The recent earnings call from American Express for Q4 2024 presented a strong financial performance for the company, marked by record-breaking revenues and net income. As Steve Squeri, Chairman and CEO, highlighted in his remarks, this robust performance sets a promising tone as American Express looks forward to its 175th year in business.
Record-Breaking Financial Performance in 2024
American Express reported a remarkable $66 billion in revenue for 2024, up 10% on an FX-adjusted basis. The company also posted a net income of $10 billion with an earnings per share (EPS) of $14.01, up 25% year-over-year. These impressive figures outpaced the company's long-term growth expectations, marking it as an outstanding year across all key performance metrics including record Card Member spending, new card acquisitions, and net card fees.
Continued Membership Enrichment and Expansions
Through 2024, American Express enriched its membership model significantly by refreshing over 40 products globally and forming strategic partnerships such as with Delta and Formula 1, which aligns perfectly with its aim to capture Millennial and Gen-Z consumers. Notably, the acquisition of Tock and Rooam boosted American Express's dining portfolio.
SME and International Markets Fuel Growth
The company's focus on expanding its small and medium-sized enterprise (SME) base has shown promise, alongside a notable comeback in organic spending by small businesses during the holiday season. Moreover, American Express's international segment stood out with 15% growth in Q4, emphasizing significant opportunities in both the international consumer and SME markets, where the company's market penetration remains in single digits.
Strategic Outlook for 2025
Heading into 2025, American Express remains steadfast in its growth strategy, driven by investment in innovation and strategic expansions. The company forecasts an 8% to 10% revenue growth along with EPS between $15 and $15.50, reflecting 12% to 16% growth over the previous year. The higher end of this guidance is contingent on maintaining the elevated spending momentum witnessed in Q4 2024.
Anticipated Headwinds and Growth Opportunities
While American Express remains optimistic, challenges such as currency fluctuations and uncertain macroeconomic conditions could impact guidance. Yet, the company sees vast opportunities, especially as consumer confidence trends upward, and millennials and Gen-Z consumers continue to adopt premium products aggressively.
Balancing Growth Investments and Returns
With $7.9 billion returned to shareholders through dividends and share repurchases in 2024, American Express plans to maintain its disciplined approach in 2025. This includes a proposed 17% increase in quarterly dividends and a strategic focus on balancing shareholder returns with reinvestments in technology and marketing.
The commitment to refreshing between 35 to 50 products annually further underpins American Express's strategy to maintain growth across its consumer and commercial sectors. While specific products under refresh for 2025 remain undisclosed, the aggressive pace indicates a concerted effort to stay ahead in the competitive financial services landscape.
Investors' Reception and Future Prospects
Retail investors have reasons to be optimistic as American Express enters 2025. Despite facing competition from fintechs and traditional players like the looming Capital One and Discover merger, the unique value propositions of rewards, experiences and service, have helped American Express secure a firm footing with its premium customer base.
As the company looks to leverage its robust foundation and capture new market segments, particularly internationally, the strategic growth outlook remains aspirational yet firmly rooted in the confidence of its current trajectory. With a clear focus on sustaining momentum, American Express seems well-positioned to continue its legacy of innovation and expansion well into its 175th year and beyond.
For retail investors, American Express's performance and future guidance suggest a focus on sustainable growth through consistent product innovation, strategic partnerships and a balanced approach to market challenges and opportunities. This aligns with the company’s longstanding commitment to adapt and thrive in a dynamic global financial environment.