American Express Co Q4 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Ryan Nash - Goldman Sachs - Analyst : Hey. Good morning, everyone.

Question: Ryan Nash - Goldman Sachs - Analyst : I didn't want to disappoint you, Steve, so I am going to ask about revenue growth. So, you gave a lot of different comments. Obviously, 8% to 10% -- you're exiting at 10%. You highlighted that Billings started the year at an elevated level similar to the fourth quarter. So Steve, maybe just talk a little bit about what could be the potential headwinds to revenue growth that would put you towards the lower end. And I guess, given GDP is strong, you've acquired a ton of cards in 2024, why is 2025 not in line with sort of the aspirational revenue growth, given it feels like this is sort of the right kind of environment where we could see that type of top-line growth? Thank you.

Question: Sanjay Sakhrani - Keefe, Bruyette & Woods North America - Analyst : Thank you. Good morning. Maybe just -- well, thank you, Steve, for getting in front of that question on the revenue guide. I appreciate that. I guess just a follow-up. If we were to think about where the acceleration came from in spending, I know, Christophe, you kind of mentioned it was balanced. But maybe, can we get a little bit more deeper into that, so that we can figure out how much it could sustain itself over the course of the year? And then -- so is it more discretionary versus travel type? And then if we think about the upside to the revenues, I mean, do you think that there would be an upside to the EPS range or that's pretty static?

Question: Erika Najarian - UBS - Analyst : Hi. Good morning. Just wanted to continue to unpack the Billings story for 2025. When I look at the proprietary net cards acquired, it looked like it slowed down a bit in the fourth quarter after being up double digits in the second and third quarter, of course, up 6.5% year over year. As we think about what's going to drive the Billings strength in 2025, particularly in light of, Christophe, your comment about modest increase in marketing expenses, should we think about -- what is the split between an increase in new cards acquired in terms of versus -- that 6.5%, versus better spend per account? We noticed, of course, that spend per account was up a little bit in the fourth quarter, up 3% versus 2% for the year.

Question: Mark DeVries - Deutsche Bank Securities Inc. - Analyst : Thanks. As we've been discussing, you're seeing accelerating Billed Business growth into year-end. We're also getting consumer and business confidence that's really been climbing. So Steve, I was hoping to hear about what you may have learned, both from any conversations you've had REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 24, 2025 / 1:30PM, AXP.N - Q4 2024 American Express Co Earnings Call with customers recently about kind of their optimism and spend, and also just looking at your historic Billed Business numbers and how that has historically kind of responded to rising confidence.

Question: Craig Maurer - FTP Securities LLC - Analyst : Yeah. Good morning, and thanks. Wanted to -- I had two questions. The first on SME -- we've seen very strong growth from some of your competitors, some newer competitors like Ramp. And I was wondering how you feel about your customer-facing tech in SME and whether that might be an area of potential acquisition in the future? And second, Delta had very strong commentary about the co-brand card growth and their expectation for 2025 that that growth will be at least as good. So, I wanted to ask you how that lines up with your thought process on the travel space and how the Delta book's been comping versus the rest of the book? Thanks.

Question: Don Fandetti - Wells Fargo Securities, LLC - Analyst : Hi. Good morning. Steve, it looks like the Capital One-Discover merger is going to go through. Any thoughts on the competitive impact? I know they don't have incremental affluent consumers, but it's more scale, ability to build lounges, and they do compete in SME.

Question: Rick Shane - JPMorgan - Analyst : Thanks for taking my question. Hey, Steve, one of the key initiatives of your team in your tenure is the increased focus on experience as an incentive versus reward. The impact on account growth has been significant and well understood. Is it fair to say that the other benefit besides growth is that there's higher operating leverage because there's more fixed costs associated with experience than there is with traditional rewards?

Question: Jeff Adelson - Morgan Stanley - Analyst : Hey. Good morning.

Question: Jeff Adelson - Morgan Stanley - Analyst : Thanks for taking my question. Steve, I was wondering if you could shed a little bit more light into the planned product refresh strategy for this year, where you might go with that? I know you previously talked about refreshing every three to four years, and Platinum -- US Platinum is one that's sort of been sitting out there since 2021. And Christophe, I was wondering if you could maybe shed a little bit more light into your credit commentary. The credit's been doing pretty well. It seems like it's outperformed what you've been looking for, stable this year. Can you talk about why you might be expecting a little bit of a modest increase from here? Is that conservatism on your part, or do you think you could actually see a better result than that?

Question: Cris Kennedy - William Blair & Company - Analyst : Good morning. Thanks for taking my question. Marketing investment has increased a lot in recent years. Can you just talk about how the allocations have evolved between the different buckets, such as customer acquisition, general brand marketing, and sponsorship activity? Thank you.

Question: Moshe Orenbuch - TD Cowen (Research) - Analyst : Great. Thanks. Most of my questions have already been asked and answered, but maybe, could you drill down a little more on the SME business? You saw a little bit of acceleration in the fourth quarter. Any thoughts either about the trends and momentum there more specifically or plans? I know, Steve, you said you didn't really want to talk about plans for refresh, but are there things that we should be looking for in 2025?

Question: Brian Foran - Truist Securities - Analyst : Hey. Good morning. I hate to use my question on FX, but is the 8% to 10% a FX-adjusted guide or GAAP? And because I think you mentioned you assume the dollar stays here. And then can you remind us the EPS impact? I know there's some expense and hedging. So, is there any appreciable EPS drag that we should think about embedded in the $15.00 to $15.50 range?

Question: Saul Martinez - HSBC - Analyst : Hi. Good morning. Thanks for taking my question. Let me double click a little bit on the International businesses that you talked about. I think you've said each of your top five markets you grew mid-to-high teens -- the mid-to-high teens range. Can you just comment on what some of the drivers are, what kind of momentum you're seeing in terms of merchant acceptance, how the sales changes you made a couple of years ago are impacting it? And I guess I'm just trying to get at how you feel about the trajectory and the sustainability of that kind of growth. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 24, 2025 / 1:30PM, AXP.N - Q4 2024 American Express Co Earnings Call

Question: Terry Ma - Barclays - Analyst : Hey, thank you. Good morning. I just wanted to ask about net card fee growth. I think you got it to mid-to-high teens growth in '25 with some moderation. So, maybe just unpack that a bit. You've historically had more of a runway to accelerate that kind of growth when you've done major refreshes. So, I'm just curious why that would actually moderate this year.

Question: Mihir Bhatia - BofA Global Research - Analyst : Good morning, and thank you for taking my question. Maybe I just wanted to take a little bit of a step back in a big picture question for you, just about competition from fintechs and how that has been evolving. You talked a little bit about it on the Commercial side earlier in response to Craig's question, but maybe just talk about it on the Consumer side as well. Specifically, I was wondering, we've been seeing some pretty rich cashback offers from some of the newer entrants in the market, if you will. Is that starting to have any impact in drawing customers away from the traditional rewards card? And just what are you seeing on competition there from the fintechs in the Consumer side? Thank you.