The paragraph outlines the start of the American Express Q4 2024 Earnings Call, introduced by the operator and led by Kartik Ramachandran, the Head of Investor Relations. It contains forward-looking statements and non-GAAP financial measures, with details available on the company's website. The call begins with remarks from Steve Squeri, Chairman and CEO, highlighting a strong performance in 2024 with record revenues of $66 billion, a 10% increase on an FX adjusted basis, and a record net income of $10 billion, resulting in earnings per share of $14.01, a 25% increase. Following Squeri's remarks, Christophe Le Caillec, CFO, will provide a detailed financial review before a Q&A session.

In 2024, American Express achieved record performance across key metrics, including revenues, net income, card fees, and acquisitions, along with high card member retention and strong credit performance. Notably, they saw 8% growth in fourth-quarter billings bolstered by holiday spending. The company refreshed over 40 products globally, enhanced their dining portfolio, and launched significant sponsorships, including a partnership with Formula 1. Their small and medium-sized enterprise customer base grew, driven by improved business sentiment and spending. The expansion of their merchant network was significant, achieving 80% coverage in top international markets. These results underscore the effectiveness of their strategy, and they look ahead to celebrating their 175th anniversary in 2025.

The paragraph highlights the company's history of innovation and growth from its beginnings in 1850 as a freight delivery service to its current status as a global premium financial and lifestyle company. It credits its longevity to talented colleagues and a focus on trust, security, and service. The company emphasizes its commitment to customer-focused innovation, particularly in attracting premium Millennial and Gen-Z consumers and small businesses. It sees continued growth opportunities, especially in the US premium card sector, where it holds a significant market share. The company is optimistic about sustaining growth by expanding its customer base within these younger, creditworthy demographics, who are expected to have increasing spending needs and entrepreneurial pursuits.

The paragraph highlights the company's growth opportunities in both the US and international markets, particularly within the small and medium-sized enterprise (SME) sector. The company is focused on expanding beyond just card services to offer additional products like lending and cash flow management. Internationally, despite currently low market penetration, there's significant growth potential, with intentions to extend merchant coverage and maintain a rapid growth trajectory. The strategy includes high investment in innovative propositions, marketing, and technology, along with continuing to refresh 35 to 50 products annually, maintaining this pace into 2025. Financial guidance for 2025 anticipates revenue growth of 8% to 10% and an EPS increase of 12% to 16%, driven by higher-than-expected Card Member spending.

The paragraph discusses the company's strong financial performance in 2024, highlighting a 10% revenue growth and a 25% increase in EPS. The return on equity was 35%, and $7.9 billion was returned to shareholders. Spending was stable throughout the year with acceleration at year-end, particularly by the premium customer base during the holiday period. This led to an 8% year-over-year growth in Q4, which was an improvement from previous quarters. The growth was broad-based across sectors, geographies, and customer segments. The company maintained excellent credit performance, saw healthy loan growth, achieved record net card fees, and benefited from a spend and fee-led model. The overall strong performance creates confidence for 2025.

In the reported quarter, transaction growth increased by 10% due to greater engagement from Card Members. US Consumer spend rose by 9% year-over-year, driven by strong holiday shopping, with Millennials and Gen-Z leading the growth at 16%. Commercial services spend increased by 4%, aided by a 3% rise in US SME spending. International markets also showed significant growth at 15% on an FX adjusted basis. While Q4 results were strong, Q1 growth may be affected by the leap year. Looking ahead to 2025, the company expects a similar spending environment to 2024. Additionally, Q4 total loans and Card Member receivables increased by 9% on an FX adjusted basis.

The paragraph describes the company's financial performance and future expectations. It notes that growth in loans and receivables is expected to outpace spending in 2025 as they cater to premium customers. Credit performance remains strong, with stable delinquency and write-off rates, helped by the company's strategy of attracting high credit quality customers. While they anticipate a slight increase in write-off and reserve rates due to acquiring new customers, revenue growth remains robust, with a 10% increase year-over-year on an FX-adjusted basis. Discount revenue and card fee growth are significant contributors, with card acquisitions reaching a record level. They expect card fee growth to continue into 2025, albeit at a moderated pace. Lastly, Q4 net interest income increased due to higher revolving loan balances and net yield.

