American Express Company Q2 2026 Earnings Call

Welcome to the American Express Q2 2026 earnings call. At this time, all participants are in listen-only mode until we conduct a question-and-answer session later on. As a reminder, today's call is being recorded. I will now turn the call over to Kartik Ramachandran, Head of Investor Relations. Please go ahead. Thank you, Donna, thank you all for joining today's call.

Today's discussion contains forward-looking statements about the company's future business and financial performance. These are based on management's current expectations and are subject to risks and uncertainties. Factors that could cause actual results to differ materially from these statements are included in today's presentation slides and in our reports on file with the SEC. Today's discussion also contains non-GAAP financial measures. Comparable GAAP financial measures are included in this quarter's earnings materials, as well as the prior period earnings materials discussed today. All of these are posted on our website at ir.americanexpress.com. We will begin today with Stephen Squeri, Chairman and CEO, followed by Christophe Le Caillec, Chief Financial Officer. After their remarks, we will move to Q&A. With that, I will turn it over to Steve.

Thank you, Kartik. Good morning. Thanks for joining us today. We delivered another excellent quarter with 10% revenue growth and EPS at $4.53. Our results continue the momentum we have seen over the last few quarters and reinforce the confidence that we have in our strategy for sustaining long-term growth. Based on our better-than-expected performance year-to-date, we are raising our full-year revenue growth guidance to 10%, and we plan to reinvest this outperformance in growth initiatives across our business. We continue to expect full-year EPS of $17.30 to $17.90. I am sure the question on your minds right now is, if you are outperforming your expectations and you are raising your revenue guidance, why aren't you also raising EPS guidance? I will answer it. We have a choice.

We can either drop the overperformance to the bottom line and buy back more shares, or we can invest to grow the business further through the wide range of attractive growth opportunities we have across our business, both in the U.S. and international. We have chosen the latter, because in the long run, it is the one that creates the most value for our shareholders, as demonstrated by our high ROE. That is what we have consistently done over the past several years. As we are at the halfway point of the year, let me take a step back and walk you through how we approached this year and how our results reflect the strength of our business model and the strategic decisions we have made to position the company for long-term success.

Over a year ago, consistent with our strategic focus on strengthening our leadership in the premium space, we made the decision to make a significant investment in enhancing our flagship Platinum products in the U.S. While I've said this before, it's worth repeating. When we invest in a product refresh, we expect to realize the full benefits a year or two after launch. First, we anticipate increased customer engagement as well as strong demand and spend growth. Then, as we lap the investments and as the new fees kick in over time, we expect fee revenues to increase and VCE expense growth to moderate. By focusing on bringing in high credit quality premium customers, we expect to see consistently strong credit performance, which supports strong earnings growth.

With that in mind, as we entered 2026, our plan was as follows: Make the upfront investments in the Platinum value propositions, which we anticipated would continue to drive the high pace of revenue growth, maintain strong credit risk management, and drive operating leverage across our marketing and operating expenses. The combination of high revenue growth, strong credit performance, and disciplined expense management were key elements of our plan for driving mid-teen EPS growth for the fourth consecutive year. Six months into the year, we're seeing stronger momentum than we expected. The investments we made in our value propositions have driven accelerated spend and revenue growth, and our Platinum portfolio is now the fastest-growing in our U.S. consumer business. Our credit performance is also better than we expected.

Retention rates remain very high, and we continue to attract a large number of high creditworthy customers with 65% of new consumer accounts coming from Millennials and Gen Zs. Importantly, we've continued to deliver strong revenue and earnings growth, while at the same time being able to invest more in customer acquisition and technology over the course of the year as we capitalize on the growth opportunities that position the company for long-term success. In looking to the second half of the year, we have great momentum. We expect card fee growth to accelerate, credit to continue to be very strong, and variable card member engagement growth to decelerate as we lap the Platinum refresh of last year.

As the Platinum refresh has shown, the key to our growth momentum over the past several years has been our focus on investing in innovating our membership-based value propositions to attract and engage premium customers across generations and geographies. Creating compelling premium value propositions that are competitively differentiated is not just about reward points. It's about enabling spending power, providing access to highly desirable travel, dining, entertainment, and exclusive experiences, forging relationships with world-class partners who provide additional value, and having talented, dedicated colleagues who back our customers and merchant partners when issues arise. In essence, a great premium value proposition is not just a product. It's a multifaceted relationship between the brand and the customer. This is what our membership model delivers, and it is very difficult to replicate on a global scale.

To build deep, enduring relationships with our premium customers, we've leaned in to adding benefits they value and where they spend, like travel, which is why we continue to expand our lounge and luxury hotel networks, and dining, which is why we acquired Resy, Tock, and our proposed acquisition of TheFork, a leading online restaurant booking platform which would add 50,000 restaurants to our dining network across 11 European countries. It's also why we've added new sports sponsorships, like the NFL and Fanatics, and provide access to a wide variety of exclusive membership-only experiences around the world. Deepening the engagement with our premium customers is also why we continue to introduce new digital payment capabilities, such as the recent announcement that card members can redeem Membership Rewards points directly within Apple Pay, giving them greater flexibility to use their points on everyday purchases.

