Amex (AXP) Q3 2025 Earnings Call Transcript

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DATE

Friday, October 17, 2025 at 8:30 a.m. ET

CALL PARTICIPANTS

Chairman & Chief Executive Officer — Stephen Squeri

Chief Financial Officer — Christophe Le Caillec

Head of Investor Relations — Kartik Ramachandran

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TAKEAWAYS

Revenue -- $18.4 billion, up 11% year over year to a record, with broad-based growth across revenue lines.

Earnings Per Share (EPS) -- $4.14, up 19% year over year.

Revised Full-Year Guidance -- Management raised expected revenue growth to 9%-10% and EPS to $15.20-$15.50 for the full year, assuming a stable macroeconomic backdrop.

Cardmember Spend Growth -- Total spend rose 8.5% FX-adjusted, about two percentage points higher than Q2, driven by retail (up 12%), T&E rebound, and premium airline tickets (up 14%).

Platinum Card Refresh -- Card acquisitions doubled in the first three weeks post-launch, with over 500,000 requests for the new mirror card and stable retention rates so far; annual fee increases will phase in for existing members over the next several months.

New Card Acquisition -- 3.2 million new cards acquired, with over 70% from fee-paying products; Millennials and Gen Z now constitute 36% of spend, equal to Gen X, and transact 25% more on average than older cohorts.

International Spend Growth -- International spend was up 13% FX-adjusted; three of the top five countries delivered 18% or more growth, and platinum spend outside the US increased 24%.

Credit Metrics -- US consumer and small business delinquency rates remained below 2019 levels; overall provision expense was $1.3 billion, with a $125 million reserve build attributable to balance growth.

Annual Card Fees -- Approaching $10 billion, growing at double digits for 29 consecutive quarters; net card fees up 17% FX-adjusted.

Net Interest Income -- Increased 12% due to higher balances and margin expansion, closely tracking spending trends.

Capital Return to Shareholders -- $2.9 billion returned, comprising $0.6 billion in dividends and $2.3 billion in share repurchases; dividends have risen 58% over three years.

ROE -- 36% ROE, maintaining high levels of profitability; around 70% of earnings returned to shareholders during the past three years.

VCE (Variable Customer Engagement) Costs -- Up 14%, with a VCE/revenue ratio at 42%, reflecting immediate benefit costs from platinum refresh investments.

Service Fees & Other Revenue -- Impacted by an $80 million gain related to Global Business Travel Group's transaction, contributing about five percentage points to year-over-year growth in this line.

SUMMARY

Management confirmed an 11% revenue gain and a 19% EPS increase for Q3 2025, alongside raised full-year guidance, as premium and international spending accelerated following the US Platinum Card refresh. Initial demand for the Platinum refresh exceeded internal expectations, with account acquisitions doubling the pre-refresh rate in the first three weeks after launch and strong engagement with new benefits. Higher VCE expenses related to the refresh were anticipated and are not expected to impede aspirations for mid-teens EPS growth in coming years, as stated by management. Net card fees, now at double-digit annual growth for 29 consecutive quarters, are poised to moderate before inflecting upward as new fees fully phase in. Millennials and Gen Z continued to drive engagement, comprising an equal share of spend as Gen X, while international markets remain a key growth source.

Chairman Squeri stated, "initial customer demand and engagement are exceeding our expectations," highlighting the launch’s positive impact on both new acquisitions and retention.

Chief Financial Officer Le Caillec confirmed, "EPS growth was 19% this quarter with an ROE of 36%," underpinned by consistent expense leverage, stable credit quality, and increased shareholder capital return.

Management explained the operational lag between immediate benefit costs and revenue realization: card fee increases are recognized over a two-year period, with growth peaking at 12 months after fee implementation anniversary.

Delinquency and write-off rates remained flat or declined sequentially, underlining solid underlying credit performance across premium portfolios.

Spending on platinum cards issued outside the US increased 24%, continuing the trend of above-average international premium engagement.

INDUSTRY GLOSSARY

FX-adjusted: Financial results recalculated to eliminate foreign exchange rate effects, providing a clearer measure of underlying business trends across geographies.

VCE (Variable Customer Engagement) Costs: Direct costs associated with card benefits, rewards, and services, which vary with customer usage and engagement levels.

Provision Expense: Funds set aside by the company to cover potential future credit losses on loans and charge card receivables.

Full Conference Call Transcript

Stephen Squeri, chairman and CEO, who will start with some remarks about the company's progress and results, and then Christophe Le Caillec, Chief Financial Officer, will provide a more detailed review of our financial performance. After that, we'll move to a Q&A session on the results with both Stephen and Christophe. With that, let me turn it over to Stephen.

