Ladies and gentlemen, thank you for standing by. Welcome to the American Express Q4 2024 Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. If you wish to ask a question, please press star, then 1 on your touchtone phone. You will hear a tone indicating you have been placed in queue. You may remove yourself from the queue at any time by pressing star, then 2. If you're using a speakerphone, please pick up the handset before pressing the numbers. Should you require assistance during the call, please press star then zero. As a reminder, today's call is being recorded. I would now like to turn the conference over to our host, Head of Investor Relations, Mr. Kartik Ramachandran. Please go ahead.

Thank you, Daryl, and thank you all for joining today's call. As a reminder, before we begin, today's discussion contains forward-looking statements about the company's future business and financial performance. These are based on management's current expectations and are subject to risks and uncertainties. Factors that could cause actual results to differ materially from these statements are included in today's presentation slides and in our reports on file with the SEC. The discussion today also contains non-GAAP financial measures. The comparable GAAP financial measures are included in this quarter's earnings materials as well as the earnings materials for the prior periods we discuss. All of these are posted on our website at ir.americanexpress.com. We'll begin today with Steve Squirey, Chairman and CEO, who will start with some remarks about the company's progress and results, and then Christophe Lekayak, Chief Financial Officer, will provide a more detailed review of our financial performance. After that, we'll move to a Q&A session on the results with both Steve and Christophe. With that, let me turn it over to Steve.

Thank you, Kartik. Good morning and thanks for joining us. 2024 was another strong year for American Express. We delivered record revenues of $66 billion for the year, up 10% on an FX-adjusted basis, achieving our long-term aspiration. We had record net income of $10 billion with earnings per share of $14.01, up 25% for the year, which is higher than our long-term aspiration the great work of our colleagues around the world drove 2024 results that were strong across our key metrics setting new records in many categories in addition to record revenues and net income we had record levels of annual card member spending record net card fees and a record 13 million new card acquisitions we also saw continued high card member retention best-in-class credit performance and disciplined expense management notably we exited the year with increased momentum as fourth quarter billings growth accelerated to 8% overall, driven by robust holiday spend. We continue to enrich our membership model, refreshing over 40 products globally in 2024, including the U.S. Consumer Gold Card, which is particularly appealing to millennial and Gen Z consumers, as well as refreshing our Delta co-brand cards. We also enhanced our dining portfolio with the acquisitions of TOC and Roam, and we launched several new top-tier sponsorships and experiences, such as our multi-year global partnership with Formula One. Our U.S. small and medium-sized enterprise customer base continue to grow with strong new card acquisitions throughout the year, and we saw an improvement in small business sentiment in the fourth quarter, which linked to stronger organic spending by our small business customers through the holiday season. A key driver of our growth is the ongoing global expansion of our merchant network. We added millions of new merchant locations globally in 2024, and we reached an average of 80% coverage across our top 12 international countries, with coverage in travel and entertainment categories well above 80%. That's an increase of eight percentage points from three years ago. These results clearly show that our strategy of backing our customers by investing in our value propositions, coverage, marketing, technology, and talent is working. As we look ahead to 2025, American Express will be celebrating a major milestone, our 175th year in business. Our company's history is one of innovation and growth. From our start in 1850 as a freight delivery company operated with horses, wagons, and trains, to becoming a global travel services company in the early 20th century, pivoting into a card-focused payments company by the 1960s and ultimately evolving into the global premium financial and lifestyle company powered by technology we are today. Our longevity has been fueled by talented colleagues who have delivered a steady stream of innovative products and services that are focused on serving premium consumers and businesses of all sizes and who have stayed true to our brand that has been built on trust security and service since our earliest days. As I've discussed over the past several years, we've continued the cycle of customer-focused innovation, which has been largely responsible for resetting the growth trajectory of the company. We believe our growth is sustainable. We're confident that we will continue to bring in large numbers of new premium customers, especially millennial and Gen Z consumers and small businesses, while also maintaining high growth across our international business. In looking at the external marketplace, we continue to see strategic opportunities to sustain our growth. For example, in the U.S., fee-based consumer premium cards are the fastest-growing part of the industry, and we have about 25% of those cards, indicating a continued upside opportunity. Across the industry, the number of millennials and Gen Z consumers with premium products are growing at an even faster rate, and we're adding highly creditworthy customers in these cohorts faster than the industry, with substantial room to continue this growth. It's clear that our premium products are resonating well with these age groups whose spending needs will continue to expand as they move forward in their lives and careers, with many likely to also start new small businesses in the coming years. In SME, we see continued growth opportunities in the U.S., where we expect to continue adding new small business customers and expanding our offerings to meet more of their needs beyond the card, such as lending, checking, and cash flow management. And when we look at international, which is our fastest growing segment, we are underpenetrated in both consumer and SME. We have an average of 6% spend share across our top five countries, which represent almost a third of the revenues outside the U.S. International SME in particular is growing off a small base, and with the differentiated products and capabilities we offer, we have an opportunity to continue our rapid growth in this part of our business. The long runway for growth we see both in international consumer and SME, coupled with the opportunities we have to continue expanding our merchant coverage across the globe, gives us confidence that we can sustain our growth trajectory outside the U.S. So as we look at this year and beyond, we're going to continue with our strategy of investing at high levels in innovative value propositions, marketing, and technology to drive growth. This includes our ongoing focus on our product refresh strategy. Currently, we're refreshing between 35 and 50 products a year, and we're planning to maintain that pace in 2025, along with other enhancements to our membership model for both our consumer and commercial customers. Turning to guidance for the year, we expect 2025 revenue growth of 8 to 10 percent and EPS of $15 to $15.50, or a 12 to 16 percent increase over 2024, adjusted for the assertified gain. Regarding our thinking and establishing this year's guidance, as we've said, card member spending is the largest component of our total revenues. In putting our plan together, our assumption had been that steady billings growth we saw through most of 2024 would continue in 2025, but the fourth quarter spend numbers were stronger than we expected. While it's too soon to tell how this year will play out, we're encouraged by that increased momentum we saw exiting 2024. For now, we're assuming 2025 billings growth will be similar to full year 2024 number. However, if spend growth continues at the elevated Q4 level throughout this year, we would expect to come in at the higher end of our revenue range, all else being equal. I'll now turn it over to Christophe for additional commentary about our results and our 2025 guidance.

