'We keep an eye on Brex and Ramp': Amex CEO on fintech rivals

During an otherwise strong earnings report, American Express CEO Steve Squeri said his firm is keeping watch on the progress of rivals, such as small-business-focused fintechs and potential competition that would result from Discover's acquisition of Capital One. 

During analyst questioning on Friday, Squeri was asked about the progress of firms like Ramp and Brex, which offer small-business payments technology. Other payment firms such as Stripe and Block also sell payments and offer credit to small businesses. 

"We feel good about the progress that we are making, and yes, we keep an eye on Ramp and Brex. They both have good products and are making some inroads and we will make sure we are responding to that," said Squeri, who would not comment on whether Amex was pursuing acquisitions in the fintech industry. He also suggested Amex's mix of loyalty programs and customer experience matches consumer preferences more than the "cash back" focus of consumer payment fintechs.

Squeri also weighed in on the potential Capital One acquisition of Discover, a deal that could create one of the largest payment and card companies in the U.S. The Capital One-Discover deal ran into political headwinds during the Biden administration. The Trump administration is more likely to take a friendly posture to large acquisitions in the financial services industry.

"It's a really good deal for them," Squeri said. "[Capital One] will have their hands full with integrating Discover over the next few years. We will evolve with our regular product refreshes." 

Bullish on consumers

For the quarter ending Dec. 31, Amex reported net income of $2.17 billion, or $3.04 per share and total revenue net of interest expense of $17.18 billion, in line with Zacks' analysts consensus estimates of $3.03 per share on revenues of $17.18 billion. Earnings per share for the fourth quarter of 2024 was up from 2023's fourth-quarter EPS of $2.62.

The company additionally reported full-year revenue of $65.9 billion, up 10% on a foreign exchange-adjusted basis over 2023, record net income of $10.1 billion and EPS of $14.01, up 25% over 2023. For the full year 2025, Amex projects revenue growth between 8% and 10%, and EPS between $15 and $15.50. Analysts have forecast 2025 EPS of $15.24. Consumer spending trends in the first few weeks of 2025 were in line with a strong holiday season, Amex said, noting that could push 2025's outlook to the high end of its projection. "Consumer sentiment is higher than it has been for some time," Squeri said. "That's what gives us hope for the year."

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Amex recorded record levels of annual card member spending, record net card fee revenues and a record 13 million new card acquisitions, Squeri said. "We are encouraged by accelerating billings growth as we believe it will be a key factor for American Express to meet its aspirational target of at least 10% revenue growth," the analyst firm William Blair said in a research note. "We believe the company has multiple levers to support midteens EPS growth in the current environment."

Where Amex is placing bets

Amex also asserted that while small businesses have struggled in recent years, the firm views the sector as a strong long-term bet. Amex has used its acquisition of small-business lender Kabbage in 2020 to support its diversification beyond travel payments and as a way to cross-sell to younger consumers to build share in international markets, where it lags behind Visa and Mastercard. 

"With SME, we still continue to acquire new customers at the same rate, organic spending has still not come back to the level we saw pre-Covid," Squeri said. 

Amex in 2024 increased investments in its core hospitality and travel verticals, entering a deal with ticketing platform Tock and adding a $100 yearly statement credit for gold card users at Resy-linked U.S. restaurants. 

The card company's other activities in the second half of 2024 included acquiring 50% of the Swisscard venture that Amex did not own. The deal, which should close early this year, is part of Amex's attempt to expand outside of the U.S. Mastercard and Visa lead Amex in international markets, with Amex's share in Europe running from 1% to about 10%, depending on the country, according to Statista. Amex's market share in Switzerland is about 20%, according to Ask Wonder.

By taking full control of Swisscard, Amex hopes to gain share of payments at restaurants and small businesses. The strategy will face challenges as the deal stipulates that Swisscard will issue cards for Visa and Mastercard as well as Amex. Earlier in 2024, Amex signed an updated agreement with payment processor Worldpay, a move designed to increase the number of locations where American Express cards can be used in the U.K. The two firms are also collaborating on technology that is designed to improve the checkout experience for Worldpay merchants, which can also receive a single statement for reconciliation and gain access to a simpler onboarding process.

Throughout the recent economic stress in the payments technology industry and period of higher inflation, Amex has stressed that its consumer base, which consists of a high amount of higher income and mass affluent customers, is shielded from weakness. 

"Both top and bottom line results posed no big surprises, while card spending volume and growth were strong across all the segments driven by holiday season sales. Credit is also improving," Jeffries said in a research note. 

Among other major U.S. card companies, Visa and Mastercard are both scheduled to report earnings on Jan. 30.