Stephen Squeri: Thank you. Good morning, and thank you for joining us. We had a very strong quarter with revenues up 11% year over year to a record $18.4 billion and earnings per share up 19% to $4.14. Cardmember spending in the quarter accelerated to 9%, or 8%, on an FX adjusted basis, with particularly strong retail spending and a bounce back in travel and our credit performance continued to be excellent. Based on our strong performance through the first three quarters, we're raising the guidance we provided in January. We now expect full year revenue growth of 9 to 10% and EPS between $15.20 and $15.50.

The big news in the quarter was the launch of our refreshed US Consumer and Business Platinum cards, which reinforces our leadership in the premium space. I'm very pleased to say that the initial customer demand and engagement are exceeding our expectations. In fact, while it's still early, this is the strongest start we've seen for a US platinum Card refresh. Before I get into more details on platinum, I want to provide some context. We are fortunate to have a global premium customer base that is unmatched in the industry, and our goal is to provide our customers with the best experience in the industry.

By continually investing in innovating our value propositions, the recent platinum launch is yet another example of our proven strategy of refreshing our products on a regular basis to drive customer engagement and growth. In fact, we've done over 200 refreshes across our portfolio globally since 2019, and this is the third US platinum refresh we've done in the past decade. Our refresh strategy leverages and strengthens the competitive advantages of our membership model. It starts with understanding what our customers and our prospective customers want, and then enhancing our value propositions with access to compelling benefits, services, and experiences at a price point that delivers outstanding value. The scale of our premium customer base gives us a distinct advantage.

Our consumer and Business Platinum card franchise alone accounts for approximately $530 billion of annual spend globally. This scale gives us deep insights into customer spending patterns and emerging trends, which informs our product enhancements and where we invest in. Another key advantage is the relationships we have with 160 million merchants around the world who accept our cards. We've grown the number of Amex accepting merchants by nearly five times since 2017, giving our card members more places to use their cards and giving more merchants access to our high spending customers who spend, on average, nearly three times more annually on American Express cards than the average spend per card on other networks.

Ultimately, product refreshes fuel a virtuous cycle of growth for the company. By continually enhancing our offerings, we drive the engagement and scale of our premium customer base, our high spending card attract a growing number of world-class merchant partners who add more value to membership, which drives more engagement. And this enables us to generate more dollars that we can reinvest in enhancing our products. The result of all this is a loyal and growing premium customer base, mutually beneficial relationships with our merchants, and strong returns for our shareholders, including higher revenue growth, excellent credit quality, expense leverage, and increased profit across our product portfolios.

There's no better example of how we execute this strategy than our platinum cards. We launched our first platinum card over 40 years ago. It was the first premium card of its kind in the industry and remains the category leader. Platinum was initially designed for well-established, affluent, frequent travelers. Several years ago, we made a conscious decision to widen our aperture for our premium products so that we could also attract new generations to the franchise and grow with them as their needs change.

With the value enhancements we've made over the past decade, the Platinum Card has evolved into the leading premium lifestyle card that it is today, with a wider range of benefits and experiences that appeal broadly across generations, including Millennial and Gen Z consumers who are very comfortable paying for its exceptional value and are highly engaged in the product. A good example of these value enhancements is the previous US Platinum refresh we did in 2021.

Coming out of the Covid pandemic, we learned that our card members, particularly the younger cohorts, love the benefits we've added in categories like digital entertainment, wellness delivery services, in addition to our travel offerings, which we also continue to enrich with investments in New Centurion lounges and expansion of our hotel programs. That brings me to our most recent platinum launch. Here again, we continued our strategy of enhancing the card's benefits and services with more world-class partners across the areas we know our customers love to deliver industry-leading value that far exceeds the card's annual fee.

In addition, we continue to enhance our award-winning digital capabilities, introducing a new app experience for our US platinum members that makes it even easier to engage with the card's benefits. As I mentioned earlier, the initial results are very strong, exceeding our expectations. For example, new platinum account acquisitions are running at twice the level before the refresh in the first three weeks. We saw very strong engagement in the new benefits, and over 500,000 requests for the new mirror card. And while the annual fee increase won't go into effect for a few months, retention rates have been stable post-refresh.

In addition to these results, we saw record bookings through Amex Travel following the platinum refresh and the launch of our new all-in-one travel app, which we introduced earlier in September in the US. Looking ahead, I'm confident about our ability to sustain our growth by continuing to build on our powerful membership platform with a growing set of high-value products, benefits, services, and experiences. We'll also continue expanding our digital capabilities for consumers and businesses, including the upcoming integration of centers, expense management, solution for commercial customers, and will focus on continuing to grow merchant coverage outside the US to give card members more places to use their Amex cards.

With that, I'll hand it over to Christophe to walk through more detail on third quarter results.