In the recent quarter, growth slowed as anticipated, partially due to shifts in the funding mix and an increase in high yield savings account balances, which grew by 17% in 2024. Younger generations, including Millennials and Gen-Z, are significant contributors to these savings accounts. Looking ahead to 2025, the company expects net interest income (NII) growth to exceed the growth in loans and receivables, aided by revolving balances, despite uncertainties in interest rates. On expenses, the VCE to revenue ratio for Q4 was 43%, with rewards expense rising 15%, partly due to prior slow growth. The company made minor program changes that temporarily increase the URR. VCE expenses are expected to grow slightly faster than revenues in 2025 due to product investment and focus on premium offerings. Marketing expenses increased to $6 billion in 2024, up 16%, with a smaller rise anticipated for 2025. Operating expenses decreased by 1% to $4.2 billion for the quarter.

The article discusses the company's financial performance and future projections. Operating expenses for the full year were $14.6 billion, down 2%, but up 1% excluding a gain from the Accertify sale. In 2025, operating expenses are expected to grow in low single digits compared to 2024. The Q4 CET1 ratio was 10.5%, and $7.9 billion was returned to shareholders, including $2 billion in dividends and $5.9 billion in share repurchases. A 17% increase in the quarterly dividend to $0.82 per share is planned for 2025. The company aims for 10% revenue and mid-teens EPS growth, projecting 8%-10% revenue growth and $15-$15.50 EPS for 2025. The revenue forecast considers trends from the previous year and increased spending in Q4.

The paragraph describes a company's economic outlook, noting that while they assume a stable economy, there is uncertainty in factors like tax policy, interest rates, and currency movements. The strengthening of the US dollar poses a challenge to growth. Nonetheless, the company expects to continue strong growth into 2025, following a successful 2024. During a Q&A session, Ryan Nash from Goldman Sachs asks Stephen Squeri about potential headwinds to revenue growth, given the strong GDP and high card acquisitions in 2024. Squeri responds by affirming that their growth outlook is indeed aligned with expectations.

The paragraph discusses a company's financial performance and future revenue projections, highlighting the impact of billing trends on achieving revenue targets. The company has provided a revenue range for 2025, with the top end aligned with long-term goals. If billings match the fourth quarter's performance, they expect revenue at the upper range, while consistent yearly billings would place them in the middle, and any decline below last year would result in lower-range revenue. The company remains confident in sustaining double-digit growth in card fees and anticipates steady, albeit slower, growth in net interest income (NII) compared to early last year. Overall, the financial guidance remains consistent with past strategies.

In the paragraph, Stephen Squeri addresses questions about revenue guidance and EPS range. He explains that the company aims to maintain flexibility in reinvesting in the business when good opportunities arise. He cites the previous year as an example, where they reinvested gains by buying back shares and increasing marketing expenses. Squeri mentions that if they have another year of strong performance with good investment options, they aim to exceed EPS expectations. As they reach the high end of the revenue range, management will have to decide between reinvesting in the business or returning more value to shareholders.

The paragraph discusses the company's plans to maintain flexibility in investments based on emerging opportunities in technology, marketing, and value propositions, acknowledging a potential top-end growth of 16%. It highlights billings performance, noting consumer growth at 9% and SME growth improving from 1% to 3%, though not yet at desired levels. International growth is strong across SME and consumer sectors, with travel, particularly airline, showing significant increases. Front cabin and restaurant spending also grew. Christophe Le Caillec adds that the holiday shopping season was robust and raises questions about the sustainability of this growth into 2025.