Thank you, Steve, and good morning, everyone. Given we are at the year end, I will discuss both our Q4 and food year results. Starting first with our food year performance. 2024 was a strong year with 10% revenue growth on an FX-adjusted basis, and EPS of $14.01, up 25%. And we continue to deliver superior returns, driven by our spend-and-fee-led model, as we ended the year with an ROE of 35%. Notably, we also returned $7.9 billion of capital to shareholders this year, which included the SLFI gain. We saw a stable spending environment for most of 2024, with an acceleration in spending as we exited the year. We continued to see healthy loan growth, and we achieved record net card fees. We achieved these results while maintaining our best-in-class credit performance, investing at high levels for growth, as well as driving significant operating leverage. In sum, the building blocks of our financial model are performing well and drive our confidence in the year ahead. Now, taking a closer look at total build business performance on slide three, robust spending during the holiday period by our premium customer base helped generate 8% FX-adjusted growth year-over-year in Q4, an uptick from the 6% range we saw for the past few quarters. The increase in growth was broad-based across both T&E and goods and services categories, across geographies, and across every customer segment, as we'll see in a moment. In addition, transaction growth also accelerated to 10% in the quarter, reflecting greater engagement from our account members. I'll highlight a few key points as we look at spend trends across our businesses over the next few slides. U.S. consumer spend was up 9% year-over-year in the quarter as strong holiday spend drove momentum versus Q3. Growth accelerated in both GNS and T&E categories with performance a bit more concentrated in this strong holiday shopping period compared to the rest of the quarter. Looking across generations, Millennial and Gen Z spend continues to grow faster than the other age cohorts, up 16% in Q4 versus last year. Notably, all generations saw an uptick in spend this quarter compared to Q3. Commercial services spend was up 4% versus last year for the quarter, with U.S. SME growing 3%, a bit of an uptick from the past few quarters, as organic spend growth improved a bit sequentially. We also saw an increase in spending from our large and global client base with improvement in T&E spend across client industries as well as improvement in goods and services spend. Lastly, international grew 15% in Q4 versus last year on an FX-adjusted basis as we continue to make strides in our international business. This rapid growth was visible across spend categories and across our consumer and commercial businesses, with each of our top five markets growing in mid to high teams. As you can see, Q4 spend results were strong across our businesses, and we feel good about the spend acceleration we saw. While growth in Q1 will be impacted by the grow over from leap year in 2024, so far, the first three weeks of January look more in line with Q4 trends. At the same time, we need to see if the momentum will sustain. So as we think about 2025, we are assuming at this point a similar spin environment to what we saw in 2024 on a full year basis. Moving on to loans on slide 7, Q4 total loans and card member receivables grew at 9% on an FEC-adjusted basis versus last year. As a reminder, these growth rates moderated over the course of the year as expected, as we lapped the period when customers were still building back revolving balances coming out of the pandemic. With that process largely behind us, for 2025, we expect loans and receivables growth to continue to grow a bit faster than spend, and as we continue to meet more of the borrowing needs of our premium customers. Turning to slides eight and nine, our credit performance continues to be excellent. Delinquency rates and write-up rates are stable versus last quarter and are still below levels from five years ago. Total provision expense was down from a year ago as we bill fewer reserves. These results are an outcome of our premium strategy that attracts high credit quality customers, combined with our risk management capabilities this strategy has widened the margin of safety and injured profitable growth. We continue to expect some modest upward buyers to write off and reserve rates over time as we continue to acquire new customers at elevated levels and increase our share of lending from existing customers. Turning next to revenues starting on flight 10. We saw another strong year of your revenue growth with revenues up 10% on an FX adjusted basis for both Q4 and the full year. Discount revenue grew 8% FX adjusted in Q4 in line with build business growth. Our cycle of product refreshes helped drive card fee growth to 19% FX adjusted in the quarter and fuel new card acquisition to a record level of 13 million for