Christophe Le Caillec: Thanks, Steve, and good morning everyone. Let me start with a few highlights for the quarter. Our business model is performing really well. Revenue growth accelerated to 11% this quarter with broad-based growth across revenue lines. Annual card fees are now approaching $10 billion annually and have grown at double digits for 29 consecutive quarters. Credit performance remains excellent, with both US consumer and small business delinquency rates still below 2019 levels. And we've driven leverage from expenses and provision even as we have invested in our premium value propositions, marketing, and technology. As a result, we continue to deliver very strong returns. EPS growth was 19% this quarter with an ROE of 36%.

Turning to build business trends for the quarter. Total spend was up 8.5%, FX adjusted, about two percentage points higher than Q2. The step-up in growth was driven by strong retail spending, up 12%, as well as a rebound in T&E. Airline spending picked up this quarter, and restaurants, our largest T&E category, continued to be very strong, up 9%. Premium T&E bookings saw good momentum, with spending on front of cabin airline tickets up 14%. The momentum we've seen from younger customers also continued. Millennials and Gen Z now account for 36% of total spend, making up the same share as Gen X. International had another strong quarter. We spent up 13% FX adjusted.

Momentum remains broad-based across markets, with three of our five top countries growing by 18% or more this quarter. In addition to the strong early performance, we are seeing in the US following the refresh spent on platinum cards issued outside the US is up 24% this quarter, consistent with what we have seen over the last two years. Overall, spend growth continues to be driven by transaction growth, up 10% in Q3. A good indicator of engagement from our customer base. I will note that we see strong engagement from Millennial and Gen Z card members, with the average number of transactions per US customer, about 25% higher than older cohorts.

We acquired 3.2 million new cards in the quarter, and even more important than the overall number of cards, demand for our premium products remain very strong, with over 70% of new accounts acquired on fee-paying products. Turning to balance, growth and credit loan and card member receivables were up 7% year over year. Broadly in line with bill business. There was about a one percentage point impact on balance growth from our health facility portfolios. Again this quarter, credit performance remains very strong and stable. Q3 delinquency and write-off rates were low, with delinquency rates flat to last quarter, while write-off rates declined.

This performance is supported by our focus on premium products, which tend to attract high-income, highly creditworthy customers. We're seeing the outcome of this strategy in the latest platinum refresh, where the credit profiles of consumer applicants following the refresh are even better than what we were seeing before, with an average FICO score of 15 points contributing to two times the number of acquisitions. Overall provision expense of $1.3 billion this quarter included a reserve build of $125 million, reflecting balanced growth. Returning to revenue on slide 14. Revenue was very strong this quarter, up 11% with momentum across revenue lines. Net card fees were up 17%, FX adjusted, a pace that we have now maintained since 2019.

Card fee growth moderated as we expected and will continue to moderate before we see an inflection upward in 2026. As a result of our product refreshes. As a reminder, card members who held platinum cards prior to the refresh get to experience the new benefits for a few months before the increase in the annual fee goes into effect. The new card fee will then be applied at renewal anniversaries over the next 12 months. Additionally, card fees are amortized over a 12-month period, putting those factors together, it takes roughly two years to fully lap the impact of the refresh on card fees.

With the contribution to growth peaking 12 months following the effective date of the new annual fee. The overall trajectory of card fees is also dependent on many other factors, such as volume and mix of acquisitions, retention, and the full suite and cadence of product refreshes globally. Net interest income was up 12% again this quarter. We continue to grow balances largely in line with spending while driving higher NII growth by expanding the margin earned on balances and at the same time, we've maintained best-in-class credit results.

This quarter, the service fees and other revenue line includes the impact of a transaction at the Global Business Travel Group, which contributed about five percentage points to year-over-year growth in this line. In addition, this is the first quarter that we have fully lapped the sale of the acidified business last May. The main takeaway here is that growth in service fees and other revenue is running higher than the low single digits that we saw in the second half of last year. And earlier this year. Overall, we feel good about the momentum we have at this point in the year, and we're on track for full-year revenue growth of 9 to 10%.

Turning to expense performance, VCE was up 14% in the quarter with the VCE to revenue ratio coming in at 42%. Card member service growth stepped up from the first half of the year to revive by strong early engagement with the refreshed US platinum benefits, especially some of the quarterly credits that were available to customers. This is a good early sign of interest in the product, and the new benefits. And as we noted previously, the cost of benefits occurs immediately. While the realization of fee revenue is lagged given the timing and accounting of those fees. Our model also benefits from partners that offer value to our customers.

Over the last 12 months, our partners have offered over $3 billion of value across embedded benefits. Amex Travel and Amex offers. We also manage our VCE expenses through constant innovation of our rewards and benefits. The latest one being the introduction of amount-based redemptions.

