American Express misses on topline; Shares fall 3%

American Express Company (AXP) reported revenues of $10 billion for the second quarter of 2018, an increase of 9% from the same quarter last year. Net income grew 21% to $1.6 billion and EPS jumped 25% to $1.84 from the prior-year period. The company beat analyst expectations on earnings but missed on revenue. The stock dropped by more than 3% after-market.

Consolidated provisions for losses rose 38% to $806 million, in line with the company’s full-year expectations. The increase reflected growth in the loan and charge portfolios as well as higher write-off rates.

American Express expects revenues to be up at least 9% for 2018. The company reaffirmed its EPS guidance at the high end of the $6.90 to $7.30 range for the full year.

Last month, American Express announced plans to increase its dividend by 11% to $0.39 starting from the third quarter of 2018. The credit card provider also intends to repurchase up to $3.4 billion of common shares during the period ranging from Q3 2018 to Q2 2019. This will allow the firm to repurchase up to $1.6 billion of common shares in 2018, and up to an additional $1.9 billion in the first half of 2019.

Stephen J. Squeri, Chairman and CEO, said “With total Card Member spending up 10% and 2.9 million new cards acquired, we are both strengthening relationships with current customers and attracting new ones through innovative products and services. We continued our progress towards parity coverage in the U.S., expanded our network internationally and announced new card offerings with three important business partners – Amazon, Marriott, and Wells Fargo.”

American Express realigned its reportable segments to reflect the organizational changes made last quarter. The new segments are Global Consumer Services Group, Global Commercial Services and Global Merchant and Network Services.

During the second quarter, the Global Consumer Services Group reported a 12% increase in total revenues, reflecting higher loans, Card Member spending, and fee income. In Global Commercial Services, revenues grew 8% driven primarily by higher Card Member spending.

Global Merchant and Network Services revenues increased 1%, primarily reflecting higher proprietary Card Member spending, partially offset by an expected decrease in the average discount rate and lower revenues from network partners.

Related: American Express Company Q2 2018 Earnings Call Transcript

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