A core element in designing our value propositions is working with world-class partners who value the opportunity to reach our high-spending premium card members. We're expanding partnerships with many of the premier companies in the world across a range of industries that further enrich the value of membership and drive customer engagement. In fact, just a few days ago, we announced a new global partnership with ALL Accor, the booking and loyalty platform for Accor's portfolio of 45 worldwide hotel brands, which include Raffles, Fairmont, and Sofitel. Importantly, our approach to creating value propositions is not a one-size-fits-all exercise. It is tailored to meet the needs and preferences of different customers and in different locations. For example, the Platinum Card is designed for customers who value premium travel and lifestyle perks, like airport lounge access, luxury hotel benefits, and one-of-a-kind experiences.

The Gold Card, on the other hand, is designed for those who do some traveling but prioritize their spending on dining, grocery, and other everyday benefits. Likewise, our co-brand cards each have their own value propositions with benefits that appeal to their specific customer bases. Our value propositions for small and medium-sized business customers are designed to fit the different payment and financial management needs of their businesses. For example, in the second quarter, we introduced a $300 ChatGPT business annual statement credit for our U.S. Business Platinum and Gold Card members, and we launched the pilot of our new expense management platform to initial group of middle-market customers. We've been executing the same strategy internationally, creating premium value propositions with benefits, partnerships, and experiences that are tailored to the customer needs and local dynamics in each geography at price points that are typically higher than in the U.S.

Since 2003, we've refreshed our Platinum Card in approximately 80% of the countries where these cards are issued, which has helped to drive 20% FX-adjusted growth in international Platinum Card spending this year. Furthermore, around 70% of new consumer Platinum Card accounts outside the U.S. are coming from millennials and Gen Zs. This approach to innovating our premium value propositions has served us well, and we plan to continue implementing this successful playbook across our business. As a result, we have built a business that compounds earnings more durably and at a faster pace than in the past. When compared to our historical performance, we now have more momentum in both the top and bottom lines, a more premium fee-paying customer base with strong loyalty, less credit risk, including when it's under stress, and more younger customers who represent greater lifetime value.

In sum, we are competing from a position of strength. We are tracking ahead of the expectations we set at the beginning of the year, generating momentum that enables us to invest more in 2026 than we initially planned in opportunities that drive long-term growth. In fact, our proposed acquisition of TheFork is one of those great opportunities. We did not have it originally in our plan at the beginning of the year, and will require investment in the second half of the year. As our strong performance has shown, we are winning with the next generation of premium customers, and we have significant growth opportunities across our businesses and around the world. Taken together, this gives us confidence in our long runway to sustainable growth and our ability to continue delivering attractive returns for our shareholders. I'll now turn it over to Christophe for details on the quarter.

Thanks, Steve, and good morning, everyone. We had another strong quarter with revenue growth of 10% and EPS up 11% year-over-year. Pre-tax income was up 15%, while net income was up 8% due to prior year tax discreets. The strength of our premium customer base, combined with the success of our product strategy, has driven accelerated momentum in the first half of the year. Spend growth stepped up to the highest level we've seen in three years, up 9% FX-adjusted in both Q1 and Q2, and balance growth continued to keep pace with spending. Demand for our premium products remains strong, with over 70% of new accounts acquired on fee-based products this year. End card fees have now grown at a double-digit rate for 32 consecutive quarters. Importantly, our focus on premium products continues to drive improvements in credit performance.

The strengthening we have seen in our credit performance is a deliberate outcome of our strategy to invest in value propositions that attract customers with high credit quality. As a result of that strategy, both delinquency and write-off rates remain below 2019 levels, and delinquency rates have been between 1.2% and 1.3% for over three years. The combination of top-line momentum, excellent credit, and disciplined expense management have together supported 11% revenue growth and 14% EPS growth through the first half of the year. Even as we have invested in our U.S. Platinum value propositions. These results demonstrate the strength of our model and give us confidence in our ability to drive sustainable growth in line with our long-term aspiration. Turning to bill business trends for the quarter on slide four. Overall spend was up 9.4% FX-adjusted, almost a point higher than Q1.

Growth was broad-based across categories with goods and services spending up 9% and T&E up 10%. Retail spending continued to be very strong, up 13% FX-adjusted in the quarter. Restaurant spending, our largest T&E category, was up 10%. Airline spending picked up further from the strong growth we saw in Q1, also up 10% year-over-year. Our customers are showing strong demand for travel, with global Amex Travel bookings up 22% year-over-year in the quarter. U.S. consumer spending was up 11%, the highest level of growth since Q1 2018, excluding periods impacted by the pandemic. We continue to see good engagement from our younger customers. Millennial and Gen Z, which make up the largest share of U.S. consumer spending, remained our fastest-growing cohorts this quarter. Commercial spending picked up to 5%, with both U.S. SME and large and global customers growing at the same pace.

We are still in the early stages of our commercial product roadmap, but we are encouraged by recent trends. At the same time, we do expect to see impacts from the sale of the small business co-brand portfolios in the balance of the year, which I will get to a bit later when I discuss our outlook. International also delivered another strong quarter with spend up 12% FX adjusted. Growth remains broad-based across consumer and business customers and across geographies, with four of our top five countries growing at a double-digit rate. Turning to new card acquisitions. We acquired 3 million new cards in the quarter, with continued momentum in acquiring younger customers and attracting new customers onto our fee-paying products. Looking at balance growth and credit, total balance increased 9% year-over-year, FX adjusted, in line with billing business.

