American Express is relying on younger generations of card holders as key to resilient revenue growth, even as the economy becomes seemingly more tumultuous.
In reporting first-quarter results Thursday, the credit card company and bank logged the best quarterly growth in three years, citing a 10% increase in customer spending, specifically in its U.S. consumer billed business. That increase was despite persistently high U.S. inflation, increased unemployment and international conflict, specifically in the Middle East, that has damped travel.
Amex reported first-quarter net income rose 15% over the year-earlier period to $2.97 billion as revenue, less interest expense, climbed 11% to $18.9 billion, according to the Thursday earnings release.
The company sees “strength, momentum, stability across the board and across the portfolio” of its cards, Chief Financial Officer Christophe Le Caillec said on a Thursday webcast with analysts.
When one analyst asked how younger Amex customers may handle a “more uncertain, more volatile economic environment,” versus their older counterparts, CEO Steve Squeri was upbeat about the next generation’s ability to weather such challenges.
“The younger generation is more equipped for the changing dynamics in the world today,” Squeri told analysts on the webcast, comparing them to middle-aged consumers. “They're more adaptable, more technology savvy, more in tune with what's going on in the marketplace today.”
As a result, the Amex CEO said he was “more comfortable” with a card holder base that skews younger than ten years ago. He gave a caveat to that remark by reminding his listeners that the Gen Z and Millennial Amex card holders aren’t the average consumers of that age, but rather they’re the “cream of the crop,” he said.
“Our Millennial and Gen Z credit performance is better than the industry's Gen X and Baby boomer credit performance, and is significantly better than the industry's Millennial and Gen Z performance,” Squeri added.
He noted how the company’s Millennial card holders have shown a propensity to put a high share of their spending on their Amex cards from the beginning of their relationship, and to increase that reliance on the card as they age.
To illustrate his point, Squeri pointed to a slide in the company’s earnings presentation showing how spending by Gen Z was up 38% from the year-ago first quarter and 13% for Millennials while it was up just single digits for Gen X and Baby Boomers, at 8% and 4%, respectively.
The slide also showed that Millennials accounted for almost a third of overall spending at 30%, though Gen Z was only 6%, according to the slide. Meanwhile, Gen-Xers accounted for the largest share at 36% and Baby Boomers were 28%.
A refresh of the company’s platinum card last year has also buttressed results, the executives said, with Le Caillec citing “accelerated spend growth.”
The company plans to keep stoking growth by investing more this year in marketing and technology, including artificial intelligence plays that the CEO cited in an annual letter to shareholders in March. In the letter, Squeri cited “hundreds” of use cases for AI.
In response to an analyst question about the possibility of AI and agentic commerce spawning more fraud, Squeri acknowledged the threat, but pointed to the company’s increased trove of data as a shield against such difficulties.
“Data is king, from a service perspective, an identification perspective, a fraud perspective, [and] a credit perspective,” he said.
As far as the company’s marketing, Squeri cited the company’s sports agreements as particularly helpful to revenue growth. Amex became the “official payments partner” of the NFL last month and announced new card perks and sponsorship moves Thursday for the NFL Draft event this month. The company also extended an agreement with the NBA franchise in February.
