenue miss was significant, with an unexpected decrease of -257 million4.
- Revenue Shortfall: The revenue shortfall can be attributed to lower card member spending, especially in the international market. Although overall card member spending grew by 7%, adjusted for foreign exchange, there was a notable decline in spending from certain regions, including Europe and Asia-Pacific5. This regional variance suggests that the revenue miss might be specific to certain geographic segments rather than being a company-wide phenomenon.
- Geographical Variance: The revenue shortfall is not uniformly distributed across all segments of the company. American Express has seen a notable increase in spending from Millennial and Gen Z consumers, which accounts for over 60% of new consumer account acquisitions globally63. This demographic trend suggests that the revenue miss might be specific to certain customer segments or geographic regions.
- Consumer Behavior: Consumer behavior plays a significant role in the revenue of American Express. The company's revenue is highly dependent on consumer spending patterns, which can be influenced by economic conditions, interest rates, and consumer confidence. Any deviation from these patterns can impact revenue, as seen in the 7% growth in overall card member spending, which was driven by increases in both U.S. consumer and international card services5.
In summary, American Express's Q2 2024 earnings missed forecasts due to lower-than-expected revenues, primarily driven by lower card member spending, especially in the international market, and variations in consumer behavior across different geographic regions.
3/28/2025 11:14am
