American Express Company (NYSE:AXP) reported its Q2 earnings on Wednesday with an EPS of $1.47, surpassing estimates of $1.43. Revenue also came in higher than expected at $8.31 billion versus a forecasted $8.20 billion and is up 1% over the prior year.
Despite the better than forecasted results, American Express saw its year-over-year net income decline by 33%, going from $2 billion in sales a year ago to just $1.3 billion for this quarter. Some key reasons for the variance include a one-time gain in the prior year of $1.1 billion, Costco U.S. no longer being a key customer, and a restructuring change that resulted in an additional $151 million in after tax earnings.
At the segment level revenues have been consistent with prior years. U.S. Consumer Services contributed $3.2 billion in revenue (unchanged from the prior year) and made up 39% of total revenue. International Consumer and Network Services totaled $1.4 billion (up 1% year-over-year), and accounted for 17% of revenue. Global Commercial Services saw the biggest year-over-year increase at 3% with $2.6 billion in sales representing 31% of total revenue. Global Merchant Services rounded out the last segment with $1.2 billion in sales (unchanged from the prior year) and was responsible for 14% of sales.
Average card member spending worldwide has increased by over 7% for the quarter and year-to-date averages are up almost 9%. With these trends continuing American Express will see many opportunities for revenue growth in the future.
American Express’s stock price is already up 16% this year and these results could help propel it even higher.