In the paragraph, an analyst, Erika Najarian from UBS, asks about the factors driving billing strength for 2025, noting a slowdown in new card acquisition in Q4 compared to earlier in the year. She inquires whether billing strength will come from new card acquisitions or increased spending per account, referencing a slight increase in spending per account. Stephen Squeri responds by explaining that it's challenging to interpret quarterly data on new card acquisitions due to timing differences in marketing expenses and accounting for welcome incentives. He emphasizes that the company significantly invested in marketing in 2024, resulting in a record acquisition of 13 million cards.

The paragraph discusses the factors influencing billing growth for 2025, focusing on contributions from newly acquired card members, organic growth from long-term members, and attrition. While attrition has been stable and low over the past few years, making it predictable, organic growth remains the hardest to forecast and is the main source of volatility. The paragraph highlights a softness in organic growth in 2024 but notes stronger performance in the fourth quarter. Approximately 7% of the billing growth is attributed to new customers, while the remainder comes from organic growth and low attrition. Following this, an operator introduces Mark DeVries from Deutsche Bank, who asks about the impact of rising consumer and business confidence on billing growth, to which Stephen Squeri responds that rising confidence was observed in the fourth quarter.

The paragraph discusses the positive indicators of consumer and small business confidence, as evidenced by increased travel spending, particularly in premium airline cabins. The sentiment among small businesses appears strong, reflecting good organic growth and international success since COVID. While the company anticipates potentially being at the high end of its revenue expectations, it remains cautious, noting the reduction in days this quarter due to a leap year and emphasizing the need for sustained performance beyond just one quarter. Overall, there's optimism but a focus on careful planning and assessment going forward.

In the paragraph, Craig Maurer from FT Partners poses two questions to Stephen Squeri. The first question is about the growth in the small and medium-sized enterprise (SME) sector, specifically inquiring about customer-facing technology and the potential for acquisitions, in light of competition from firms like Ramp. Squeri responds by expressing satisfaction with the progress made, especially with the Kabbage acquisition, but declines to comment on future acquisitions. The second question concerns the growth of co-branded cards, particularly with Delta, and how that aligns with the company's strategy in the travel sector. Squeri indicates a positive outlook on travel, aligning with Delta's expectations, and highlights the comprehensive spending captured through the Delta card, not limited to Delta purchases alone.

The paragraph involves a discussion during a conference call. An analyst, Don Fandetti from Wells Fargo, asks Stephen Squeri, presumably a company executive, about the competitive impact of a potential Capital One and Discover merger. Stephen acknowledges the merger as a smart strategic move, emphasizing that it will enhance their scale and product offerings. He recognizes Capital One as a serious competitor, especially with their Venture X initiative targeting the premium space. However, he expresses confidence in his company's ability to compete and points out the challenges Capital One might face in integrating Discover. The conversation then shifts to another analyst, Richard Shane from JPMorgan, questioning the company's strategy of focusing on experiences and incentives over traditional rewards, suggesting this could lead to higher operating leverage due to more fixed costs.

In the paragraph, Stephen Squeri discusses the balance between fixed costs and variable rewards at the company, highlighting the importance of experiential sponsorships and lounges for card members. He mentions that as the company expands, particularly with new and existing lounge investments, costs scale similarly to technology infrastructure growth. Squeri emphasizes that the company aims to provide a mix of rewards and experiences for card members, leveraging fixed costs over a broader customer base. Following this, Jeffrey Adelson from Morgan Stanley inquires about the company's product refresh strategy, specifically regarding the US Platinum card, and seeks insights into credit performance, noting its favorable trends.

Stephen Squeri and Christophe Le Caillec discuss the anticipated modest increase in their company's performance. Squeri refrains from making specific predictions, citing ongoing product refreshes as a factor. Le Caillec highlights their strong credit metrics, noting they remain below pre-COVID levels and attribute this to a focus on the premium market. Despite this strength, he anticipates a slight upward trend due to customer acquisition and the maturation of new accounts. Both emphasize the success of their premium strategy in attracting low-risk customers and maintaining strong credit performance.