We have now lapped the roughly one percentage point impact on balance growth from when the small business co-brand portfolios were classified as held for sale over a year ago. As a reminder, although these two portfolios were classified as held for sale, we continue to earn economics until the transfer of the portfolios to the new issuers. One portfolio transfer happened in April this year, and the second one is expected in Q3. Credit performance continues to be very strong. The Q2 write-off rate was flat versus last quarter, while the delinquency rate declined. Provision expense of $1.1 billion included a reserve release of $191 million, mostly reflecting further strengthening of portfolio credit performance.

The strength of our model also holds in a stressed environment, as demonstrated by the Fed's recently released CCAR results, which show that under a severely adverse scenario, we have the lowest projected credit card loss rate across all banks and a pre-tax ROE of 3.8% over nine quarters. Turning to revenue on slide 13. Revenue was up 10%, marking our fourth consecutive quarter of double-digit revenue growth. Net card fees reached record levels in, once again, our fastest-growing line. Up 15.4%. We continue to see good momentum in attracting customers onto our premium products, with 75% of new accounts acquired on fee-paying products in the quarter, the highest level we have seen since we increased our focus on premium products. Net interest income was up 11% this quarter.

We saw around a one percentage point impact to year-over-year NII growth from the sale of one of the small business co-brand portfolios. We continue to grow balances largely in line with spending while driving higher NII growth by expanding the margin earn on balances. We are also seeing demand for our deposit products, with balances from our U.S. consumer and small business banking deposit products up 9% year-over-year. The majority of deposits come from our Card Members, deepening their engagement with our membership model. With around 10% of our U.S. Card Members currently holding a deposit account with us, we see a long runway for growth. Turning to expenses on slide 18. Marketing and OpEx each grew 6% in the quarter, and the VCE to revenue ratio was 44.6%.

The step-up versus the first half of last year reflects the investment we made in the value propositions of our U.S. Platinum Cards when we refreshed these products in September last year. As we discussed at the start of the year, the VCE to revenue ratio is linked to the level of Card Member spending. Through the first half of the year, we have seen stronger spend than we expected coming into the year, including in categories like airlines, where customers earn and use rewards. These factors are contributing to a slightly higher VCE ratio than we originally expected. Moving on to capital. We returned $2.9 billion of capital to our shareholders, including $0.6 billion of dividends and $2.2 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 high levels of earnings to our shareholders, over 75% over the past three years. Turning to our 2026 outlook, let me spend a few minutes on how we're thinking about the balance of the year. Starting with billings and revenue. We expect to see impacts from the sale of the two small business co-brand portfolios. The transfer of the portfolios are staggered across Q2 and Q3, building to the full impact by Q4. Starting in Q4, we expect a quarterly impact of around 1 percentage point to spend growth at around 2.5 percentage point impact to net interest income until we lap the portfolio sales. Put together, the impact to total revenue is about 1 percentage point.

I would note that the portfolio sales will have a negligible impact to pre-tax income, and these impacts were incorporated in the guidance we provided for the year. On card fees, we expect growth to accelerate in Q3 and to exit the year in the high teens, and we continue to expect credit metrics to be generally stable throughout the year. Turning to expenses. We expect marketing to be up by around 10% year-over-year in the second half of the year, driven by increased investments in customer acquisition. We continue to expect operating expenses to grow in the mid-single digits for the full year, including the additional investment in technology we previously discussed. On the VCE ratio, given the higher level of spending we have seen this year, we now expect the ratio to be between 44% and 45% for the full year.

We will lap the impacts of the Platinum Card refresh starting in Q4, resulting in lower growth in VCE expenses. We feel really good about our momentum and our results halfway through the year. Having delivered 11% revenue growth and 14% EPS growth, as well as the opportunities for continued growth ahead. Given the momentum in the business, we are raising our revenue guidance and now expect full-year revenue growth of 10%. As we increase investments in new customer acquisition and technology development, we are maintaining our full-year EPS guidance of $17.30 to $17.90. The guidance does not include the potential impact from the sale of our equity interest in Global Business Travel Group that we previously announced. We expect the transaction to close in the second half of the year, will provide more detail then.

With that, I'll turn the call back over to Kartik, and we'll take your questions.

Thank you, Christophe. We will now start the Q&A session. We ask that you please limit yourself to just one question. Thank you for your cooperation. 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're using a speakerphone, please pick up the handset before pressing the numbers. Our first question today is coming from Sanjay Sakhrani of KBW. Please go ahead. Thank you.

Good morning. The 11+% growth in USCS is truly impressive. I'm curious if there's a way to parse apart how much is coming as a result of the strong account acquisitions you've seen of late, versus your core mature customers spending more on the card. I'm just trying to think about the sustainability of that outperformance. Also it's really impressive this is happening despite all the geopolitical impacts and obviously the contagion to the economy. I'm just curious if you're seeing anything on that front, whether it's in USCS or in other areas. Thanks. Hey, good morning, Sanjay.

