American Express Company (NYSE: AXP) reported its financial results for the second quarter on Friday that beat Wall Street estimates on the back of acceleration in spending. Shares of the company were about 4% up in premarket trading on Friday.
Financial performance
American Express said its net income in the second quarter printed at $2.3 billion that translates to $2.80 per share. In the comparable quarter of last year, its net income was capped at a sharply lower $257 million or 29 cents per share.
The financial services company valued its credit reserves release at $866 million in the recent quarter. Revenue net of interest expense stood at $10.24 billion versus the year-ago figure of $7.68 billion.
According to FactSet, analysts had forecast $9.57 billion of revenue and $1.63 of EPS. In the prior quarter (Q1), Amex had missed analysts’ estimates for revenue.
What else was interesting in the earnings release?
On top of cardholder spending, the American multinational also said that a rebound in travel and entertainment resulted in an increase in the average discount rate in the second quarter. Commenting on the financial update, CEO Stephen Squeri said:
“Our strong second-quarter results show that the steps we have taken to manage the company through the pandemic and our strategy of investing to rebuild our growth momentum are paying off.”
American Express said its premium fee-based cards were very much in demand in the second quarter, leading to record additions in Platinum Card members in the United States. Member retention was also above levels seen before the pandemic, with spending accelerating sequentially and topping pre-pandemic levels in June.
The news comes a day after American Express declared dividends on Series B and C preferred stock. The $137 billion company has a price to earnings ratio of 28.04.
The post Here’s what American Express Q2 results tell us appeared first on Invezz.
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