As we've noted previously, we expect the VCE ratio to increase over time as a result of our investments in the value proposition and the mix shift to a more premium portfolio. We also feel good about the ability of these investments, together with expense leverage, to drive sustainable mid-teens EPS growth under our long-term aspiration. Moving on to capital, we returned $2.9 billion of capital to our shareholders, including $0.6 billion of dividends and $2.3 billion of share repurchases. Our business continues to generate very strong returns with an ROE of 36% this quarter. Our strong ROE enables us to return a high level of earnings to our shareholders around 70% over the past three years.

Over the same time period, our dividend is up 58%. That brings me to the outlook for the year where there continues to be uncertainty in the environment. Given the strength of our performance, we are raising our full-year guidance. We now expect revenue growth of 9 to 10% and earnings per share between $15.20 and $15.50. These assume a stable macroeconomic outlook as we get to the end of the year. Stepping back, we feel really good about our momentum year to date, and we are very pleased with the initial demand and engagement following the platinum refresh. With that, I'll turn the call back over to Kartik and we'll take your questions.

Kartik Ramachandran: Thank you, Christophe. Before we open up the lines for Q&A, I will ask those in the queue to please limit yourself to just one question. Thank you for your cooperation. And with that, the operator will now open up the line for questions. Operator.

Operator: Ladies and gentlemen, if you wish to ask a question, please press star, then one on your touch-tone phone. You'll hear a tone indicating that you've been placed in queue. You may remove yourself from the queue at any time by pressing star, then two. If you are using a speakerphone, please pick up the handset before pressing the numbers. One moment please. For the first question. Our first question comes from the line of Sanjay Sakhrani with KBW. Please proceed with your question.

Sanjay Sakhrani: Thank you. Good morning. First of all, I appreciate all the disclosures on the platinum card and the refresh. And it seems like things are going really well there. Steve, I guess there's been just a lot of resiliency, if not strength, across your customer base. Even corporate and small business to accelerate sequentially. So maybe you could just talk about how you're feeling about the path forward? Can things actually improve here? Because we've bottomed some because you had this acceleration. Maybe just in a stable macro backdrop, specifically, and then just one Christophe modeling thing, the gain that you had this quarter, I mean, should we think about it as an explicit benefit?

I'm sorry if I missed it. Missed that commentary. If you had any. Thanks.

Stephen Squeri: Look, I think you saw a little bit of an accelerant this quarter from a Billings perspective. But if you look back over the last 6 or 7 quarters, it's been relatively stable. Is this a sign of things to come? I don't know if we're going to keep this billings up the way we are, but I don't see anything in the horizon here that would indicate that billings are going to slow down or decline. So, you know, I think the second quarter, you saw a deceleration in airline spending. I think the pickup in T&E was really good. I mean, restaurants continue to be strong, but airlines really did pick up.

And I think what was really encouraging for us as well was the premium part from an airline perspective. I mean, that was up 14%. When you think about front of the cabin. So that coupled with quarterly billing, quarterly bookings in our US travel consumer travel business, which we're at an all-time high. So I think, you know, look, we're still in a relatively stable, stable environment. I would also point out, as I always point out, our card base is not representative of what's going on across the United States.

It truly is a bifurcated economy. We have a small percentage of the cards, but our cardholders are much more premium, and we're lucky to have a much more premium card base. So, you know, we're seeing a little bit of a pickup in spend. We hope that continues into the fourth quarter. I think what was encouraging for us is also the pickup in small business. You know, we saw 4% growth pick up in large and global as well, which was up at about 6%. And international continues to, you know, just continues to really be really strong.

And the last thing I'll say is I think retail spending, especially in the US consumer business, you know, hopefully is a good harbinger for what will come during the holiday season because US consumer business was very strong as well at 9%. So, you know, are we going to see a big accelerant from here? It's not what we're expecting, but we're not also expecting a deceleration as well.

Christophe Le Caillec: And on your question about the gain, so it's not a large gain. It's in the range of about $80 million. We called it out because it has an impact on the growth rate of that line. Service fees and other revenue there. You know, if you want to color, as you know, we own about 30% of the Global Business Travel Group. And I'm sure you've heard or seen that they just merged with their Carlson Wagonlit. And that translated into a small gain for us, which we recognized this quarter. And that is moving the line a little bit. It's about five percentage points of that 17% growth that you see here.

FX adjusted, even if you control for that, we would still be in double-digit revenue growth. So it's really not changing that much there. The picture in terms of the momentum that we've reported this quarter.

Operator: Thank you. Our next question comes from the line of Ryan Nash with Goldman Sachs. Please proceed with your question.

Ryan Nash: Hey, good morning Steve. Good morning Christophe and I echo Sanjay's comments on the disclosures. Maybe Steve can maybe just talk or Christophe, broad strokes on the financial impact of the platinum refresh, particularly on card fees and VCEs. And, Christophe, you broadly comment on this, but does this in any way impact your ability to generate mid-teens EPS growth? Not over time, but during the refresh period? Thank you.