the new year, for the year, with around 70% of new accounts acquired on fee-paying products. We expect card fee growth in 2025 to continue to grow in the mid to high teens, but to moderate as we progress through the year. Turning to slide 13, Q4 NII was up 13% on an FX-adjusted basis. Growth was driven by increases in revolving loan balances and net yield versus the prior year. As expected, growth moderated this quarter as it has over the course of the year. An important long-term driver of yield is our ability to improve our funding mix as a result of our growing deposits program. Our high-yield savings account balances grew 17% in 2024. As with our premium cards, we see that our Hysa product is resonating with younger customers. Millennial and Gen Z customers make up over half of the accounts and about a third of the total balances today. As we think about 2025, we expect NII growth to outpace the growth in total loans and receivables supported by growth in revolving balances. And while there is uncertainty in the rate outlook, as a reminder, we are mildly liability sensitive with a relatively small impact from changes to the Fed funds rate. I'll turn next to expenses on slide 15. In Q4, the VCE to revenue ratio was 43%. Rewards expense in particular grew 15% in the fourth quarter, largely driven by the slow growth in rewards expense in the prior year. In addition, as we mentioned last quarter, we made some small changes to the program that are good for both customers and the overall economics of the program, but drive a very small increase in the URR in the short term. Stepping back, we expect overall VCE expenses to grow slightly faster than revenues in 2025 as we continue to invest in our products and drive car member engagement and as our portfolio continues to become more premium. We expect rewards growth to remain a bit elevated in Q1 as a result of the URL model changes from a year ago, before growing more in line with the historical trend. We ended the year with $6 billion in marketing expenses, up 16% for the full year, as we invested at elevated levels based on the attractive growth opportunities we saw. Given the significant increase of the investment pool in 2024, we expect a modest increase in marketing expense for 2025. Finally, operating expenses for the quarter were down 1% versus last year at $4.2 billion. On a full-year basis, operating expenses of $14.6 billion were down 2%, excluding the gain on sale of the assetified business in Q2. operating expenses were up 1% for the full year. In 2025, we expect operating expenses to grow in low single digits versus 2024 levels adjusted for the certified gain. This continues our strong track record of discipline expense management as we maintain the low levels of growth from last year while still investing in key areas such as technology. Let me move now to capital on slide 16. Our Q4 CET1 ratio was 10.5% and continues to be within our 10 to 11% range. We returned $7.9 billion of capital to our shareholders for the year, including $2 billion of dividends and $5.9 billion of share repurchases. In 2025, we also expect to increase our quarterly dividend by 17% to $0.82 per share, consistent with our approach of growing our dividend in line with earnings and our 20% to 25% target payout ratio. With this plan increase, we expect to more than double the dividends since the beginning of 2019. we have also reduced the share count by 17%, demonstrating our confidence in the sustainability of earnings of our differentiated model. This brings me to our 2025 guidance. We continue to run our business with an aspiration to achieve 10% plus revenue growth and mid-teams EPS growth. As Steve noted, for the full year 2025, We expect revenue growth between 8-10% and earnings per share between $15 and $15.50. The EPS range reflects 12-16% growth year-over-year adjusted for the certified gain in 2020. I'll note that the revenue guidance reflects a balance between the spend environment we saw for the most of the year and the acceleration in spend growth we saw in Q4. If the spend momentum we saw in Q4 were to continue, we would expect revenue growth to be closer to the high end of the range, all else equal. Our guidance also factors in a range of scenarios based on what we are seeing in our business today. It assumes a stable economy and reflects what we know today about the regulatory and competitive environment at the same time there is uncertainty in the environment whether in tax policy interest rates or currency movements our outlook is based on the fx rates as they are today as a global company the strengthening of the us dollar is a headwind to our growth in closing as you heard 2024 was a strong year for the company we are well position to continue our track record of strong growth into 2025, and we feel good about the year ahead. With that, I will now turn the call back over to Karthik, and we will take your questions.

