How Deals And Tech Are Helping AmEx Bulk up in the Hot Restaurant Market

American Express Co.’s top brass early Friday stressed the company’s technology build-up in the red-hot restaurant category while stressing a need to spur cardholder spending overall as the card company presented its third-quarter 2024 results.

Revenue in the quarter hit $16.6 billion, up 8% from the September quarter last year, but the top brass is looking for 10% jumps. That goal will require stronger spending, said chief executive Steve Squeri during a conference call early Friday held to discuss the company’s results. “For us to hit that 10% [goal], we’d have to have an acceleration in billing, certainly more than 6%,” Squeri told equity analysts on the call, referring to the company’s reported billing growth in the quarter.

Stronger billings, he added, “is the right aspiration for us to hit that 10% revenue-growth [target].” But he repeated that “we’ll need an acceleration in billings growth. We’ve had 6% billings growth pretty much for the past year.”

One way to reach that growth goal is via acquisitions. Here, AmEx was active this summer in building up its business in the hyper-competitive restaurant sector, which accounted for $100 billion in volume for AmEx last year, making restaurants the company’s biggest travel-and-entertainment category.

In June, the company agreed to pay $400 million to acquire Tock, a reservation and table-management platform, from Squarespace. At the time, Tock was serving some 7,000 restaurants and wineries. In the same month, it bought Rooam (pronounced Rome), used by restaurants to manage mobile payments, ordering, and point-of-sale integrations. The price was not announced. These deals come on top of Resy, a reservation system AmEx acquired in 2019.

Now, “dining is fueling our momentum,” Squeri said. With Tock, especially, “we’ll punch above our weight” in the restaurant category, he added.

Discount revenue—the fees that flow to AmEx from merchants on each card transaction—is AmEx’s largest revenue category, accounting for about half the company’s intake. For the quarter, it grew 4%, “a good proxy for what to expect in the fourth quarter,” said  Christophe Le Caillec, AmEx’s chief financial officer, during the call. Here, international revenue is growing faster than that in the U.S. market, he said.

Net card fees accounted for $2.17 billion in revenue for the quarter, up 18% year-over-year, making card fees the company’s fastest-growing revenue category. Total revenue of $16.6 billion was up 8% year-over-year. Net income totaled $2.51 billion, a 2% rise.

For now, the top officers noted the 174-year-old company isn’t looking for any ripple effect on revenue or earnings from the upcoming U.S. presidential election. “We’ve been around for a lot of elections,” noted Squeri.