American Express Q1 2025: Beat Expectations with 7% Revenue Growth and $3.64 EPS

Introduction
American Express (AMEX) posted strong financial results for Q1 2025, exceeding analyst expectations with significant increases in revenue, net income, and earnings per share (EPS). Despite economic challenges, the company demonstrated stable performance, driven by higher transaction volumes, growth in premium card portfolios, and effective cost management.

About the Company
American Express (AMEX) is one of the leading global credit card companies, with a rich history of over 170 years. The company offers a wide range of financial services and products, including credit cards, debit cards, payment services, and financing solutions for both individuals and businesses. Since its inception, American Express has focused on premium customer service and the development of products tailored for both the U.S. and international markets. The company is known for its partnerships with major businesses, personalized financial solutions, and continuous technological innovation, positioning it as a global fintech leader.

Key Financial Performance

• Total Revenues: AMEX achieved $16.97 billion in total revenues, reflecting a 7% year-over-year (YoY) growth. FX-adjusted revenues grew by 8%.
• Net Income: The company reported net income of $2.58 billion, a 6% increase compared to Q1 2024.
• Earnings Per Share (EPS): Diluted EPS stood at $3.64, a 9% increase from $3.33 in the prior year.
• Revenues Net of Interest Expense: Reached $15.65 billion on an FX-adjusted basis, an 8% increase compared to last year.

Expense Performance

• Transaction Expenses: AMEX reported a 7% increase in Goods & Services (G&S) billed business and a 6% increase in Travel & Entertainment (T&E) spending.
• U.S. Consumer Services: Growth in U.S. billed business was notable, with millennials and Gen-Z driving 14% and 5% YoY increases, respectively, while Gen-X and Baby Boomers showed more moderate growth.

Credit Performance and Loan Data

• Loans and Card Member Receivables: AMEX reported a 9% increase in total loans and card member receivables, reaching $207 billion.
• Credit Quality: Net write-off rates slightly increased to 2.4% compared to the previous year, while reserves remained stable at 2.9% of total loans.

Revenue Performance

• Discount Revenue: Increased by 4%, primarily driven by higher transaction volumes.
• Net Card Fees: Increased by 18% YoY, reflecting growth in premium card offerings.
• Net Interest Income: Increased by 11%, primarily driven by the growth in loan balances despite lower interest rates.

Operating Expenses

• Card Member Rewards: Expenses increased by 16%, driven by higher transaction volumes and increased redemption costs.
• Marketing and Business Development: Marketing expenses showed modest growth of 1%, while business development expenses rose by 10% due to higher partnership costs.

Impact of Macroeconomic Conditions and Tariffs on Profits
The Q1 2025 report notes that revenue and performance growth at American Express are significantly influenced by the global economic environment. The company highlights that changes in consumer confidence, consumer spending, and unemployment rates can impact its performance. Additionally, American Express faces challenges from global trade policies, including the impact of tariffs that have been imposed or may be implemented in the future. These tariffs could affect not only consumer spending but also overall market confidence and consumer behavior, which could in turn impact the company’s growth in profits. Despite these challenges, the company continues to focus on navigating an uncertain economic environment and maximizing growth through a focus on premium products and services tailored to customer needs.

Guidance for 2025
American Express expects continued growth in 2025, with revenue growth projected to range from 8% to 10%. The company’s EPS forecast is between $15.00 and $15.50, indicating a growth of 12% to 16%.

Conclusion
American Express’ Q1 2025 results highlight the strength of its premium card offerings and its ability to maintain profitability despite global challenges. The company is successfully increasing customer engagement, particularly among younger generations, while continuing to see growth in revenues from large customers and mid-sized businesses. However, the company must remain vigilant to global economic uncertainties that may affect consumer spending and expenses in the months ahead.