Thank you, Christophe. Before we open up the lines for Q&A, I will ask those in the queue to please limit yourselves to just one question. Thank you for your cooperation, and with that, the operator will now open up the line for questions. Operator?

Ladies and gentlemen, If you wish to ask a question, please press star, then one on your text tone phone. You'll hear a tone indicating that you've been placed in queue. You may remove yourself from the queue at any time by pressing star, then two. If you're using a speakerphone, please pick up the handset before pressing the numbers. One moment, please, for the first question. Our first question comes from the line of Ryan Nash with Goldman Sachs. Please proceed with your question.

Hey, good morning, everyone. Morning, Ryan. i didn't want to disappoint you steve so i'm going to ask about revenue growth um so you know you gave a lot of different comments obviously eight to ten you know you're exiting at ten you know you highlighted that um you know billings are started the year um you know at a at an elevated level similar to fourth quarter so steve maybe just talk a little bit about you know what could be the potential headwinds to revenue growth that would put you towards the lower end and you know So I guess, you know, given, you know, GDP is strong, you've acquired a ton of cards in 2024, you know, why is 2025 not, you know, in line with sort of the aspirational revenue growth, given it feels like this is sort of the right kind of environment where we could see that type of top line growth?

So I would say that it is in line. I mean, we've got, we give a range and that range has our top end, you know, the 10% at the top end is in line with our long-term aspiration just like this year you know we did hit our long-term aspiration not only for the quarter but for the year on a full year basis so what would cause you to go sort of below middle or at i think what you have to look at last year is a lot of our con a lot of our consumer customers were building balances and so you had some pretty strong NII growth. And that's sort of moderated a little bit as we got into the year. So if you look at it, it really does come down to a billing story for 2025. And I think the way that we've guided it is absolutely right. We've guided that if, in fact, billings are like they were in the fourth quarter, you will see us at the top end of the revenue range. And as Christoph said, and I said, all else being equal, you don't have any sort of surprises. But, and as we've said at your conference, just giving you another plug for your conference, it really becomes, you know, billings. And I think if billings continue at where they were in the fourth quarter, then I think what you will see is us at the top end of that revenue range. If you see them where they were for the whole year, you can assume we'll be in the middle. And I don't think this will happen, but this is why you give ranges. If they were below last year, you would be at the lower end. So I think it really, truly is a billing story. I think, you know, we're very confident with card fees. I mean, we've had 26 consecutive quarters with double-digit card fees. We expect that to continue more to the mid-teens, to the lower-high teens. And, you know, NII will continue, albeit at a little bit of a lower growth rate than you saw in the first two quarters of last year. So I think the guide is truly in line with what we said. I mean, last year we went 9 to 11, and, you know, we came in at 10, and we said it was about billings, and we got billings in the fourth quarter, which pushed us over the line. So, you know, we're just providing guidance that incorporates all those scenarios. you.

Our next question comes from the line of Sanjay Sakharani with KBW. Please proceed with your question.

So let me deal with the EPS range. I mean, you know, one of the things that we've done over the years is if we've had opportunities to invest, we've invested. Now just take a look at this year. This year, you know, we provided our guidance at the beginning of the year. It was obviously lower than what we ended the year with. And our expectation was that we were going to, you know, reinvest the certified gain, but we wound up using that to buy shares back. And we increased our marketing by 800 million. So we want to keep the flexibility if we have, you know, good investment options to invest back in the business. Having said that, If, in fact, we had a year like we had this year, not only do we have good investment options, but we could also exceed EPS, we would do that. So I think as you start to get to the high end of that revenue range, what winds up happening is management has to make a decision. Do we reinvest in the business? Do we drop some more of that back to shareholders? And that'll be a decision that we will make on an ongoing basis as we see what the opportunities would be, whether those be opportunities in technology, whether those be opportunities in marketing, more value proposition, and so forth. So we want to leave ourselves that flexibility to be able to make those investments. But having said that, there is a top end of the range that's $15.50. It is at 16% growth. And that is more likely to happen if you have higher revenue growth, again, with the commentary that I made, that we could make a decision that we want to invest that back in. So it's plausible that that, in fact, would happen. As far as billings go for the quarter, and I'll let Christoph comment a little bit more, I think what you saw across the board, you know, you saw a consumer come up. It was, you know, 9%, which was two points above where we had been running. We saw more organic spend lift in SME, which made SME from one to three. And that's still not where we want to be from an SME perspective. And international continues to perform very, very well, both from an SME perspective and from a consumer perspective, also picking up two points. Travel was higher this particular quarter, and particularly airline. Airline doubled sequentially quarter over quarter, you know, 13%. The more surprising number, I think, was front of the cabin up 19%. 13%. And restaurant continues to be strong. So T&E was very, very strong in the quarter for us. And Christophe, I don't know if you want to add anything else. I don't have a lot because you covered most of it.

The only thing I will say is that the holiday shopping season was especially strong for us. And you asked the question about the sustainability, and that's the key word, right? And, you know, the team here is looking at, you know, whether it's going to expand into 2025. That's the key question. And that's a real, you know, it's really hard to answer this in a definitive way. As I said in my remarks, the first three weeks of January very much look like in line with what we saw in Q4. But there's like 49 more weeks to come and we don't know how it's going to is going to play. So more to come on this, but what we saw so far looks very strong.

Thank you. Our next question comes from the line of Erica Najarian with UBS. Please proceed with your question.

