American Express Q1 Earnings Beat Estimates on Premium Customers

American Express Company AXP reported first-quarter 2025 earnings per share (EPS) of $3.64, which beat the Zacks Consensus Estimate by 5.5%. The bottom line climbed 9% year over year. (See the Zacks Earnings Calendar to stay ahead of market-making news.)

Total revenues net of interest expense amounted to $16.97 billion, which missed the Zacks Consensus Estimate by 0.2%. The top line improved 7% year over year in the quarter under review.

The strong first-quarter 2025 earnings benefited from growing Card Member spending and premium customer base. Rising revolving loan balances and continued robust card fee growth aided its performance. The results were partially offset by escalating customer engagement and operating costs.

American Express Company Price, Consensus and EPS Surprise

American Express Company price-consensus-eps-surprise-chart | American Express Company Quote

Q1 Operational Performance

Network volumes of $439.6 billion rose 5% year over year in the first quarter, driven by higher U.S. consumer spending. The figure, however, missed the Zacks Consensus Estimate by 1.2%. Total interest income of $6.1 billion increased 6% year over year and beat the consensus mark by 1%. Provision for credit losses declined 9% year over year to $1.2 billion due to a modest net reserve release.

Total expenses increased 10% year over year to $12.5 billion due to higher operating expenses and an elevated customer engagement cost level, which resulted from expanding Card Member spending and usage of travel-related benefits.

Q1 Segmental Performances

The U.S. Consumer Services segment’s pre-tax income of $1.7 billion improved 7% year over year in the first quarter and beat the Zacks Consensus Estimate by 13.5%. Total revenues, net of interest expenses, climbed 10% year over year to $8.2 billion. Growth in the customer base of Gen-Z and Millennials also favored this segment’s results.

The Commercial Services segment recorded a pre-tax income of $836 million in the quarter under review, which fell 5% year over year and missed the Zacks Consensus Estimate by 18.3%. Total revenues net of interest expense amounted to $4 billion, which grew 7% year over year due to an increase in net interest income. The reported figure beat the consensus mark by 2.7%.

The International Card Services segment reported a pre-tax income of $381 million in the first quarter, which jumped 51% year over year and beat the consensus mark by 59.8%. Total revenues net of interest expense improved 8% year over year to $2.9 billion but missed the consensus mark by 2.1%.

The Global Merchant and Network Services segment’s pre-tax net income of $990 million fell 3% year over year in the quarter under review but beat the Zacks Consensus Estimate by 0.3%. Total revenues net of interest expense declined 3% year over year to $1.8 billion.

Corporate and Other incurred a pre-tax loss of $609 million in the first quarter, narrower than the prior-year quarter’s loss of $615 million.

Balance Sheet (as of March 31, 2025)

American Express exited the first quarter with cash & cash equivalents of $52.5 billion, up from $40.6 billion at 2024 end. Total assets of $282.2 billion rose from $271.5 billion at 2024 end.

Long-term debt amounted to $51.2 billion, up from $49.7 billion at 2024-end. Short-term borrowing was $1.6 billion.

Shareholders’ equity of $31.2 billion improved from $30.3 billion at 2024-end. Return on average common equity was at 35%, below the year-ago level of 35.9%.

Capital Deployment Update

American Express bought back 2 million common shares in the first quarter of 2025 for $700 million and paid $600 million worth of dividends. In the quarter under review, the company paid a per-share dividend of 82 cents.

2025 Outlook Reiterated

American Express anticipates revenues to increase between 8% and 10% in 2025 from the 2024 level of $65.9 billion. Management expects EPS in the range of $15-$15.50, the midpoint of which indicates an improvement of 8.9% from the 2024 level of $14.01.

The company earlier stated that it expects revenue growth of more than 10% over the long term, while EPS is likely to continue registering mid-teens growth. The company currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

How Are Other Payments Companies Positioned?

Bigger rivals of AmEx like Visa Inc. V and Mastercard Incorporated MA are scheduled to report earnings in the coming weeks.

The Zacks Consensus Estimate for Visa’s earnings for the to-be-reported quarter is pegged at $2.68 per share, indicating 6.8% year-over-year growth. The consensus mark for Visa’s revenues is pegged at $9.56 billion, signaling a 9% increase from a year ago.

The Zacks Consensus Estimate for Mastercard’s first-quarter earnings is pegged at $3.57 per share, indicating 7.9% year-over-year growth. The consensus estimate for Mastercard’s revenues is pegged at $7.13 billion, indicating a 12.3% increase from a year ago.

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This article originally published on Zacks Investment Research (zacks.com).

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