American Express Posts Q2 Earnings Beat, Revenue Miss

Summary:

• American Express exceeded earnings expectations at $2.89 per share, beating estimates by eight cents.
• Revenue fell short of expectations at $15.05 billion, leading to a slight decrease in stock value.
• Strong travel demand was observed during the quarter, especially among millennials, whose spending rose by 21 percent year over year.
• Spending on travel and entertainment also surged, showing a 14 percent year-over-year increase.
• American Express reaffirmed its full-year guidance and extended its partnership with Hilton until 2023.

American Express reported its second-quarter earnings, beating expectations on earnings per share while missing revenue estimates. Despite the revenue miss, the company saw strong travel demand and reaffirmed its full-year guidance. Here are the key points from the earnings report:

Earnings per share came in at $2.89, surpassing street expectations by eight cents. However, revenue was recorded at $15.05 billion, falling short of estimates, resulting in a slight decline in shares. American Express experienced robust travel demand during the quarter, with bookings through their consumer travel business reaching pre-pandemic levels. Millennials played a significant role in spending, with a remarkable 21 percent increase year over year. Spending on travel and entertainment also surged, showing a 14 percent year-over-year rise. The company anticipates double-digit growth in these sectors for the remainder of the year. The credit loss provision reflected higher net write-offs and a reserve build of $327 million. However, American Express remains confident due to its higher credit standards compared to its competitors. Additionally, American Express announced a long-term partnership renewal with Hilton, extending the collaboration until 2023. Warren Buffett's 20 percent ownership in the company contributes to their decision to avoid giving out quarterly guidance, though they affirm their annual guidance. Despite the positive aspects of the earnings report, the stock saw a decline of 3.25 percent, prompting investor questions during the conference call.

American Express continues to showcase its resilience and ability to navigate challenges, maintaining its position as a leading credit card provider. As the year progresses, investors and customers alike will closely watch how the company's growth and strategic decisions unfold.