On USCS billing, you're absolutely correct. It's up 11.4%. We went back in time to see when was the last time we saw such a growth, and if you strip out the discontinuity of COVID, you have to go back to Q1 2018. It's truly an impressive performance. One of the biggest contributor to the acceleration is the Platinum refresh. It is by far the biggest product we have. It has the fastest growth rate. There's truly a lot of momentum. We see that momentum coming from new card member acquisition, as well as tenured card members that are increasing their spend, as well as people who had another card in their wallet and upgrading to Platinum Card, right? Platinum is definitely pulling a lot here in the acceleration.

If you go back to Q1, we quantified that acceleration, and I talked about, it wasn't a Q1 number, but we talked about a 600-basis point acceleration across the entire Platinum portfolio in U.S. consumer. It's truly coming from a lot of tenured card members that are just consolidating their spend because they enjoy the new value proposition.

Yeah. Hi, Sanjay. Let me just add a couple of points. With the refresh, engagement has been really accelerated, and that's driving a lot of the spend. When you start to dig into the numbers, we saw a 22% increase in travel bookings. We put that into the value proposition. You look at restaurant spend was up 10%, but when you look at Resy restaurant spend, it's double that. Again, what we've hit on really well here with this, especially with the Platinum refresh, is we're stepping up engagement. As Christophe said, it's a combination of new acquisition, but it's also the engagement that we're getting with existing card members, and it is very impressive to be at 11% for us at this stage of the game.

To the second part of your question about the geopolitical events out there. When you look at a granular data, you do see. You do see gas spend increasing significantly. Now, it's around 2% of the total billing, so it's not meaningful in terms of impact to the overall numbers. You do see as well travel to the Middle East, go through the Middle East, like an impact as you would expect. Travel globally is up 10%, and this is the highest number. Airline is up 10%, and this is the highest number we've seen in the last six quarters. There is some impacts, but there is no evidence of a general slowdown, and people are offsetting these transactions with all the transactions in all the categories. It's not really visible at a macro level.

Thank you. The next question is coming from Ryan Nash of Goldman Sachs. Please go ahead. Hey, good morning, guys.

Good morning, Ryan. Good morning.

Steve, you noted the decision to reinvest the upside in revenue growth. Maybe just talk a little bit more about the areas that you're investing in. I know you referenced customer acquisition and technology. Maybe just talk a little bit about what you think this will do in terms of your ability to sustain these types of top-line growth levels into 2027. Thank you. Okay. Thanks for the question.

Look, I think we've gotten to a point where the company's got quite large, and to continue the revenue growth, it requires us to continue to invest. Those investments come across a wide range. The one thing that I did call out was obviously we're going to acquire TheFork, all things working out the way we hope they work out. That will be deal cost, integration cost, things like that. We're investing in technology, when you think about our company, we've got international business, U.S. business, corporate card business, small business. We operate in so many different countries. We have a merchant acquiring business and a network business. There is no shortage of technology investments or enhancements or refreshes that need to occur.

Across a wide range of technology platforms, we're able to pull some of those investments into the second half of the year. To be able to get to things quicker is a huge advantage for us because we're going to have to make these investments over time. Why not make those investments sooner rather than later to update the platforms and so forth? The other thing that is still out there is there are still card acquisition opportunities. To my point about sustaining the growth, you need to continue to invest in acquiring high revenue-generating cardholders and high-spending cardholders to continue the really good revenue growth that we've seen over the last few years. That's where you can think about these investments occurring. It's in technology, a little bit in TheFork, also in card acquisition.

You've seen, we've announced a number of things that we're participating in from an agentic commerce perspective, that requires investment as well, those things weren't on the docket at the beginning of the year. It's not a stagnant business, it's not a business that you don't need to put gas in the tank. That's what we're doing. I think it's a strategy we've employed for a number of years. I think it's really served us well. We've been consistently growing the last four years, double-digit revenue growth, mid-teens EPS growth. We don't look at just a year. We look at it the medium to long term, we think this is the best strategy for us and for our shareholders.

Thank you. The next question is coming from Don Fandetti of Wells Fargo. Please go ahead. Hi, good morning.

Steve, it sounds like you're feeling a little bit better about SME. You launched a pilot on the expense management software. I guess I'm trying to understand, is this more of a discussion around the pace of build business growth, or could we see some type of middle-market customers moving away to the fintechs where there could be some lumpiness? My follow-up is just to touch on the advantage of the closed loop around agentic commerce.

Okay. Thanks for the question, Don. Look, I think we announced a very aggressive commercial card roadmap earlier in the year. I think you're seeing a little bit of a bounce back. We were at 5% from an SME perspective, 5% from a large and global perspective. Look, from a middle market space, Ramp and Brex have been out there. Center, which is our expense management system, which we just launched, I think this will help us not only retain business, but actually win new business as well. It's middle market where we have seen the softness. Small business has been very strong and large and global and corporate has been moving along, I believe, very nicely. My perspective is we've seen an uptick in SME billings over the last two quarters.

I think the roadmap that we have and the launch of the middle market expense management software will certainly help us. As far as agentic, I think the closed loop, we've talked about the closed loop for many, many years. We've talked about it from a physical perspective, then we talked about it from an e-commerce perspective, I think we're even more advantaged from an e-commerce perspective, both from a fraud and data.