Stephen Squeri: I'll let Christophe go through some of the numbers here.

Christophe Le Caillec: Yeah, the short answer is no. We try to provide some color in terms of the dynamic. And you understand I know there the card fee dynamic is delayed. And then it's summarized over 12 months. While the benefit is immediate and is available to everybody. That clearly puts a little bit of pressure. And we signal at the beginning of the year that you should expect a little bit of step up in Cochems at the back end of the year, on the back of this platinum refresh. But the year is really playing out as we were expecting it to play out. You know, of course, we have those insights.

It was not all that visible to all of you, but we were expecting that kind of like step up in Cochems in Q4 and we are expecting it as well for 2026 going forward. So we did all of this with our eyes wide open. It's a material investment, a significant investment, but it's our biggest product. And we give you a little bit of, you know, some global numbers as well. On the size of their product. It's very large. So it is a sizable investment for us.

But we are, you know, we are still, you know, doing all of this with the, you know, ambition to deliver 15 or mid-teens EPS in terms of, in terms of the coming years.

Stephen Squeri: Right. And the only thing I would say is that, you know, look, we plan and we run the company medium to long term here. So as Christophe pointed out, we do all this stuff with our eyes wide open and with our aspirations in mind. And so when we think about our planning horizon, as Christophe said, it will take, you know, two years for everything to fully play out and expenses play out a little bit earlier. But, you know, our aspirations are still our aspirations. Ten, 10% plus revenue growth and mid-teens EPS growth.

Operator: Thank you. Our next question comes from the line of Mark DeVries with Deutsche Bank. Please proceed with your question.

Mark DeVries: Yeah, thanks. I was hoping to get a better sense of how much you think the platinum refresh contributed to the acceleration in build business growth during the quarter. I was kind of surprised at how quickly you made some of those credits, like the Resi and Lululemon available, probably stimulated some spend and also any color on kind of the strength of demand on the consumer product versus the business.

Christophe Le Caillec: Good morning, Mark. So on the spend, if you look at the spend in aggregate total build business for the quarter, the impact is small. You know, we've seen strength as we said in travel and entertainment, airline went from being flat last quarter to being at 5% this quarter. So either those macro changes are what's driving the billing strength that you see in the quarter. If you were to look at some specific partners, though, you would see like an impact. And we are sharing, I think some of those numbers on that platinum.

Charge on platinum card, where, you know, we're calling out that, you know, for those partners listed on the bottom right here, there was like a 2X increase in terms of the number of customers. But the total impact, billing wise for the quarter is, is not really material.

Operator: Thank you. Our next question comes from the line of Donald Fandetti with Wells Fargo. Please proceed with your question.

Donald Fandetti: Hi. Good morning. Steve, can you dig in a bit on what you're seeing in SM? You know, obviously it's good to see the uptick, you know, is that organic growth or is this just sort of bouncing around. And do you see any scenarios where that could normalize as you look out to 2026? There's also, you know, some fintech competition.

Stephen Squeri: Yeah. Look, I think what we're seeing is we're seeing still good acquisition. Which is good. And you're seeing organic start to turn around. A little bit, especially at the small end and at the, in the, in the medium in, in the middle market as well. So I think it'll, it'll stabilize. You know, one of the things that we've talked about quite a bit is, you know, our larger transactions moving off, you know, some of the cards that came on during, during the Covid piece. And I think we're, we're over, we're growing over that right now. So we feel good about acquisitions. We feel good about the early indications as it relates to the business. Platinum.

Platinum launch. And yeah, it's look, it's a, it's a competitive, it's a competitive marketplace out there. No doubt about it. Which is why we've done the center where we did the center acquisition and why we'll be looking, you know, early next year to, to relaunch, to launch our, our version of center integrated in with our cards. So you know, we think there's still a lot of opportunity in this space. And we think, you know, hopefully the, the downturn that we saw from an organic perspective is, is going to be behind us.

Operator: Thank you. Our next question comes from the line of Craig Maurer with FT Partners. Please proceed with your question.

Craig Maurer: Yeah. Hi. Good morning. Thanks for taking the questions. Wanted to ask first. When you look at the platinum card refresh, I was curious how much of that you think has been. With consumers or businesses that have high-end cards with other issuers already, or upgrades within your own portfolio, trying to ascertain, you know, the degree to which this, this investment is creating a competitive takeaway from others. And second, if you could just talk about the international strength and where you saw that most outside the US. And where you might still be lacking in terms of coverage, thanks.

Stephen Squeri: Yeah. So look, I think the it's a little bit too early to tell in terms of, you know, what the takeaways are at this point. I think the upgrades were very happy with the upgrades and we were happy with, you know, the new card acquisition that we saw, what we what we don't know. And we'll figure this, this out. But we're, you know, sort of three weeks in here. With these people that had premium cards before. Is this their first foray into the premium card segment? But we'll look at all that.

