American Express Posts Q4 EPS Gain, Margins Squeezed by Higher Engagement Costs
American Express posted Q4 earnings with EPS rising year-over-year and revenue slightly surpassing Wall Street estimates, driven by strong Card Member spending. However, customer engagement expenses jumped and operating costs increased, pulling down margins and net profit growth.
1. Q4 Earnings Performance
American Express reported Q4 EPS of $2.27, up 8% year-over-year, driven by a revenue increase of 7% to $15.3 billion. Net income rose to $2.9 billion, reflecting strong underlying profitability despite cost pressures. The card services segment delivered 9% revenue growth, while international transaction revenues grew 11%.
2. Rising Engagement and Operating Costs
Total operating expenses climbed 9% year-over-year to $8.4 billion, fueled by a 12% rise in customer engagement costs. Marketing and rewards expenses jumped to $1.8 billion as the company expanded promotional offers and loyalty benefits. Technology and development spending increased 14%, reflecting investments in digital platforms and fraud prevention tools.
3. Card Member Spending and Outlook
Card Member spending accelerated 10% to $227 billion, with travel-related purchases up 15% and dining spending rising 12%. Management noted that higher average spend per account offset slower growth in new account openings. For fiscal 2026, American Express reaffirmed its revenue growth target of 6–8% and expects EPS between $9.30 and $9.50, emphasizing ongoing investments in customer acquisition and digital capabilities.