TradingKey - AmEx released its earnings for the second quarter of the fiscal 2025 on July 18th before the market bell

● 2Q25 Earnings per share: $4.08 vs $3.87 estimate (+17% y/y)

● 2Q25 Revenue: $17.86bn vs $17.70bn estimate (+9% y/y)

Obviously a double beat is not a bad thing for AmEx. Further to this, the company kept its annual guidance for both revenue and EPS, largely removing the worries coming from macro.

American Express also wrote off 2% vs 2.1% in the previous quarter, showing the ability of the firm to attract creditworthy customers.

The most valuable information we got from these earnings is about the state of the more affluent part of the US population, and, to be honest, the spending is quite resilient. Seems like the wealthier ones do not really care about economic slowdown, tariffs or trade wars. Spending within categories like Travel and Entertainment was one of the major drivers behind the company’s strong result. Simply speaking, AmEx cardholders are still spending on business and first class flights, lounges and fine dining experiences.

Such spending is not just accredited to the older population, but also to the millennials and Gen-Z, underlying two mega trends - 1) wealth transfer from the older to the younger generations is already underway; 2) desire for experience economy is still a driving force among the younger ones;

Conclusion 

Despite the lukewarm investor reaction, as the stock fell after the announcement, AXP has been on a rally recently and the valuation is not that attractive. Naturally, the investors already have high expectations.

AXP 2Q25 Earnings Preview

TradingKey -AmEx will release its earnings for the second quarter of the fiscal 2025 on July 18th before the market opens.

- 2Q25 Earnings per share: $3.87 estimate vs. 2Q24 actual of $4.15 (-7% y/y)

- 2Q25 Revenue: $17.70bn estimate vs. 2Q24 actual of $16.33bn (+8% y/y)

What are investors looking at?

Loan business is a key: Unlike peers like Visa and Mastercard, who partner with banks to issue credit cards, and only facilitate the transactions, American Express has an integrated model that issues the cards, holds the loans, collects the card annual fees and facilitates the transactions.

Thus, the growth of the loan portfolio of AmEx is an important revenue driver. In relation to this, the delinquency rate (proportion of loans where payments are not made by the due date) will be an important indicator for the current state of the consumers. We should bear in mind that AmEx users are generally wealthier than those of Visa and Mastercard.

The earnings will bring more clarity on the effects of the economic slowdown, inflation and tariffs on the general consumer trends.

Stablecoin threat: As AmEx is exposed to transaction business, there is a certain threat from the growing popularity of stablecoins. A key promise of stablecoins is to remove middlemen. Rather than routing payments through issuing banks, card networks, or multiple correspondent banks. For example, in a bank-to-bank stablecoin transfer, AmEx interchange layers might be bypassed entirely. We do expect to hear the management’s view on this.

Conclusion

As American Express reports rather early in the earnings season, they will be able to provide valuable information on the consumer spending, the inflation and the overall economy, as well as any insights on the growing competition from stablecoins.