American Express' (AXP) third-quarter results showed an increase year on year; however, revenue fell slightly short of market estimates. The payments giant raised its full-year earnings outlook, reflecting strong performance in several key areas despite some challenges. In the fiscal quarter ending in September, American Express reported adjusted earnings of $3.49 per share, surpassing the $3.30 figure from the previous year and exceeding the Capital IQ consensus estimate of $3.29.
Notably, revenue net of interest expense increased to $16.64 billion from $15.38 billion. Nevertheless, this figure fell short of the expected $16.65 billion, leading to a 5.7% drop in stock value during Friday trading. "In the third quarter, card member spending increased by 6%, while card fee revenue growth accelerated by 18%," stated Chief Executive Stephen Squeri.
The company attracted a significant number of new premium card members, achieving 3.3 million new card acquisitions while maintaining impressive retention rates, strong credit performance, and disciplined expense management. In terms of specific revenue growth, U.S. consumer services revenue saw a notable 10% increase, totaling $7.94 billion.
International card services experienced an 11% rise, reaching $2.94 billion. Commercial services also grew by 7%, nearing $4 billion, whereas global merchant and network services remained steady at $1.85 billion. American Express reported provisions for credit losses totaling $1.36 billion, an increase from the $1.23 billion reported a year earlier.
This rise is attributed to higher net write-offs due to growing loan balances. The company also noted a 9% rise in consolidated expenses, amounting to $12.08 billion. Looking ahead, American Express anticipates 2024 per-share earnings in the range of $13.75 to $14.05, a revision from its previous estimate of $13.30 to $13.80, driven by solid year-to-date performance and the strong earnings generated by its core business.
According to the consensus on Capital IQ, the projection for GAAP EPS is set at $13.71. Chief Financial Officer Christophe Le Caillec provided insights during an earnings call, emphasizing that the EPS outlook indicates a year-over-year growth of 23% to 25%. "This figure is higher than our expectations at the beginning of the year and exceeds our long-term aspiration of mid-teens growth,” he remarked.
Additionally, American Express expects full-year revenue growth to be around 9%, as detailed in a recent investor presentation. Back in January, the company had outlined expectations for revenue growth in the range of 9% to 11% for 2024. Stock information: Price: $272.62, Change: -$13.16, Percent Change: -4.60..