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American Express Co. is working to sign more card deals like the one it has with merchants using Block Inc.’s Square merchant-processing unit, while cardholder spending and revenue for the company have rebounded to hit record quarterly highs, top executives for the travel-and-entertainment giant said early Friday.
The good news was tempered somewhat by what Steve Squeri, AmEx’s chief executive, called a hiccup in small-business volume, as these firms have been slower to rebound from the pandemic. “We’re making sure we acquire more small businesses. When they’re ready to grow again, we’ll be ready to grow judiciously with them,” Squeri told equity analysts during a call to discuss AmEx’s second-quarter results. These businesses “were really strong for us last year, but this year [they will] be a bit more muted,” Squeri added.
Overall, volume for AmEx reached an all-time high $427 billion in the quarter, up 9% year-over-year. Travel-and-entertainment spending accounted for much of the increase, with a 14% year-over-year increase, while goods and services grew 6%. “Travel bookings one month out are stronger than they were pre-pandemic,” Squeri noted, adding, “it’s hard to apologize for record billings. We feel really confident.”
AmEx’s deal with Square, meanwhile, won’t be the last such the card company signs. It represents the culmination of long negotiations by a unit at the company that works internationally as well as domestically, Squeri said. “Square gets the headlines because it’s a U.S. company. But the team has been working hard for years [on these deals],” he added. “Our card with Square has been in the pipeline for a long time, but we’ve been out there on a consistent basis to get partners.” The card rewards Square merchants in the form of lower processing costs.
AmEx posted $15 billion in revenue for the quarter, up 12%, including an 8% increase in discount-fee revenue to $8.48 billion. This category, which represents the fees merchants pay to accept the AmEx card, accounts for 56% of the company’s total revenue. Net interest income, at $3.1 billion, and net card fees, at $1.79 billion, grew 21% and 12%, respectively, and represent the second- and third-largest contributors to the company’s revenue. All in all, AmEx recorded $2.174 billion in net income for the quarter, up 11%.
The card company’s top brass took the opportunity of the earnings call to bid farewell to Jeffrey Campbell. The company announced last month Campbell will retire in August after 10 years in the CFO role and will be succeeded by deputy CFO Christophe Le Caillec.
