American Express Co (NYSE:AXP) stock dropped on Friday after it reported mixed fourth-quarter 2025 results.
The company reported quarterly revenue (net of interest expense) growth of 10% year-over-year to $18.98 billion, topping the analyst consensus estimate of $18.92 billion.
The revenue increase was primarily driven by higher Card Member spending, increased net interest income supported by growth in revolving loan balances, and strong card fee growth.
Adjusted EPS also exceeded projections, coming in at $3.53, trailing the analyst consensus estimate of $3.54 due to a 10% jump in expenses, mainly due to the "Platinum refresh" marketing costs and higher customer engagement fees.
Segments
Card Member spending, or Billed Business, rose 9% year-over-year to $445.1 billion.
U.S. Consumer Services revenue climbed 11.0% to $9.16 billion, while Commercial Services revenue increased 6.7% to $4.4 billion.
International Card Services saw a 16.9% jump to $3.5 billion, and Global Merchant and Network Services revenue grew 7.7% to $2.04 billion.
Net card fees surged 17% year-over-year to $2.63 billion.
Total expenses, however, increased by 10% year-over-year to $14.48 billion, driven by higher variable customer engagement costs due to increased Card Member spending and the U.S. Platinum Card refresh.
Provisions for credit losses rose to $1.4 billion from $1.3 billion a year ago, reflecting higher net write-offs, partially offset by a lower net reserve build compared to the prior year.
The fourth-quarter net write-off rate was 2.1%, up from 1.9% year-over-year.
Dividend Hike
The company plans to increase the quarterly dividend per common share by 16% from $0.82 to $0.95 per share, beginning with the first-quarter 2026 dividend declaration.
Gen Z Card Spending
Chair and CEO Stephen Squeri said fourth-quarter card member spending increased 8% on a foreign-exchange-adjusted basis, net card fee revenue grew at a double-digit rate for the 30th straight quarter, and credit performance remained best in class.
He explained that the company continued to invest strategically in initiatives that strengthen its Membership Model and fuel growth, including the successful U.S. Platinum Card refresh and technology upgrades such as new app features and GenAI-powered experiences.
A historic shift in consumer dynamics fueled the results.
CFO Christophe Le Caillec told Reuters that for the first time in the company's U.S. consumer business, Gen Z and Millennial spending has surpassed that of Gen X.
This younger cohort is increasingly adopting premium products like the Platinum card to unlock lifestyle perks and travel benefits.
While high borrowing costs have forced many Americans to cut back, the affluent members have specifically increased their spending on restaurants, luxury goods, and international travel.
Credit Card Rate Cap
Management is also pushing back against a potential one-year cap on credit card interest rates (10%) proposed by the Trump administration.
Le Caillec told Reuters that while the company supports affordability, it does not believe a price cap would achieve that goal, as the company focuses on a "disciplined approach" to its premium membership model.
FY26 Outlook
American Express expects full-year revenue of $78.73 billion-$79.45 billion, representing a 9%-10% year-over-year increase, compared to the analyst consensus estimate of $78.62 billion.
The company expects EPS of $17.30-$17.90, compared with the analyst consensus of $17.41.
AXP Price Action: American Express shares were down 3.32% at $346.59 at the time of publication on Friday, according to Benzinga Pro data.
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