American Express Q2 Earnings Disappoint Despite Record Revenue and 7% Spending Growth

American Express reported record revenue for Q2, with a 7% increase in spending by affluent cardmembers. However, net income declined 4% to $2.89 billion and earnings per share slipped 2%. Despite this, the company's record revenue suggests that its high-end card offerings remain resilient despite economic uncertainty.

Title: American Express Reports Record Revenue Despite Economic Uncertainty

American Express (AXP) has reported robust financial performance for the second quarter of 2025, with record revenue of $17.9 billion, marking a 9% year-over-year increase. The company's card member spending surged by 7%, reaching a new high of $416.3 billion. Despite this strong performance, net income declined 4% to $2.89 billion, and earnings per share slipped by 2% to $4.08 [1].

The surge in spending by affluent cardmembers indicates a high level of financial confidence and willingness to spend among upper-income Americans. This trend is particularly notable among millennials and Gen Z, who are increasingly embracing American Express's luxury value proposition. The company's business model, which heavily skews toward a more affluent customer base, makes these numbers a significant barometer for the financial health of upper-income Americans [1].

However, the company's expenses rose by 14% year-over-year, driven by higher investments in technology, risk management, and increased customer engagement costs. This increase in expenses is attributed to the enticing premium products and experiences offered to card members, which are proving popular despite the rising costs of servicing them [1].

American Express's credit performance remains strong, with the lowest projected credit card loss rate and the highest projected return on assets in the Federal Reserve's 2025 stress tests. The company's net write-off rate improved to 2.0%, indicating effective credit management. This robust credit performance is particularly notable among younger card members, with delinquency rates for millennial and Gen Z customers being nearly 40% better than the industry average for older age groups [1].

Looking ahead, American Express is preparing a significant refresh of its U.S. Consumer and Business Platinum Cards this fall, aimed at enhancing the luxury perks and rewards that appeal to millionaire millennials and aspiring Gen Zers. The company is also launching the new Coinbase One Card on its network, targeting younger, high-earning professionals seeking digital assets. American Express is confident that these strategic moves will continue to drive growth in the premium segment [1].

In conclusion, while American Express's net income and earnings per share declined, the company's record revenue suggests that its high-end card offerings remain resilient despite economic uncertainty. The company's focus on premium products and its strong credit performance position it well for continued growth in the premium space.

References
[1] https://finance.yahoo.com/news/american-express-just-offered-rare-184640626.html
[2] https://www.gurufocus.com/news/2987188/american-express-co-axp-q2-earnings-eps-of-408-beats-estimate-revenue-hits-179-billion