When you think about agentic commerce and you think about just how potentially fraught it is with not only fraud, but also with hallucinations that can occur, I think by understanding what a card member truly wants to have and sort of intent and having that data, being able to go out and then match that purchase data will enable us to provide and back our customers a lot better, which is why we announced months ago now the agentic insurance product where I think we're going to have a huge advantage from a trust, service, and security perspective over our competitors in the marketplace because we have the data from both sides. We know what the customer wants. We'll know what the customer wanted to do, and we'll also know what the merchant delivered. I think people say you're in the early innings.

We're sort of in the preseason. We didn't even get to the early innings of the regular season yet. I think people are a little bit nervous. They're nervous about interacting in this space, and what we hope is because of our knowledge of both sides of the equation, that as this begins to take off, they will choose us because of our ability and our historical track record of backing our customers. I think that's our advantage, and I think we've talked about the advantage in a physical world. We've seen it play out there. We've seen it play out in e-commerce. I think it's going to play out even more over time. As I said, really, we're not even in the early innings. We're in preseason here. Thank you.

The next question is coming from Craig Maurer of FT Partners. Please go ahead. Thanks. Good morning.

Wanted to ask about the adjustment in the URR and how material the benefit was in the quarter, that helps us gauge the rest of the year and when you grow over it next year. Additionally, you talked about higher client incentives and business development expense. Can you talk about those trends, considering the big wins you've had recently with the NFL, Fanatics, and so on? Thanks. Okay, I'll take the URR question.

The URR, for those who are not familiar, is part of the key element of our Membership Rewards program. We evaluate and quantify the ultimate rate of redemption. From an accounting standpoint, we expense the cost of those rewards when they are earned, and we make an assumption about how many of those points ultimately are going to be redeemed. It's a fairly complex calculation. On a regular basis, we update the models. We try to make it better. We improve the data that feeds the model to be more accurate. As you can imagine, there's a lot of reviews and a lot of work that goes into any revision of that assumption. When we did that, we came up with a slightly lower ultimate rate of redemption, but it really hasn't changed it much.

I think we report externally the ultimate rate of redemption is like 96%, and it really hasn't changed that much. It has a small benefit in the quarter in terms of the MR cost, but at the full year level, it's going to be de minimis. It's more hygiene and making sure that we have the right accounting process more than anything else.

Yeah. Look, thanks for the question, Craig. When we think about the NFL, Fanatics, and the other sponsorships that we have, the NBA, Formula 1, the USGA, Wimbledon, and US Open Tennis, those sponsorships are really all about access for our card members, experiences, special things that we can do, which is also why we have our event stadium benefits that we have as well with over 50 different locations around the world. What we're trying to do there is package up a group of experiences that our card members really like. You could throw music and direct-to-artist things that we do as well. Specifically with the NFL, I think with the NFL, NBA, Formula One, it gives us, on a global basis, access for our card members to events and to venues that they want to go to.

Fanatics sort of ties it all together for us, not only from an experience perspective when we have Fanatics events, but also for the various things that we will do with Fanatics at the NFL Draft, NBA All-Star Game, Super Bowl, et cetera. Also from a merch perspective and a collectibles perspective and trading cards and things like that. I think you tie that whole experience together. From a cost perspective, both Fanatics and the NFL, when you think about our entire marketing budget, is very tiny. They are in the plan. They're in the run rate. When we talk about increased investments, that's not some of the things that we're investing in. We really like the assets that we have, and we like how they work together, and how our card members really enjoy them.

Thank you. The next question is coming from Rick Shane of J.P. Morgan. Please go ahead. Thanks for taking my questions this morning.

Look, you guys have talked a lot about customer acquisition. Can we talk a little bit about attrition both quantitatively and qualitatively? Can we sort of think through what the one-to-two-year retention rates are on new customers versus what you've seen historically? Also, to the extent you get feedback when customers don't renew the card, what are the reasons that a customer might walk away?

Okay. Hey, good morning, Rick.

The executive summary to you, the answer to your question is, we're not seeing anything on attrition. I will send you back to a slide that we showed in Q1 that was actually pretty detailed on the Platinum Card, where we raised the fee by $200. By the end of Q1, we had repriced, if you want, about a quarter of the U.S. Platinum portfolio. The retention rate were not only through the roof, they were flat year-over-year. Last year there was no price increase. We're not seeing anything on the attrition level. They remain very high. In terms of why the people are attriting or downgrading, sometimes people say, "I just retired. I just don't need that kind of benefit anymore, and I'm just going to downgrade." Vice versa, as a matter of fact.

I was saying earlier on that we've seen on the Platinum Card, as a result of the introduction of the new value proposition, a lot of card members upgrading. In general, attrition levels remain very consistent with what we've seen in the past. We've been, as you know, refreshing a lot of our new products, and we've been repricing a lot of the new card members. The end result is that attrition level have remained very constant and very low for the past few years.

Thank you. The next question is coming from Mark DeVries of Deutsche Bank. Please go ahead. Thank you.

Steve, how should we think about the longer-term return on investment in platforms like Resy, Fork? There's benefits that you've cited, the lift to spend and run category. The less obvious benefits that we may not see, like just the revenues from the platforms, and also kind of the higher loyalty, both with the merchants on those platforms and with customers who are engaging. Also any longer-term plans to integrate those platforms and maybe rebrand.