Hi, good morning. Just wanted to continue to unpack the billing story for 2025. When I look at the proprietary net cards acquired, it looked like it slowed down a bit in the fourth quarter after being up double digits in the second and third quarter, of course, up six and a half percent year over year. As we think about what's going to drive the billing strength in 2025, particularly in light of, Christophe, your comment about modest increase in marketing expenses, should we think about, you know, what is the split between, you know, an increase in new cards acquired in terms of versus that 6.5% versus, you know, better spend per account? You know, we noticed, of course, that spend per account was up a little bit in the fourth quarter, up 3% versus 2% for the year.

Yeah. So, there's a lot in your question, Erika. Let me try to address most of the points. The first thing is that it's very hard to read a lot in the quarterly distribution of NCA, and there is definitely not a good alignment between the marketing spend in a quarter and the NCA in a quarter. There is a time difference between the two because of the accounting around how we account for the welcome incentives. But the point here is that we invested a lot in 2024 and we got a lot of cards, you know, 13 million cards, which is a record for the company. As you think about how this is going to play out and the math we're doing about the 2025 spend, as you know, the way we think about billing growth is like we split it between what's coming from this recently acquired card members, what's coming from organic, which are either the growth coming from the tenured con members. And, you know, the last piece of the puzzle is attrition. You know, the expectation that we have for 25 around attrition is consistent with what we've seen over the last, I would almost say the last four or five years, is that it's going to be like very stable, very low. There's not a lot of either attrition going on here in terms of the billing growth. The contribution coming from organic is the one that is the hardest to predict. And that's the source of the softness we saw in Q4. And that's what either is the positive performance that we saw, sorry, the softness we saw in 2024. And that's the organic that was stronger in Q4. So it's hard to say how that organic is going to perform in 2025, you know, but it's the source of the volatility for sure. There, you know, and we provided some of the details in the past, but, you know, I would say a good, you know, 7% of the billing growth comes from these new customers and the balance is typically the organic spend and the attrition.

Thank you. Our next question comes from the line of Mark DeVries with Deutsche Bank. Please proceed with your question.

As we've been discussing, you're seeing accelerating built business growth into year-end. We're also getting consumer and business confidence that's really been climbing. So, Steve, I was hoping to hear about what you may have learned, both from any conversations you've had with customers recently about kind of their optimism on spend and also just looking at your historic built business numbers and how that is historically rising confidence?

Well, I think, look, I think we saw a rise in confidence in the fourth quarter. Certainly, you saw it from a consumer perspective, you know, 9%. And I think as I'll just go back and comment on travel. I mean, travel traditionally for us, especially airline in the fourth quarter, is not a big number, but it doubled sequentially in front of the cabin. I think front of the cabin is a really good indicator of consumer confidence because what you do is when people don't have confidence, they may not cancel a trip, but they may downgrade the hotel, downgrade the airlines, the class of service, and so forth. So I think we're seeing more consumer confidence. We've done a survey of small businesses, and the sentiment is really, really good, and it's higher than it's been in a long time. And I think we saw that come up with from an organic growth perspective. International's just been strong. International has been a strong story for us since, you know, two years after COVID. It has just been a it's been marching on. So I think that, you know, that's what gives us, you know, hope for the year that this will continue. But again, hope is not a plan. And so, you know, we do our plan based upon what we saw at the time of the plan. and you know as we look at the first the first couple of months in the first quarter we'll see where we are and you know provided that we have this continued growth we would expect again to be at the high end of of the range from a revenue perspective the only thing that i will throw out there from a timing perspective is that we will have one less day um in um you know in this first quarter due to leap year so we'll have to we'll manage that but we like to look at things on a day's mix adjusted basis anyway. And so we'll be able to see through that and determine what that will mean for the second quarter. So I think there's more to come, but I think the basic story here is there is consumer confidence at this point. There is small business confidence. We just don't want one quarter to color what a whole year is going to be. We'd like to see that be repetitive before we do anything with it.

Thank you. Our next question comes from the line of Craig Moore or with FT Partners. Please proceed with your question.

Yeah, good morning and thanks. I wanted to, I had two questions. The first on SME, you know, we've seen very strong growth from some of your competitors, some newer competitors like Ramp, and was wondering, you know, how you feel about your customer-facing tech in SME and whether that might be an area of potential acquisition in the future. And second, Delta had very strong commentary about the co-brand card growth and their expectation for 2025 that that growth will be at least as good. So I wanted to ask you how that lines up with your thought process on the travel space and how the Delta book's been comping versus the rest of the book. Thanks.

Yeah, I think, well, remember, you know, look, we align very closely with Ed and his team. And so we're aligned with that. But also remember that the Delta book is not just what's spent on Delta. It is spent what Delta card members, America's card members spend on everything else. And so, you know, look, I think, you know, the remuneration that we provide delta we would expect that to continue to increase we're happy to see that increase because that means spending is increases and we're getting our piece of the pie um we're getting our piece of the pie as well so i i think it bodes well for travel um you know and i think that um you know we saw that in the fourth quarter and we hope that that can continues and i know in my conversations with ed uh he feels very confident about about this year and i think that's how he spoke about it, you know, during his earnings call. As far as SME tech, you know, look, we constantly look at ways to improve the customer experience. And obviously, I'm not going to comment on, you know, acquisitions or things like that. But we feel good about, you know, where we are and the progress that we're making, especially with our, you know, cabbage acquisition and so forth. And yes, we keep our eye on Ramp, Brex, and everybody else that's out there. They are working from a smaller base, but they have good products, and they're making some inroads, and we will make sure that we are responsive to that.

