American Express reported better-than-expected revenue for the fourth quarter of 2024, driven by strong holiday season spending on travel and online shopping. The New York-based financial services company, which primarily serves affluent consumers, recorded revenue of $17.18 billion for the quarter ending December 31, slightly exceeding analysts' projections of $17.16 billion, according to LSEG data.
The company reported net income of $2.17 billion, or $3.04 per share, in line with Wall Street expectations. CEO Stephen Squeri highlighted the strength of consumer and commercial spending during the holidays. "We ... saw record levels of annual Card Member spending, record net card fee revenues, and a record 13 million new card acquisitions," Squeri said, adding that the company continued expanding its global merchant network.
Total billed business, a key metric measuring spending on AmEx cards, rose 8% year-over-year to $408.4 billion. Travel and entertainment spending, particularly on airline travel, was a standout category, CFO Christophe Le Caillec told Reuters. "Airline travel, in particular, did really well," Le Caillec said.
AmEx's ability to navigate economic uncertainty has been bolstered by its high-income customer base, which is less impacted by inflation and elevated borrowing costs compared to the broader population. The company's provisions for credit losses fell to $1.3 billion in the fourth quarter, down from $1.4 billion a year earlier. A resilient economy and recent rate cuts by the Federal Reserve have also eased concerns about credit quality.
"The impact of rate changes to our economics are really, really small, given the nature of our balance sheet and the funding structure that we have," Le Caillec said.
Despite the strong performance, American Express shares dipped 2.5% to $318 in premarket trading Friday, down from a record close of $325.87 the day before. The stock remains up approximately 75% over the past 12 months.
Looking ahead, American Express projects earnings per share for 2025 to range between $15.00 and $15.50, compared to analysts' estimates of $15.23. The company also forecasts revenue growth of 8% to 10% for 2025, aligning with Street expectations of 8.1%.
Analysts remain optimistic about the company's growth trajectory. William Blair analysts noted in a research note, "We are encouraged by accelerating billings growth as we believe it will be a key factor for American Express to meet its aspirational target of at least 10% revenue growth."
The company's net interest income for the quarter came in slightly below expectations, at $4.04 billion compared to the $4.09 billion forecasted by analysts polled by Visible Alpha. Nevertheless, AmEx's overall performance underscores its resilience in a challenging environment.
The results cap a strong quarter for financial firms, with many of the largest banks posting robust earnings on the back of a resurgence in Wall Street dealmaking. AmEx also announced plans to increase its quarterly dividend to 82 cents per share, up from 70 cents previously, reflecting confidence in its financial outlook.