Thanks for all those questions, Mark. I think that what's interesting here with Resy, with Tock, and TheFork, what we've really tried to do with Resy and Tock and TheFork is to create many closed loops within our closed loop. Right? What we've done here is we're connecting our card members and we're connecting merchants. What's also really important is to remember that Resy, Tock, and TheFork are open platforms. They're open also to non-card members. That becomes useful for us from an acquisition perspective because what we'll do within those platforms is special offers for card members, table access for card members, and so forth. It's an opportunity for us to acquire card members in a cheaper way, and also for them to experience the potential benefits of being a card member.

When you look at Resy, Tock, or TheFork on a standalone P&L basis, we don't look at it that way. Because it's part of the value proposition. That's how we look at it. It's a benefit. I think when a restaurant looks at Resy, The Tock, or, again, we'll look at TheFork, they will look at it from a perspective of, "I now have access to some of the best customers, and the ones that are going to spend more money at my restaurant. The proof is in the pudding. It's 2x the spending at Resy restaurants, and our ticket prices are higher for card members versus non-card members in all restaurants. We have a higher ticket. As far as the plans, Resy and Tock will come together from a user experience perspective, especially from a front-end user experience perspective.

That will give us a broader, more integrated look at restaurants from a Card Member perspective. TheFork, given it is European-focused at this point, will stay as a standalone entity. I think that works out. Importantly, our travel representatives will have access to both. When you book travel, you book your hotel, you book your airline, they'll be able to also book restaurants for you. Restaurants in Europe is one of the highest demand things that we have in that area. We don't look at the P&L per se of Resy, Tock, and we won't look at it in TheFork. We manage it aggressively, but it's not a revenue maker or profit maker in itself. What it is though is it does help Card Member retention, customer acquisition, merchant satisfaction, and it drives spend.

That's what's really important, and it integrates very well with our travel business as it adds the capability for our travel representatives to just have that at their fingertips.

Thank you. The next question is coming from Terry Ma of Barclays. Please go ahead. Hey. Thank you.

Good morning. Morning, Terry. Hey, good morning.

Can you maybe just give a little bit more color on your net card fee growth guidance in the back half of this year? Kind of what's contemplated in that, whether it's just from a step-up of the annual fee from the back book, or are you contemplating more acquisitions? Maybe just taking a step back, I think historically you've seen more of a notable acceleration after a refresh, and you just haven't seen this thus far at Platinum.

Hey, good morning, Terry. Let me explain what's happening here. We're growing card fee at 15%. What I said in my prepared remark is that we expect that card fee growth rate to accelerate in Q3 and to exit in Q4 in high teens. The key driver of that acceleration, you can track it back to the Platinum refresh. There are, of course, a lot of things that are impacting that number across the world, but the single biggest contributor to that inflection point is Platinum. The reason why it takes a while to hit the P&L is because, as you know, we started repricing card members from January only, and when we move card members to the new price point, we amortize it over 12 months. It's kind of like a slow process. That's why the impact, if you want, is delayed.

It is also because of that delayed impact that you've seen this kind of declining momentum because you have to go back to the refresh of the Delta card and the Gold Card, and you'll see that kind of acceleration on the card fee line. We're now in the declining growth rate as a result of that. There is inertia in that number, in that growth rate. It takes from beginning to end, something like two years to find its way into the P&L. That's why you have this kind of cycle. To be clear, because that's the most important thing, we expect that card fees are going to exit this year with a growth rate in the high teens.

Thank you. The next question is coming from Rob Wildhack of Autonomous Research. Please go ahead. Morning, guys.

A question on NII growth. First, in the quarter, growth there slowed 150 basis points from 1Q to 2Q. Just wondering if there is anything to call out there. Going forward, I know you said to grow faster than billings, wondering if you could unpack that a little bit more. You have the commercial portfolios that are drags, on the positive side, you have the really strong credit outcomes, which might be a reason to continue to lean into NII growth. Just curious how that all comes together in terms of growth in that line, and then in the context of the higher revenue guide, too.

Yeah. Hi. Let me clarify this because there is indeed a bit of a noise in those numbers. First, let me start with the balance sheet and the growth of balances. We are reporting this quarter growth rate of 9%, which is in line with the billing growth of 9%. Last quarter, the balance growth rate was 7%. The biggest contributor, the rounding doesn't help here, but the step-up is a function of the classification of those two small business co-brand portfolios that we reclassified as held for sale over a year ago. We just lagged that kind of reclass, and that is why you see a step-up in the balance growth.

Now, from a P&L standpoint and the NII line specifically, despite the fact that those two portfolios were classified as held for sale, the economics were flowing through our P&L. In Q2, specifically in the month of April, we transferred one of these portfolios, the Lowe's portfolio, to be specific. It is not a large portfolio, but it was large enough to impact the NII growth rate by about one percentage point. The decline you see in the growth rate from 12% to 11% is largely attributable to the transfer of that portfolio to the new issuer. As you think about the balance of the year, there will be another transfer of the Amazon portfolio in Q3.

By the time you get to Q4, both portfolios will be out of our system, if you want, and the impact to the NII line is going to be 2.5%. This would be a headwind until we lap it. What's important to understand is that although it impacts NII, the impact to net income and earnings is really negligible. It's not only negligible, it's also completely baked in the original guidance that we gave at the beginning of the year because this was a slow train coming. We knew exactly what would happen. No impact to guidance, no impact to earnings. It does create some discontinuity, both in terms of the balance sheet balance growth and in terms of the NII growth rate. Hope that was useful. Thank you.