Thank you. Our next question comes from the line of Don Fandetti with Wells Fargo. Please proceed with your question.

Good morning. Steve, it looks like the Capital One Discover merger is going to go through. Any thoughts on the competitive impacts. I know they don't have, you know, incremental affluent consumers, but, you know, it's more scale ability to build lounges and they do compete, you know, SME.

Yeah, look, I think, you know, Rich is a really smart CEO and I think it's a really good, I think it's a really good deal for them. You know, picks up a debit network and picks up a lot more scale at, you know, I think he becomes the largest credit card lender in the United States. With that, Discover is a multifaceted company, not only with debit and credit cards, but with a bunch of loans and what have you from a car student and so forth. So I think it fits very nicely in with their strategy. You know, Capital One with VentureX is making inroads, you know, within the premium space. I think we continue, though, to more than hold our own. And look, they're a formidable competitor, but, you know, I think also they'll have their hands full with integrating, you know, Discover over the next couple of years, and we will continue to evolve our products with our product refreshes. and we look forward to competing with them.

Thank you. Our next question comes from the line of Rick Shane with J.P. Morgan. Please proceed with your question.

Thanks for taking my question. Hey, Steve, one of the key initiatives of your team and your tenure is the increased focus on experience as an incentive versus reward. The impact on account growth has been significant, well understood. Is it fair to say that the other benefit besides growth is that there's higher operating leverage because there's more fixed costs associated with experience than there is with traditional rewards?

Yeah, I mean, it's a good point. I think that you're absolutely right. I mean, you have, you know, you do have more fixed costs when you're doing sort of experiential sponsorships. You have more fixed costs when you're doing lounges and things like that than you do when you're on a variable rewards basis. The trick is with that piece of it, though, is that as you continue to grow, it's just like technology, right? You know, you have X amount of mainframe capacity or servers or what have you. And then as you get big, you need to add a little bit more, but then you grow into that scale. And so I think that's what you're seeing as we expand some of our lounges, we'll be making some more investments, not only new lounges, but we'll be expanding some of the existing lounges as well. But I think that's part of the calculus for us is that, you know, our card members, while they like the rewards, they also like all the experience and the access that we put around it. And so by making sure that we're balancing our investments in these areas, we're able to give people the best of both worlds. And that's what we strive to do. And it also enables us, again, to lever a little bit more fixed costs across a wider base.

Thank you. Our next question comes from the line of Jeff Adelson with Morgan Stanley. Please proceed with your question.

Hey, good morning. Thanks for taking my question. Steve, I was wondering if you could shed a little bit more light into the planned product refresh strategy for this year, where you might go with that. I know you've previously talked about refreshing every three to four years and platinum, U.S. platinum is one that's sort of been sitting out there since 2021. And Christophe, I was wondering if you could maybe shed a little bit more light into your credit commentary. You know, the credit's been doing pretty well. It seems like it's outperformed what you've been looking for stable this year. You talk about why you might be expecting a little bit of a modest increase from here. Is that conservatism on your part, or do you think, you know, you could actually see a better result than that?

Yeah, so I'll disappoint you with the first answer. But so, look, we're going to do between 35 and 50. I'm not going to comment on which ones and pre-announce. I think that we'll let you speculate on what's going to happen. But, yeah, you know, we look to refresh products on an ongoing basis and also when we feel the need that those products need refresh. And so you'll just have to wait and see what we come out with. But, you know, we have 11 more months to go.

So good morning, Jeff. Under credit metrics, the first thing that I'm going to say is that we are still materially below where we were pre-COVID, unlike, I think, most of our competitors. So that tells you something about, you know, the performance from a credit standpoint. It says as well that all the growth that we generated over the last few years was very much focused on the, you know, in the premium space. So I like that. So the comment on the upward buyers, I made a similar comment at the beginning of last year. And it turned out that the credit metrics were actually fairly stable, especially towards the later part of the year. I still believe that those metrics should trend up a little bit while, you know, remain, you know, best in class. They're going to trend up because we're acquiring a lot of customers and they're going to be doing some seasoning happening for those vintages. and the performance, you know, those metrics are so low, so good that to some extent they can only go up a little bit from here. But, you know, these are, you know, we're very comfortable with the performance on the credit side. You know, the premiumness of the strategy is just working and translating really well in the credit performance. We're issuing, you know, premium products and that attracts a lot of, you know, very low credit risk customers. And so where we are, it's just like a very good position. And, you know, I, you know, I hope that by the time I get to, we get to the end of the year, we're looking at this race and I can say I was wrong and the credit were stable. But I think in the long run, the trend is that you should expect those metrics to trend up a little bit, very modest, but a little bit.

