American Express (AXP.US) delivers mixed results: Q2 revenue misses expectations, full-year guidance raised, market wary of "premium" consumption momentum peaking

According to Zhitong Finance APP, while the U.S. economy struggles under the dual pressures of high inflation and geopolitical tensions, American Express (AXP.US) continues to see its affluent client base voting with their wallets. This financial services giant, which focuses on high-end credit card business, released a “mixed” quarterly report in pre-market trading on Friday—earnings per share came in at $4.53, beating expectations by $0.13, but revenue was slightly below expectations at $19.64 billion versus the anticipated $19.69 billion. Despite net profit rising 8% year-on-year to $3.11 billion and cardholder spending growth hitting a three-year high, the market reacted to the revenue “shortfall” with a share price drop of over 3% in pre-market trading.

Core Financial Data: EPS Beats, Full-Year Revenue Guidance Raised

According to the Q2 earnings report as of June 30:

Net Profit: $3.11 billion, up 8% year-on-year (compared to $2.885 billion in the same period last year);

Diluted EPS: $4.53, up 11% year-on-year and above analyst expectations of $4.40;

Total Revenue (excluding interest expense): $19.637 billion, up 10% year-on-year, slightly below the market expectation of $19.69 billion;

Card Member Spending (adjusted for exchange rates): up 9% to $455.8 billion, marking the highest growth rate in three years;

Credit Loss Provisions: $1.1 billion, lower than last year's $1.4 billion, reflecting improved credit quality;

Net Write-off Rate: 2.0%, unchanged year-on-year;

Total costs rose 12% year-on-year to $14.5 billion, mainly driven by greater customer engagement costs due to increased cardholder spending, the refreshed U.S. Platinum Card, and higher cardmember benefits utilization. The effective tax rate rose from 18.7% last year to 23.6%, primarily due to a one-time tax benefit in the same period last year.

Premium Consumption Engine: 9% Billing Growth Reaches Three-Year High

Against the backdrop of a “K-shaped” U.S. economy, American Express's business model centered on affluent clientele has demonstrated strong defensiveness. Cardmember spending adjusted for exchange rates rose 9% to $455.8 billion, the fastest pace in three years.

Recently, American Express has focused its marketing resources on its Platinum Card—which carries an annual fee of $895—moving away from no-fee cash-back cards. In Q1 2026, 73% of the 3.1 million new cards issued carried an annual fee. This high-end strategy is translating into real results—Q1 (the first to include higher annual fees) saw revenue grow 11% and EPS jump 18%.

CEO Stephen Squeri stated in a press release: “We have delivered another strong quarter with 10% revenue growth, EPS of $4.53, and cardmember spending up 9%—the highest growth rate in three years on a currency-adjusted basis.”

Full-Year Guidance Raised: Revenue Growth Target Lifted to 10%

Based on better-than-expected performance in the first half, American Express has raised its full-year 2026 revenue growth guidance from 9%-10% to 10%. Meanwhile, the full-year EPS forecast remains at $17.30 to $17.90.

Previously, the market consensus for full-year revenue growth was about 9.8%. This upward revision reflects management's confidence in sustained high-end consumer growth throughout the rest of the year. However, Squeri also noted that the company will continue to ramp up investments in marketing and technology to drive long-term growth—which could limit short-term margin expansion.

Market Reaction: Shares Fall Over 3% Pre-Market, Revenue “Miss” Triggers Market Nerves

Despite exceeding EPS expectations, raising full-year guidance, and posting the fastest spending growth in three years, American Express shares still dropped over 3% in pre-market trading.

This seemingly contradictory market reaction reflects two main investor concerns: First, the symbolic nature of missing revenue expectations. The actual revenue of $19.64 billion missed the $19.69 billion forecast by just 0.25%, but in the current environment of macro uncertainty, any shortfall gets magnified. The market is on high alert to whether consumer momentum is nearing its peak.

Second, the impact of rising costs on profits. Total expenses rose 12% year-on-year, outstripping the 10% revenue growth. Increased customer engagement costs, Platinum Card investments, and higher benefits utilization are all squeezing profit margins. Zacks analysts have previously warned that customer engagement costs linked to higher cardholder spending and increased usage of travel and lifestyle benefits could compress margins.

As of the close on July 23, American Express shares were at $340.84, down about 5.7% year-to-date. The 12-month average target price from 22 Wall Street analysts is $373.48, suggesting approximately 12.6% upside. On July 13, JPMorgan raised its rating from Neutral to Overweight, with a target price increased significantly from $328 to $400; UBS similarly raised its target price from $340 to $386 on the same day.

Strategic Moves: $700 Million Acquisition of TheFork, Expanding European Dining Ecosystem

Beyond the earnings report, American Express also announced plans to acquire European restaurant booking platform TheFork for $700 million. TheFork connects over 50,000 restaurants in 11 European countries; the deal is expected to close by the end of 2026, pending regulatory approval.

This acquisition marks a continuation of American Express’s strategy in the upscale dining sector. The company previously acquired digital dining platforms Resy and Tock. Adding TheFork will expand its European restaurant service coverage to over 50,000 establishments, further strengthening its “premium travel + fine dining” benefits ecosystem.

Amid intensifying competition in the high-end credit card market, dining benefits have become a core differentiator for premium card products. Through ongoing acquisitions and integration of dining technology platforms, American Express is building a competitive moat that is difficult for rivals to replicate.

Industry Comparison and Macro Context: The Advantages of High-End Positioning

Compared to rivals targeting a broader customer base, American Express's premium positioning is showing clear advantages in the current macroeconomic climate. In Q2 of fiscal 2026 (ending March 31), Visa posted net revenue growth of 17% to $11.2 billion; Mastercard saw 16% net revenue growth to $8.398 billion in the same period. All three credit card giants are benefiting from the resilience of U.S. consumer spending—total credit and debit card spending rose 6.3% year-on-year in June, the fastest pace in over four years.

However, American Express’s $1.1 billion credit loss provision declined 21% year-on-year, while the net write-off rate remained steady at 2.0%—data reflecting the relative strength of its high-credit-quality customer base in the face of macroeconomic uncertainty. The Atlas x Pave Consumer Health Index shows that U.S. household financial buffers have dropped to a two-year low—yet for American Express’s premium clientele, the impact is much lower than for mass-market credit card issuers.