The paragraph discusses the evolution of marketing investments, with a focus on customer acquisition and general brand marketing. While general brand sponsorship has remained stable, significant growth in marketing spending has primarily gone towards customer acquisition. This includes both consumer (customer) acquisition, which involves upgrading and companion cards, and prospect acquisition. The speaker emphasizes prioritizing customer acquisition due to its attractive returns and mentions utilizing a sophisticated process to optimize marketing expenditures. They also stress maintaining strict standards on underwriting and returns to maximize these investments.

The paragraph features a discussion about the SME (Small and Medium-sized Enterprises) business, primarily focusing on its organic growth. Stephen Squeri explains that, although the company is maintaining a steady acquisition and attrition rate of SME customers, organic spending has not returned to pre-COVID levels. The pandemic caused a decrease in spending, which began recovering post-COVID but has since stabilized. Factors like inflation and higher interest rates have affected spending trends. Squeri emphasizes the importance of achieving a 3% organic growth to enhance SME's contribution to overall billings. He reiterates that the story is not about customer acquisition or attrition but about organic growth driven by small business confidence. The paragraph concludes with a segue to another question from Brian Foran regarding FX (foreign exchange) adjustments and financial guidance.

In the paragraph, Christophe Le Caillec addresses a question about the impact of currency exchange rate fluctuations on EPS (earnings per share). He explains the importance of differentiating between FX-adjusted (foreign exchange-adjusted) and FX-reported figures to accurately reflect the company's revenue momentum by removing currency noise. Since it's challenging to predict currency movements, the company focuses on FX-adjusted metrics. He mentions that a 10% increase in the dollar results in a $136 million negative impact on PTI (pre-tax income) but acknowledges this as a complicated issue due to global expenses. The adjustment between FX-adjusted and FX-reported revenue growth can be material, as exemplified by a one percentage point difference observed in Q4.

In the article paragraph, Stephen Squeri discusses the strong growth and positive trajectory of their international business, highlighting increased merchant acceptance and card acquisitions. He notes that merchant acceptance has expanded significantly, reaching 80% LIF coverage in key markets. The company sees substantial opportunities in the SME and consumer segments, particularly in the top five markets where they have less than 6% market share. Squeri expresses confidence in sustaining double-digit growth in billings, similar to the pre-COVID period when international was the fastest-growing business segment. Despite a significant slowdown during COVID, the international segment has rebounded and continues to grow rapidly.

Terry Ma from Barclays inquired about the expected moderation in net card fee growth for 2025, given historical patterns of acceleration following product refreshes. Christophe Le Caillec responded by highlighting that the company has experienced strong card fee growth for 26 consecutive quarters, with a compound annual growth rate of around 13%. This growth was particularly strong in Q3 and Q4, driven by product refresh cycles. Looking ahead to 2025, Le Caillec anticipates that this acceleration will continue into Q1 before stabilizing to mid-teens growth, akin to early 2024. He also noted the support from a high percentage of card acquisitions being on fee-paying products and strong renewal rates.

In the paragraph, Mihir Bhatia from Bank of America asks about competition from Fintechs, particularly regarding consumer card offerings and attractive cashback deals. Stephen Squeri responds by emphasizing that their Card Members prioritize a balance of rewards, experiences, and services over mere cashback. He mentions that while they are aware of Fintech competition, their customers value experiences and service that Fintechs have not been able to replicate. On the small and medium-sized enterprise (SME) side, technology integration with cards is noted, and the company is prepared to address these competitive dynamics.

The paragraph discusses the consumer side of American Express, noting that there have been no new significant developments. Card acquisitions are at record levels, indicating strong consumer interest. Kartik Ramachandran concludes the call, thanking participants and mentioning that the Investor Relations team is available for further questions. The operator informs listeners about the availability of the webcast replay and provides details on how to access it. The conference call is then formally concluded.

This summary was generated with AI and may contain some inaccuracies.