Thank you. Our next question comes from the line of Chris Kennedy with William Blair. Please proceed with your question.

Good morning. Thanks for taking the question. Marketing investment has increased a lot in recent years. Can you just talk about how the allocations have evolved between the different buckets, such as customer acquisition, general brand marketing, and sponsorship activity? Thank you.

General brand sponsorship has been fairly stable over the past years and the lion's share of the growth that you saw in marketing, so say over the last 12 months, the $800 million between last year and this year, the lion's share of that is going into acquisition. Then we split it between what we call consumer acquisition versus prospect acquisition. Consumer acquisition, customer acquisition, sorry, refers to, you know, upgrading and companion cars. And, you know, these are very attractive investments. So we try to find the right balance between investing and deepening the relationship with our current customers and prospect acquisition. So, you know, I don't have, you know, the split between the two, but we typically try to fund first that customer acquisition, which is, you know, the most attractive in terms of return. And, you know, we look at the opportunities that exist in the market and, you know, we maintain our very strict standards in terms of underwriting and returns and try to maximize that. So we have, as you know, a sophisticated process to optimize those marketing dollars. But at a very high level, I think that's the story.

Thank you. Our next question comes from the line of Moshe Orenbuck with TD Cowan. Please proceed with your question.

Great, thanks. Most of my questions have already been asked and answered. But maybe could you drill down a little more on the SME business? You saw a little bit of acceleration in the fourth quarter. Any thoughts either, you know, about the trends and momentum there more specifically, you know, or, you know, plans? I know, Steve, you said you didn't really want to talk about plans for refresh, but are there things that we should be looking for in 2025?

Well, I think mostly, you know, what I would say about SME, which is, you know, we still continue to acquire the same amount of SME customers that we've been acquiring, and our attrition is the same. It really continues to be an organic story. And organic spending has still not come back to the levels that we saw, you know, sort of pre-COVID. And so if you look at what's happened from an SME perspective during COVID, organic spending went all the way down. Coming out of COVID, it really started to ratchet up. And then it sort of normalized a little bit. And inflation, higher interest rates, and so forth. So I think we started to see the deceleration of organic spending stop and start to turn around. What I think the story will be with SME is that we can get that back to a 3% organic lift. You will see SME then be more of a contributor to overall billings than it is right now. So it truly is an organic story. And, you know, as I said, as you pointed out, I'm not going to talk about refreshes, but I think it really comes down to small business confidence. And it's not an acquisition story. It's not an attrition story. It truly is still an organic story for us. And I think the industry is still seeing that as well.

Thank you. Our next question comes from the line of Brian Ferrand with Truist. Please proceed with your question.

Hey, good morning.

I hate to use my question on FX, but is the 8 to 10 FX adjusted guide or gap?

And because I think you mentioned you assume the dollar stays here. And then can you remind us the EPS impact? I know there's some expense and hedging. So is there any appreciable EPS drag we should think about embedded in the 15 to 1550 range?

Yeah. So thank you for your question, Brian. The first thing that I'm going to say on this is that we talk about FX adjusted and FX reported because we think it is useful to you and to us to think about the momentum that we see, say, from a revenue, from a billing standpoint, you know, stable currency, like once we control for currency movements, because that reflects the true momentum in terms of transaction and no FX noise. So for that reason, we speak about it in FX-adjusted terms. As we think about forecasts and predictions, it's impossible for us to predict where we're going to be from an FX standpoint. So we cannot talk about it in terms of FX reported at year end because we don't know which way the dollar is going to go. And therefore, we're not trying to. The way to think about the impact of these currency movements, you saw it in Q4, right? Here we have actual movements. The difference from a revenue growth standpoint was one percentage point, right? FX adjusted revenue growth was 10%. FX reported, GAAP reported was 9%. So the impact is material is one percentage point of revenue growth. In terms of EPS impact, it's a far more complicated stories because we have expenses spread out across the world. We have centers of excellence. So it's really a complicated one. I'm going to refer you, I think it's in the K or in the Q, where we have sensitivity. And it goes something like this. You can check the numbers precisely, but a 10% increase in the dollar, or 1% increase, 10% increase in the dollar, translating to $136 million-dollar negative impact on PTI. And so that's the kind of sensitivity. So it's not hugely impactful, but it is a little bit impactful still.

Thank you. Our next question comes from the line of Saul Martinez with HSBC. Please proceed with your question.

Hi. Good morning. Thanks for taking my question. Maybe you can double-click a little bit on the international businesses is you talked about, I think you've said each of your top five markets, you grew mid to high teen, the mid to high teen range. Can you just comment on what some of the drivers are? What kind of momentum you're seeing in terms of merchant acceptance, how the sales changes you made a couple of years ago are impacting it? And I guess I'm just trying to get at how you feel about the trajectory and the sustainability of that kind of growth.