The next question is coming from Darrin Peller of Wolfe Research. Please go ahead. Hey, guys.

Thanks. I just want to touch on the operating leverage for a minute. I know that you've obviously said you're going to be reinvesting quite a bit of the top-line upside between tech and customer acquisition. Just thinking for a minute about deploying AI within both your customer service and internal functions, I know that's still a considerable opportunity for operating leverage to offset some of the reinvestment. Just where are you seeing in terms of pacing on that right now? When would you expect us to see some of the incremental benefits start to show up in a more material way?

Yeah. All right. Darrin, thanks for the question. Let me ask Christophe to talk about what we look at for the rest of the year from an operating leverage perspective, and then I'll come back and talk about AI.

Yeah. The way we define operating leverage, just to be clear, because I don't know whether we got the same definition, we look at OpEx as a ratio of revenue. OpEx for us annualized is between $16 billion-$17 billion. As you can imagine, there's a variety of things that hit that line. The one thing I will say is just to be very careful with looking at a quarter specific OpEx number because there's always discrete item one-offs that hit that line. If you take a step back, and I know you know this, but I think it's worth repeating. If you take a giant step back and look at over many years, you know that we've been very effective at driving operating leverage in terms of that ratio of OpEx to revenue. We are committed to doing that again.

AI is going to play a critical role in that. It's part of the reason as well that we are investing so much in strategy. In terms of how and what to expect in the balance of the year, we are expecting operating expense this year to be in the mid-teens.

Mid-single. Mid-single digits, sorry. Oh, sorry.

Not mid-teens. Mid-single digit this year. We're tracking well against that. I think this quarter is at 6%, and we're going to be in that range by the time we get to the end of the year.

Yeah I'll let Steve talk about what we're working on.

Yeah. Let me talk a little bit about AI. I think every company out there is engaged with this at this particular point in time. I am not so sure how many companies have really committed to actual in P&L savings for 2026 and probably not even for 2027. When we look at it, one of the first places that we have deployed it, and we have deployed it in multiple places in the business right now is technology. From a technology perspective, what we are seeing is anywhere from a 30%-40% decrease in cycle time from a coding perspective. That is really not a savings because what that does is allows us to do more. That is what we are doing.

If you remember early on, I mentioned that we have a large backlog of technology projects, we are getting to more things quicker. From a servicing perspective, both from a travel and from a card servicing perspective, we have equipped our customer service and travel agents with AI-powered tools. What we have seen there is a lack of acceleration in hiring of more travel representatives, more customer service reps, even as the business continues to grow. If you look at how many representatives that we had servicing our customers, that number really has not grown, and we would expect over time for that number to decrease. I think that will normally decrease from an attrition perspective.

From a marketing perspective, we are really using AI right now to streamline some of our marketing campaigns so that we are getting out the marketing campaigns a lot quicker, and that gets you time to money. I think that is critically important. Look, we have used AI in credit and risk and fraud for 15, 16 years. Now what we are doing is how do you implement sort of unstructured data agentic in that to help make the decisions a little bit better? Look, we are investing in it. I think one of the things, and other companies will talk about this as well, as you look to integrate AI within existing systems, you need to either, as you redo them, embed it within, or you need to put a layer above so that you can integrate these systems in a seamless way.

By doing that, what you are doing is making it a lot easier. We just launched a servicing portal for our CCPs, our card member service representatives, where we have embedded within, and it will reduce the handle time for them and enable them to give our customers a much better experience. A lot more to come on this. I think we are further along on this than I would say we are in agentic commerce. This is more in the early innings. Like every other company, we have high hopes that this will streamline, make us more efficient, make us more productive, and eventually, hopefully drive more top-line revenue growth and more earnings growth as we move on.

Thank you. The next question is coming from Bill Carcache of Piper Sandler. Please go ahead. Thank you.

Good morning, Steve and Christophe.

Good morning, Bill, and welcome back.

Thank you. You've both been with Amex for many years, and as investors debate Amex's valuation versus history, it would be helpful to get your thoughts on, sort of as you reflect on your years with the company, what has fundamentally changed about Amex's product flywheel that makes the growth algorithm more durable today than it was historically? Maybe if you could also touch on what gives you confidence that the rebuilt product flywheel can compound beyond the current refresh cycle rather than just requiring repeated reinvestment to sustain growth. Thank you. Well, thank you.

I'm finishing up 41 years, so I've been around a little bit longer than Christophe. I think when we take a step back, I think what's changed is, I think we've committed more to truly understanding what our customer needs and where our customer's going. I think that's fundamental, is that we've done, I think, a much better job as a team understanding the customer, because this business is all about the customer. The customer doesn't stay stagnant. The customer continues to evolve. That's why product refreshes are so critically important, because customer needs are changing, one could argue, on a daily basis. We can't change products on a daily basis. I think the other thing that we have done is really we have expanded our aperture of who our customer is.

Fundamentally, we believe, and we've always believed, but we still believe that our customer is a high-spending, high creditworthy, premium, aspirational customer. I think where we've pivoted is that before the pivot, we define that as a specific cohort. The reality is, whether you're a Boomer, a Gen X, a Millennial, or a Gen Z, there are those types of customers in every single cohort. What we've created now from a durability perspective is a flywheel and an ecosystem that we can adapt to the next cohort of customers that come through the pipeline. Versus attempting to fit our one-size-fits-all product into multiple customer sets, we now are able to modify that product so the product is very expandable.

