American Express (NYSE:AXP) reported robust Q3 2023 earnings, marking the seventh consecutive quarter of strong performance. The company posted record revenues of $15.4 billion, a 13% increase year-over-year (YoY), and earnings per share of $3.30. The strong performance was fueled by robust card member spending and growth in international card services.
According to InvestingPro data, American Express holds a market capitalization of $105.36 billion, with a P/E ratio of 14.62. The company's revenue for the last twelve months (LTM2023.Q2) was $53.01 billion, marking a 10.52% growth. The gross profit margin stood at 55.57%.
Key takeaways from the earnings call include:
- American Express reported a 9% increase in US consumer spending and a 15% increase in International Card Services segment spending on an FX adjusted basis.
- Over 60% of all new consumer account acquisitions came from Millennials and Gen Z consumers.
- The company continues to innovate its value propositions, including the acquisition of Resy and enhancements to its product offerings.
- American Express is confident in achieving its growth plan aspirations of annual revenue growth exceeding 10% and mid-teens EPS growth in 2024 and beyond.
InvestingPro Tips highlight that American Express has a high earnings quality, with free cash flow exceeding net income. The company also yields high return on invested capital. These factors, alongside the fact that American Express is a prominent player in the Consumer Finance industry, have contributed to its continued success.
American Express reported strong growth in international card services, with spending from international consumers and SME and large corporate customers increasing by 15%. Despite a slight softness in commercial services, spending volumes are on track to support revenue guidance for the full year. The company also reported a 15% YoY growth in loans and card member receivables, driven by the interest-bearing portion of the balances. Credit quality remained robust with write-offs and delinquency rates below pre-pandemic levels.
Total revenues increased by 13% YoY, driven by growth in discount revenue, net card fee revenues, and net interest income. American Express acquired 2.9 million new cards and expects revenue growth of around 15% for 2023. Operating expenses are projected to be around $14.5 billion, with marketing spend estimated at $5.5 billion.
During the earnings call, American Express executives expressed confidence in their growth plan and future revenue growth. They highlighted that their revenue growth is driven by billing, card fees, and lending. The executives also discussed the small business segment, stating that while growth was slow in the last two quarters, they still see it as a significant opportunity.
CEO Steve Squeri discussed the company's focus on non-card products, particularly in small business lending, which has reached over $10 billion. Squeri emphasized the importance of providing a variety of working capital options for small business customers, including non-card loans and shorter-term loans. He highlighted the Kabbage acquisition as a way to expand these offerings. Squeri also mentioned the company's efforts to grow its organic footprint with consumers by introducing new products and services, such as savings accounts, debit cards, and personal loans.
In conclusion, American Express reported a strong Q3 2023 performance, demonstrating continued growth across various segments. The company remains confident in its ability to sustain this growth and deliver on its future growth plans. For more insights, InvestingPro offers additional tips on its Pro platform.
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