We will look at all that data and figure that out as far as international goes international pretty much across the board was, was very, very strong for us. I think, you know, we focus on really the big five markets. I think three of those markets, we had at almost 18% growth. And, you know, coverage continues, you know, as I said, we're, we talked about the city strategy of getting to 75% live coverage. And we talked about the various country strategies. And we continue to march, march in that direction. You know, we'll continue to focus on Europe.

And that's been a big focus. There's still some cities that, that we're working on. And will share more color with that. As, as that, as that occurs. But we're really pleased with just how much coverage has increased. Over the last, over the last few years.

Operator: Thank you. Our next question comes from the line of Erika Najarian with UBS. Please proceed with your question.

Erika Najarian: Hi. Good morning Christophe. If I could just. Dig in to Ryan's question a little bit. You know thank you so much for taking us through. You know, the sort of lifespan of the increase in card fees two years after the refresh. It's fully baked in 12 months after the new car will peak. I'm wondering if you could walk us through in terms of the same pacing, in terms of the step up and related expenses, is it would it be the heaviest over the next like 3 to 4 quarters and then it would subside in, in the next in the back half of, let's say 27. That walk would be helpful.

Christophe Le Caillec: Hey. Good morning Erika. Either predicting what's going to happen in 27 is going to be like really hard, but you. From her engagement standpoint, we are certainly going to keep engaging with card members. And our goal is to increase the engagement. But from a modeling standpoint, I think you can assume that the entire benefits are available to our card members from book back book from day one, and there are very strong engagement that we've seen in a right on the day of, you know, announcing the new product on September 18th. Was very high from day one. And has remained, you know, elevated and strong since then.

So I don't think we there is like a bit of a curve that is playing out for those benefits. The way the way it's playing out. If you want for card fees. Right. The accounting is also a lot more straightforward. Many of the benefits are quarterly benefits. So you kind of like expense them as soon as the card member earns them. So there is not that kind of complexity for those benefit as there is for card fees. So it's going to be like much more linear.

But over time, as I said, the goal is actually to get more and more of these card members to engage with those benefits. So you should expect that kind of like, you know, modest trend up. By design.

Operator: Thank you. Our next question comes from the line of Brian Foran with Truist Securities. Please proceed with your question.

Brian Foran: Hey, maybe piggybacking a little on Craig's question. If I think about the tearing of gold, platinum and black. You know, now that there's more dining on platinum. Are you seeing any interactions with gold? That you would call out? And then on the other side, you know, is there white space available for some, you know, enhanced or new, even new card between platinum and black? Now that you know, it's clear that a lot of consumers will jump at a pretty high annual fee.

Stephen Squeri: So, you know, look, gold continues to be, you know, a very strong product for us. And we continue to acquire new cardholders there. So we haven't seen Gold Card acquisition go down. And we have seen upgrades. But it's still early. I mean, you know, we're only three weeks in here. So we'll see how that plays out. And, you know, part of part of our strategy is to provide card members with a path to, to higher end products that potentially meet their needs, you know. Look, is there a is there a product between Platinum and Centurion? Maybe if you have any ideas, we're open to those to those ideas.

But you know, it's something that we talk about from time to time. But we'll see. But we're really happy with Centurion is and we're happy with where with where platinum is. And I think this refresh will continue to cement our position as the leading premium product.

Operator: Thank you. Our next question comes from the line of Rick Shane with JP Morgan. Please proceed with your question.

Rick Shane: Hey guys. Thanks. I'd kind of like to follow up related to Erica's question, particularly related to retention offers as you as the new higher fees roll out, I assume that really sort of cascades over 12 months. And I'm curious how we should think about perhaps what percentage of customers take retention offers or request retention offers. And if you expect that response rate is going to be higher or lower this time based on the initial responses you've seen.

Stephen Squeri: Yeah. So I think in general, that's a low that's a very low percentage of how we retain our base. Most of the retaining of the base is actually just explaining the product to them. And I think when you look at this product and you look at what you pay for, the value that you get, it's pretty easy to come to the conclusion that this is a product that I really want to keep. And so I think what we one of the things that we've really tried to do with this refresh is really make it easy to understand what the benefits are. And easy to engage in those benefits.

And I think that's critical because what that will do will lead to more retention. More engagement, will drive more business to our merchants. And we'll have more loyalty all the way around. So I don't see retention offers playing a. In fact, I would argue that they may play even a smaller role than they have in the past. And they already had a small role, because I think this product. Really works really hard for itself.

Operator: Thank you. Our next question comes from the line of Jeff Adelson with Morgan Stanley. Please proceed with your question.