If you just look at the Platinum product, that's a product that can play well with Boomers, Gen X, Millennial, and Gen Z, and the next generation along, because we'll continue to add value to it that'll have applicability across a wider set. I think the other thing that we've done and what we've really leaned into here is we work a lot more with partners, not only from a co-brand perspective, where we create specific co-brand opportunities that allow us to go into a joint customer base, but I also believe our premium partners really want access and are willing to provide benefits to our cardholders. If you look at not only the value propositions that we have. If you look at the limited time offers that we offer, the ability for our partners to access this base, I think that's been critically important.

The other thing that I would say, I'm sorry for going on, but you have opened up the door here, is that our focus on international has completely changed. From an international perspective, we've really leaned into coverage. We've really leaned into premium. What we've also done is we're not treating all of the countries we operate from a proprietary perspective the same. We've leaned into the U.K., Mexico, Canada, Australia, and Japan. That has played out really well for us. When you think about this, and I've only talked about the consumer side here, but when you think about this durability from a consumer perspective, you now have a machine that is able to go after different types of cohorts.

We're able to go after those cohorts with various offers that make sense to them, with various products that make sense to them, and also to integrate with our premium customers extra value. You then do that on a global basis, which we've done, which is why TheFork acquisition is going to be so important for us because it brings in We already have travel, now it brings in restaurants. You look at that, you bring the experience layer that we have, the investment that we've made in lounges and in Fine Hotels + Resorts. You create this premium ecosystem that our customers are going to live in, and it's durable.

The durability is reinforced by the growth that we continue to have, whether it be lounges, whether it be restaurants, whether it be Fine Hotels + Resorts, because our partners want to play in here. Look, I think that that's what makes it different. When we look at the flywheel and we look at the opportunity to reinvest some of our over-delivery that we've had this year, we feel confident because we know we can access the type of customer we need to access on a global basis, and there are more out there for us to access, and we think that's going to continue into the future. Again, I could speak hours on how I think the company is different and how we approach product development and what have you, how innovation is critical, and how we've really integrated tech.

I think that's what's different, part of that is because our scale is so much bigger. If I go back just to 2017, we're a $30 billion revenue company, now we're $70 billion this year, we're looking at 10% revenue growth, almost an $80 billion revenue company potentially by the end of the year. You have more scale, you have more ability to operate in the environment. I think that's what's different.

Yeah. It was a long answer, I'll add a quick finance overlay on top of that. First, I can assist since I'm younger than Steve. I'm only getting to 30 years with the company. The key point that I wanted to make are this. There is a lot more momentum now than, say, 10, 15 years ago. You see that in the pace of the product refreshes. You see that as well in the revenue momentum, billing growth. Many of our metrics are moving at a faster clip today than they were 10, 15 years ago. The second thing, when I look at the balance sheet, the resilience of the portfolio is much, much stronger now.

One piece of evidence that you can go to is when you look at the reserve rate that we have just between the end of 2019 and where we now, we lowered the credit reserve rate from 2.9% to 2.7%. That's an outcome of focusing on premium card members. The other proof point is you look at some metrics that prove that the card member base is getting more premium. You look at the role of card fees. That line has grown at 17% over the last seven years, right? That's because there are just a lot more card members paying fees. The final point I'm going to make on this is that when you look at the stress testing that the Fed did, you can see as well that through the cycle, one day there will be an economic cycle.

We have much lower peak write-off rate than any of our competitor, we remain profitable through the cycle. Finally, sorry, the last thing is that the focus on younger card member gives us a lot of confidence in our ability to sustain growth going forward. They come with a lower income initially, we're going to grow with them, they're going to grow with us, there's a lot of embedded growth that comes with the focus on younger card members.

Thank you. Our final question today is coming from Mihir Bhatia of Bank of America. Please go ahead. Hi. Good morning.

Thanks for squeezing me in here. I wanted to ask about billing trends a little bit more, if you wouldn't mind. I think, Christophe, you had mentioned billings were particularly strong early in 2Q, and it seems like that continued into June. Anything you can share on July or quarter-to-date trends? Maybe just more broadly, what is the billings growth assumption you have embedded in the raised 10% revenue guide? Are you underwriting billings to hold at this level? Does it assume some kind of deceleration from here? I know you have the co-brand headwind, of course. Yeah. Thank you, Mihir, for the question.

We're not going to get into trying to guide on billing going forward. We are a momentum business, right? You can expect that a lot of the good momentum we've seen is going to continue in the balance of year. The investments we're making, the increase in the investments we're making, the goal is to support that momentum. Now, it's not significant enough to move the needle in the balance of year, we expect that momentum to continue. Bear in mind, though, that as we transfer those two small business portfolios, they're not very large. They're not contributing to earnings. There was some bill business associated with those cards, and that will put about a 1% headwind to those billing numbers.

You're going to see a little bit of a slowdown as a result of that. That's our expectation is that the momentum is going to keep going in the balance of year.

Great. With that, we will bring the call to an end. Thank you for joining us and for your interest in American Express.

Thank you. This concludes today's conference call. Thank you for your participation.