If the general attitude of global business is based on economic uncertainty, American Express (amex) I have never received that email.
The company is optimistic about the balance of 2025, even if many peers and the broader business community are holding themselves to the economic turbulence. While much of Wall Street circulates the illusion of consumer trust and rising unemployment rates, American Express executives see enough stability in their spending to ensure sound revenue and revenue targets, especially within its wealthy, young customer segment.
AMEX Chairman and CEO Stephen Squeri I emphasized the company’s confidence Repeat year-round guidance from 8% to 10% Increased revenue and earnings per share ranged from $15 to $15.50. He acknowledged the continued uncertainty in the global market, but emphasized that American Express’s forecast already accounts for a potential peak weighted average unemployment rate of around 5.7%. He noted that those numbers give the company plenty of room to survive macroeconomic headwinds.
CFO Christophe Le Kayleck Amex’s core strengths, particularly its price-based model and premium customer base, said it remained strong throughout the first quarter.
Q1 was the subject of pessimistic predictions from analysts, but the revenue season has so far shown incredible stability. A key point of interest to analysts is the concept of consumers “moving forward,” fearing that travel and big ticket purchases in late 2024 or early 2025 will artificially inflate first quarter numbers.
Squeri was clear in alleviating these concerns.
“We really don’t see moving forward,” he told investors. Revenue Call. “From a consumer perspective, we’re not making any progress.” Squeri noted that spending was consistent in January, February, March and the first half of April, with only monthly fluctuations being consistent.
He also said high-income earners continue to spend their time on travel, an important category of AMEX.
“We had the most travel bookings ever,” he said. This is partly due to the broader trends of consumers who prioritize experience and leisure despite demand. Even small business clients who have reported an increase in wholesale and other spending have not shown that one-time burst analysts could be associated with the “pull-forward” phenomenon.
Gen Z and Millennial Expense Resilience
Amex has long seen Gen Z and Millennials as important growth drivers. Squeri repeated his beliefs by citing both a higher average FICO score and arrears rate compared to the broader industry benchmarks.
“Our millennials and Gen ZS are significantly better from a FICO perspective and from a delinquent perspective than the industry,” he said. This younger cohort typically spends around 20% less overall than the older generation, but its spending is increasing with rapid clips, especially in international markets where management reported a 22% jump from the previous year.
The company also noted that younger consumers tend to be less balanced, but that trend does not seem to attenuate revenue.
Please refer: 85% of Gen Z prefer digital payments to cash
Instead, Squeri and Le Cailec said it points to a new generation of financially disciplined cardholders who use American Express cards for convenience, perks and points, rather than as a fallback for everyday liquidity. Squeri suggested that despite headlines about student loan repayments and rising cost of living, this group’s robust spending patterns reflects their ability to attract young mobile professionals upwards.
Beyond generational breakdowns, Squeri emphasized that American Express’s comprehensive customer base is skewed towards higher-income, more resilient cardholders.
“If we look at our card base now against card base and card base in 2019, it’s more premium than we have a higher FICO at that point,” he said.
This premium positioning, according to Squeri, helps quarantine the company against widespread fluctuations in consumer trust. Le Cailec has stepped up the company’s fee-driven model to buffer further from consumer sentiment swings. Over the past few years, a significant portion of new accounts (about 70% this quarter) has used paid products.
Meanwhile, American Express can successfully refresh the number of cards offerings and raise annual fees only if it enhances the benefits of the cards accordingly. In Squeri’s words, “We don’t indiscriminately raise the fees. Adding value will raise the fees.”
Long-term focus
Despite the threat of a recession, Squeri said the company remains committed to long-term investments in technology, small business solutions and new product updates. Squeri admitted that SMEs might feel in trouble first, if the economy goes in a tougher direction, but he emphasized that the company will not abandon its future-looking strategy.
“I’m not going to miss out on a good opportunity to invest in the future just to hit numbers,” he said.
Numbers, on a FX-adjusted basis, revenues rose 8% year-on-year or 9% to $17 billion when considering the impact of the jump year. Total cardholder spending also grew on a stable clip, surpassing the results at 6% (7% excluding extra days) across pivotal metrics such as customer retention, premium product demand, and credit performance. These numbers not only match, but in many ways they outweigh the levels seen in 2024.
Given the stable spending and credit trends, in light of the current economic situation, American Express forecasts full yearly revenue growth between $15.50 and $15.50, with revenue growth of 10% and revenue growth of 10%.
Although these goals could be affected by broader macroeconomic development, the company said it focuses on promoting long-term growth by supporting its customers and colleagues, exercising disciplined expense management, and selectively investing in the business.
