Introduction & Market Context
American Express (NYSE:AXP) released its first quarter 2025 earnings presentation on April 17, 2025, showcasing continued growth despite a moderate spending environment. The credit card and financial services giant reported total revenues of $16.97 billion, up 7% from the same period last year, with net income rising 6% to $2.58 billion.
The company’s stock was trading down slightly in pre-market activity, with shares at $251.89, a decrease of 0.41%. This follows a 1.92% decline in the previous session, suggesting investors may be taking a measured approach to the results despite the company’s solid performance.
As shown in the following summary of financial performance, American Express delivered diluted earnings per share of $3.64, a 9% increase year-over-year, continuing its trend of consistent earnings growth:
Quarterly Performance Highlights
American Express reported total billed business growth of 6% on an FX-adjusted basis, maintaining a stable growth trajectory compared to previous quarters. The company’s growth was balanced across both Goods & Services (7%) and Travel & Entertainment (6%) categories, though results were impacted by a negative 1% effect from the leap year comparison to Q1 2024.
The revenue performance was particularly strong in certain areas, with net card fees growing 18% (20% FX-adjusted) and net interest income increasing by 11%. These results reflect the company’s successful premium card strategy and continued customer engagement.
The following chart illustrates the consistent billed business growth trend over the past five quarters:
American Express’s revenue composition shows strength across multiple streams, with particular momentum in subscription-like card fee revenue. The company’s diversified revenue model has helped maintain overall growth despite moderating discount revenue growth:
Segment Performance Analysis
American Express’s performance varied across its different business segments, with international operations showing particularly strong results.
U.S. Consumer Services billed business grew 7% year-over-year, with millennial and Gen Z customers driving much of this growth at 14% YoY, representing 35% of total spending in this segment. This demographic strength underscores the company’s successful strategy of attracting younger premium customers.
Commercial Services showed more modest growth at 2% YoY, reflecting ongoing challenges in the small business environment. U.S. SME, which represents 81% of this segment, grew at 2%, while U.S. Large & Global Corporate business increased by just 1%.
The standout performer was International Card Services, which maintained strong momentum with 13% year-over-year growth. Both consumer and commercial components showed robust performance, with International Consumer up 12% and International SME & Large Corporate growing 13%. Goods & Services spending was particularly strong at 14% growth.
The following chart shows the consistent double-digit growth in International Card Services over the past five quarters:
Credit Quality & Risk Management
American Express continues to demonstrate strong credit quality metrics, reflecting its focus on premium customers. The company reported a net write-off rate of 2.1% in Q1 2025, showing stability compared to previous quarters. Delinquency rates remained low at 1.3% for accounts 30+ days past due.
Total loan and card member receivables reached $207 billion, representing 7% growth year-over-year, a moderation from the double-digit growth seen in previous quarters. The company maintains a 2.9% reserve as a percentage of total loans and card member receivables, unchanged from previous quarters.
The following chart illustrates the company’s credit metrics over time:
Total provision for credit losses was $1.15 billion in Q1 2025, which included a $1.22 billion reserve build, partially offset by $73 million in net write-offs. This represents a slight decrease from the $1.27 billion provision in Q1 2024.
The worldwide total loans and card member receivables trend shows a gradual moderation in growth rates from the peak levels seen in 2023 and early 2024:
Strategic Initiatives
American Express highlighted several strategic initiatives during its presentation, with a particular focus on its product refresh strategy and investments in dining capabilities.
The company has already completed 40 product refreshes globally in 2025, with more planned for the remainder of the year. These refreshes have contributed to the accelerating growth in net card fees, which reached 20% on an FX-adjusted basis in Q1 2025.
Net card fee growth has shown consistent acceleration, while new card acquisitions remain robust at 3.3 million in Q1 2025:
American Express is also investing in its dining capabilities, having completed acquisitions of Toc and Rome to complement its existing Resi platform. These investments aim to strengthen the company’s value proposition for premium customers, particularly millennials and Gen Z consumers who show higher engagement with dining benefits.
The company’s capital position remains strong, with a Common Equity Tier 1 (CET1) ratio of 10.7%, well within its target range of 10-11%. American Express returned $2.4 billion to shareholders in Q1 2025, including $1.9 billion in share repurchases and $500 million in dividends.
Forward Guidance & Outlook
American Express maintained an optimistic outlook for 2025, projecting revenue growth of 8-10% and earnings per share of $15.00-$15.50, representing adjusted EPS growth of 12-16% when excluding the impact of the Accertify gain on sale.
The guidance is subject to macroeconomic conditions, reflecting potential uncertainties in the broader economic environment:
The company’s expense management strategy appears to be working effectively, with total expenses growing at 10% year-over-year in Q1 2025, compared to revenue growth of 7%. Variable customer engagement expenses, which include rewards, business development, and card member services, increased by 14% to $7.24 billion, representing 43% of revenue.
American Express’s consistent performance across multiple quarters, combined with its strong position in premium customer segments and international markets, suggests the company is well-positioned to achieve its 2025 guidance despite the moderate spending environment. The acceleration in card fee revenue and stable credit metrics provide additional confidence in the company’s ability to maintain its growth trajectory.
Full presentation:
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