Jeffrey Adelson: Hey, good morning. Steven Christophe. I just wanted to maybe dig in a little bit more on consumer health. I know, you know, I think your results really speak for themselves. And you've been pretty clear that you're seeing a stable spend environment in the last 6 or 7 quarters. Delinquencies remain low. I guess, just maybe in light of all these seemingly one-off headlines we've seen recently, which the market is maybe hearing are not so one-off, you know, there's been a lot of focus on the health of the consumer. So obviously your consumer base is very different than most.

But maybe you could just give us a little bit more color and commentary into the health of your consumer base. Maybe what you're seeing at the lower end of that spectrum and relatedly, just anything you're noticing from the government shutdown so far, if at all. Thanks.

Stephen Squeri: All right. Let me make a couple comments and I'll whatever. I miss. Christophe can fill in I. You know, I think that there's been a little bit of noise out there in the last couple of days about, you know, defaults and. Especially from a commercial perspective. But if you look at what the banks reported from a card write-off perspective and a card delinquency perspective. It all got better. Write-offs are down from the bank, from the from the major issues that we follow. Delinquency is down. And for ourselves. Delinquencies are exactly what they've been for the last number of quarters.

You know, around at 1.3 and our write-offs sequentially are, you know, are down a little bit. They're 1.9. But, you know, we've been hovering around two and 1.9 and our gap, you know, we still have a huge gap between us and our competitors. So I think, you know, the health of our consumer is really, really good. And they're spending they're engaging with the product. And they're paying their bills. And I would argue that it looks like the health of, of our bank competitors, consumers are getting are getting a little bit better.

As far as the government shutdown goes. You know, this is not our first rodeo with a government shutdown. And we haven't really seen any impact at this particular point in time. And if I go back historically, I think the last, not the last one, but maybe the one before was like 35 days or something like that. It. It didn't really have an impact. And so and for card members that are impacted, we do have our programs, our short-term relief programs, which will get them over the hump, enable them to continue to use the product and then come back and engage with us as they normally would. So that's that's pretty much what we're seeing.

Christophe Le Caillec: I don't have a lot to add. You know, I will say, you know, some indicators that reflect the strength of our portfolio, like retail spend up 12%, restaurant spend up 9%. So very strong acquisition as well with 70% of the card members joining the franchise choosing to join American Express on a fee-paying product. So the first thing they do is just like to pay a fee that shows, you know, confidence in their in the future.

And of course, you know, on the credit metric, part of our job is also to kind of, you know, look at every single, you know, customer in that just to see whether there are areas of weakness and, you know, like it's very stable across the board, very strong. And. Reflected in the metrics in the reserve rate. We go, you know, there's a lot of scrutiny that goes into this modeling. And you know, we see a lot of strength and stability across the board.

Operator: Thank you. Our next question comes from the line of Mihir Bhatia with Bank of America. Please proceed with your question.

Mihir Bhatia: Good morning, and thank you for taking my question. I was wondering if you could spend a couple of minutes on marketing spend and how you're thinking about that, not just into for Q, but also just longer term or into 2026. I guess, I suspect you want to continue to support the platinum refresh, but any details you can provide on where that $6 billion-ish of annualized spend is going? Maybe just give us a peek under the hood. How much is broad-based sponsorships, brand building versus like more micro like, the card member bonuses, retention type stuff? Thank you. Yeah.

Christophe Le Caillec: Hey. Good morning Mihir there. Are the biggest share. And the one that is moving from one quarter to another when it comes to marketing is there a size of the welcome incentives? Right. That's the biggest share of this marketing line. And there is tension here in that number. Between we want to spend more marketing dollars, but we also want that marketing dollar to be more efficient. So if you work here in the marketing organization, you constantly battling between. Let's do more, let's spend more. And yet at the same time, let's make sure the dollars were really, really hard for us.

And the, you know, the number that we end up spending each quarter and each year is the outcome of those two. Kind of like pressure points. And we are very strict and disciplined about those two. We really do not want a great opportunity to go. And so we're going to keep investing and we're going to keep investing at elevated levels. And at the same time, we're going to subject every single of this dollar to the level of rigor that we have spoken in the past, making sure that the return on that investment, we treat that as an investment meets our profitability criteria.

Right. And we are very clear in terms of stopping those investments where they are not meeting these criteria. And we are getting more and more sophisticated. You know, and measuring those, tracking those and, and, you know, and that's that's how we make that decision. It's not like, let's spend this year like $6 billion. We kind of like go in very much in the detail. And it is the sum of all this kind of like analysis that leaders do. That number. That's what we've done in the past and that's what we're going to keep doing going forward.

Operator: Thank you. Our next question comes from the line of Moshe Orenbuch with TD Cowan. Please proceed with your question.

