American Express ends Q1 with higher revenue but lower income, reaffirms goals
American Express shared Friday its first quarter 2022 earnings report, ending the period of March 31, 2022. The company had 29% higher revenue compared to last year, with 6% lower income. Additionally, American Express CEO Steve Squeri provided insights as to where the year will take the company.
As the year continues, American Express will continue investing in customer retention, brand, and credit performance. Additionally, the company is working toward creating partnerships with other companies to expand on the value consumers and businesses get from working with American Express.
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"For example, last week, we announced a new financial advice service with Vanguard exclusive for our US consumer card members, which brings together Vanguard's digital financial planning and investment management expertise with our industry-leading membership rewards," Squeri said on the company's earnings call.
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The company is also taking an interest in FinTechs, such as i2c -- a FinTech payment processor -- which will help other FinTechs more easily launch products on the American Express network.
Further, American Express is focused on its environmental initiatives. The new initiatives "are designed to engage [American Express] customers, community partners, and colleagues in our climate efforts, including the goal of significantly expanding the use of recycled plastic in our card products," Squeri said. The company also reaffirmed its commitment to reaching net-zero carbon emissions by 2035.
The company reported income of $2.1 billion on revenue of $11.7 billion, with an EPS of $2.73. Income is down 6% compared to last year, but revenue is up 29%. Expenses also increased by 34% to $9.1 billion compared to $6.7 billion a year earlier.
According to Squeri, the revenue growth was a byproduct of the company's continued investments in customer acquisition, engagement, and retention. The company expects to see continued growth as the year continues.
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American Express CFO Jeff Campbell said on the earnings call that Millennials and Gen Z were the biggest drivers behind consumer growth for the quarter, with 56% higher spending than last year. "Overall, we are pleased with the growth momentum we see across the board in our spending volumes, which is tracking in line with our expectations for both the year and for our long-term expectations," he said.
Campbell also said the company expects consumer spending to increase, particularly around travel, as the economic situation caused by the pandemic continues to improve. However, he indicated the company is keeping an eye on other macroeconomic situations as the year continues. Despite this, the company is optimistic.
"We remain committed to executing against our new growth plan and running the company with a focus on achieving our aspiration of delivering revenue growth in excess of 10% and mid-teens EPS growth on a sustainable basis in 2024 and beyond," Campbell said.