Well, we feel really good about the trajectory and the sustainability merchant acceptance and international continues to to grow i mean it's we acquired millions of merchants and a comment that i made is you know we're at um you know 80 you know lif coverage in in the in the key markets and you know from a t&e perspective we're over 80 you saw that go up by by eight points over the last three years so merchant acceptance internationally continues to grow very very rapidly for us as far as, you know, overall growth, you know, we invest quite a bit in, in, in card acquisition in, in international and our opportunities in international for card acquisition are still really, really good. And, you know, a lot of that growth comes from new cards for us. So we think, you know, with less than 6% market share in the top five markets and in a, in an SME environment, which is really nascent at this point, we think there's still big opportunities in SME and in consumer for us. And so our expectation is that double digit billings will continue into the foreseeable future. And remember, pre-COVID, that's what we saw. International was the fastest growing part of our business because we added merchant locations and we added more cards. During COVID, it was a, you know, international, if you recall, was a, you know, almost more than a two-year stoppage, but it's right back to where it was pre-COVID, and we continue to feel that that's going to continue.

Thank you. Our next question comes from the line of Terry Ma with Barclays. Please proceed with your question.

Hey, thank you. Good morning. I just wanted to ask about net card fee growth. I think you got it to mid-to-high teens growth in 25 with some moderation, so maybe just unpack that a bit. You've historically had more of a runway to accelerate that kind of growth when you've done major refreshes. So I'm just curious why that would actually moderate this year.

I mean, the first thing is that these growth rates have been very strong for a very long period of time. As a matter of fact, this quarter marks the 26th consecutive quarter where we've seen car fee growth in double digit. And it's like, when I say double-digit, I think the CAGR is like 13% over this period of time, right? Something of that magnitude. So very strong growth. At the beginning of the year, we started the year at like 16%, and we said we should expect to exit the year with an acceleration, which is exactly what happened, right? We were at 18% last quarter, 19% in Q3, 19% in Q4. So, very strong growth, which, you know, it's always a complicated, you know, there's always a lot of moving factors here. So, it's not easy to simplify too much. But the big driver of that acceleration was actually the cycle of product refreshes. And we can see it in our models. And therefore, as you think about 2025, you know, that acceleration that we saw in Q3, Q4 is still going to play out in Q1 2025. And afterwards, it should trend a little bit more like what you saw at the beginning of 2024, which is this, you know, mid-teens, you know, growth rate. So still continuing on a very strong trajectory of car fee growth. And, you know, I just want to remind as well that on these 13 million cards that we acquired this year, 70 percent are joining the franchise on a fee paying product. Right. So that supports that growth together with a very strong renewal rates that we see as well. So it's just there. It's been a very successful story for us, not only recently, but over the last five years. And that success is going to keep on in 2025.

Our final question will come from the line of Mihir Bhatia with the Bank of America. Please proceed with your question.

Good morning. Thank you for taking the question. Maybe I just wanted to take a little bit of a step back in a big picture question for you just about competition from fintechs and how that has been evolving. You talked a little bit about it on the commercial side earlier in response to Craig's question. But maybe just talk about it on the consumer side as well. Specifically, I was wondering, we've been seeing some pretty rich cashback offers from some of the newer entrants in the market, if you will. Is that starting to have any impact on drawing customers away from the traditional rewards card? And just what are you seeing on competition there from the fintech in the consumer side?

I would say I go back to the answer I gave before. I think Rick Shane asked the question before about how we invest. I think our card member is a little bit different. And they're really not really focused on cashback. We have cashback products for those that like it, but our card members are more focused on a balance between rewards, experience, and service. And so from a fintech perspective on the consumer side, we really have not seen anything. Not that we don't look at it, not that we're not aware of it, But again, it's about knowing your customer. And our customer, you know, is one that really does value that experience, you know, access and service as well as having rewards with it. So, and that's not something that the fintechs have been able to really replicate. Again, it is more of a cashback product. You know, on the SME side, it's technology integrated with CARD. And, you know, we're very aware of that. And, you know, as I said, we'll take the appropriate steps to address that. So, on a consumer side, though, no, we have not seen any inroads at all. And, you know, if you look at it, our card acquisition, you know, we don't unpack it, but our card acquisition from a consumer perspective was at record levels as well. So, you know, we had high, high consumer cards that we've acquired. So, you know, nothing to see there at this point, but again, we'll continue to watch it.

Steve, thank you. With that, we will bring the call to an end. Thank you again for joining today's call and for your continued interest in American Express. The IR team will be available for any follow-up questions.

Operator, back to you.

Ladies and gentlemen, the webcast replay will be available on our investor relations website at ir.americanexpress.com shortly after the call. You can also access a digital replay of the call at 877-660-6853 or 201-612-7415, access code 137-50743 after 1 p.m. Eastern Standard Time on January 24th through January 31st. That will conclude our conference call for today. Thank you for your participation. You may now disconnect.