Moshe Orenbuch: Great, Thanks. You've kind of answered both the question about card fees and spending in terms of the refreshed. Is there, you know, some sort of a like a vintage like performance in terms of spend volumes and, you know, and therefore the key revenue driver that you could share with us, like as you kind of bring on both, you know, both from new accounts and from, you know, higher spend from existing accounts. Any ways to think about that over the next several quarters? Yeah.

Christophe Le Caillec: So we're not. We're not disclosing those kinds of like numbers around spend by vintage or revenue by vintage. But what I can tell you is that intentionally, we have been, you know, back to the conversation with me here about investments and marketing dollars. We've been spending more of our dollars against fee-paying products and premium products. So the customers that are, you know, the more recent customers or indexed on these fee payment products, they also overindex on being younger customers. And we've made that point many, many times.

And either this quarter we shared with our with you that everything else equal, when you look at the engagement we're getting from these younger customer, they actually tend to transact 25% more than the older cohorts. So either I'm not going to share vintages and detail numbers with you, but you know, those are the kind of like forces that are at work here. More premium younger card members, more engaged. And that's what's kind of like the dynamic in the portfolio.

Stephen Squeri: Right? The only thing I'll add is that. We're getting from a younger cohort, we get a higher share of their wallet and they stay with us longer. And they grow as their lives grow. And so what we don't disclose vintage numbers. You can just philosophically look at this and say, well, if you're getting somebody younger and they're going to stay with you longer and you have a premium base that you're going after. Maybe you can conclude that they will spend more over time. And so those vintages, as you get these cardholders now tend to add more value down the road.

And that's the strategy without going through sort of this, this is who we acquired when. But if you just think about this from a strategic perspective. Younger premium cardholders, we're going to grow with them as their careers grow as their families grow as their as their life changes. And we're what we're doing here is we're really creating that loyalty and engagement so that we become that card of choice. And when you put a lot of benefits on a product. People want to engage with that product.

More on an ongoing basis, whether that product, whether they're using a benefit associated with the product or not. And so that's a dynamic that's at work.

Operator: Thank you. Our final question will come from the line of Rob Wildhack with Autonomous Research. Please proceed with your question.

Robert Wildhack: Hey guys. One more on platinum. The $3 billion figure in partner offered value was an interesting one. As you've gone through this refresh cycle and maybe looking back over the last few cycles, refresh cycles. Now to I mean, how has that partner receptivity changed with respect to co-funding credits and rewards? And then is there anything unique or different between the products, like to call out on the same theme as you compare the gold refresh to the platinum refresh.

Stephen Squeri: Well, I think you know, the nice part about sort of this product and our customer base is. People want to work with us and people that have been working with us want to work more with us. And I think there's no better example than that. Than our relationship with Uber. You know, we always we've had an Uber benefit for a long time. And now you have an Uber one benefit on there. And so they clearly see the value of working together. And it's a great partnership of working together to drive to drive results. You know, for both of us. And so, you know, it's we're very discerning about who we're going to work with.

We work we try and work with, you know, as many world-class brands as we can. And you. Know what you want to do is make sure that you're putting together a value proposition that speaks across the generations. And so, as I said in my opening remarks, we've been expanding these value propositions from pure travel to much more lifestyle wellness, and, you know, retail. And so forth. And digital, you know, people live their lives that way.

And so I think that, you know, as we continue to think about this and as we continue to have success here. It gets back to what we what we talk about, which is our virtuous cycle, that the more the more value we bring to our merchant partners, the more they want to engage with our cardholders, and then the more that we drive. As you think about the various products you look to target, the various value propositions to the target audience that you're going for. And if you just take if you look at sort of differential between platinum and gold. Well, gold has, you know, certain travel benefits associated with the, the, the hotel collection.

It really is targeted. It has a heavy emphasis on dining. And, you know, we've talked about the success that we had with Dunkin and the engagement that our card base has, and that's worked out very well for our cardholders, very well for us and very well for Duncan as well. And so the challenge of our marketing teams is to make sure that we're not only know what our card members want, but anticipate what our card members want.

And then build those into the value propositions by working with those partners that will, that will, in fact, do that. And I think, I think we've done a good job in that respect. And I think the team has really stepped up and created a platinum card value proposition. That is the best value proposition that we have ever that we ever had. And I think our customers are really appreciating it and will continue to appreciate it.

Kartik Ramachandran: With that, we will bring the call to an end. Thank you again for joining today's call and for your continued interest in American Express. The IR team will be available for any follow-up questions. Operator. Back to you.

Operator: Ladies and gentlemen, the webcast replay will be available on our Investor Relations website at IR.americanexpress.com. Shortly after the call. You can also access a digital replay of the call at (877) 660-6853, or (201) 612-7415. Access code. 13756151. After 1 p.m. eastern time on October 17th through October 24th, that will conclude our conference call for today. Thank you for your participation. You may now disconnect.

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