Earnings Call Transcript - AXP Q1 2026

Operator, Operator

Ladies and gentlemen, thank you for standing by. Welcome to the American Express Q1 2026 Earnings Call. 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.

Kartik Ramachandran, Head of Investor Relations

Thank you, Darryl, 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 discussed. All of these are posted on our website at ir.americanexpress.com. We will begin today with Steve Squeri, Chairman and CEO, who will start with some remarks about the company's progress and results; and then Christophe Le Caillec, 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.

Stephen Squeri, Chairman and CEO

Thank you, Kartik. We had a very strong start to the year. Revenue in the quarter grew 11% or 10% on an FX-adjusted basis and EPS was $4.28, up 18% over the prior year. Card member spending grew 10% on a reported basis, and this is the highest quarterly growth in 3 years, driven by strong growth across both Goods and Services and T&E. We continue to see strong demand and engagement with our premium products across our customer base. Within our U.S. Platinum portfolio, we're seeing accelerated spend growth following the refresh while maintaining high retention rates after the fee increase went into effect. Millennial and Gen Z spending growth continues to be robust and globally over 70% of new accounts are on fee-paying products. International remains our fastest-growing segment with billings up double digits for the 20th consecutive quarter on an FX-adjusted basis. And consistent with what we've seen for several years, our credit performance continues to be excellent and best in class. Based on our strong results to date and our confidence going forward, we've decided to increase our investments in marketing and technology to capitalize on key growth opportunities and build on our momentum. Looking ahead, we're reaffirming our full year 2026 guidance of 9% to 10% annual revenue growth and EPS of $17.30 to $17.90. While the macro and geopolitical environment remains uncertain, we believe we are well positioned to continue delivering strong results, given our focus on premium customers, our spend in fee-centric model and very strong portfolio quality. Our performance once again demonstrates the power of our growth strategy as we continue to execute our proven playbook. A key part of the playbook is the ongoing investments we're making to enhance our differentiated membership model, which is fueled by our high-spending Card members, the value added by our world-class partners and the innovations and service delivered by our talented colleagues. One of the most compelling features of Amex membership is the unique experiences and access we offer our card members in dining, sports, entertainment and more. Sports are a powerful engagement engine across our customer base. In Q1, we announced several agreements that added to the relationships we have with over 50 top-tier leagues, teams, venues and events around the world. In March, we announced a multiyear global partnership with the NFL, making American Express the League's official payments partner beginning with the 2026 season. This broad-based sponsorship includes exclusive card member experiences, ticket access, on-site activations and other perks at high-profile league events, including the NFL Draft and the Super Bowl. We're very excited about the opportunity to join with the NFL as they expand internationally. With our large global footprint, positioning us well to support their growth while engaging Amex card members around the world. We also announced new multiyear sports and entertainment agreements with MetLife Stadium, Mercedes-Benz Stadium and teams in play there. And we renewed our sponsorship with the NBA, along with several agreements with NBA teams across the country. In addition to our sports sponsor partnerships, we continue to enhance Amex's membership with recent openings and plans for new or expanded airport lounges in Las Vegas, Boston, Charlotte, Dallas Fort Worth and New Delhi. And the expansion of our fine hotels and resorts and hotel collection programs with an additional 300 properties recently accepted into the program out of an approximately 1,400 who apply. Another key element of our strategy is the ongoing innovation of our product value propositions, and we continued our progress on this front as well. In the quarter, we announced a road map for a series of commercial products and solutions that we're planning to roll out in the U.S. in 2026 for businesses of all sizes, starting with the launch of our new Graphite Business Cash Unlimited card. The road map includes plans to release 8 newer enhanced products, benefits and capabilities including a corporate cash back card and expense management software, making this the most significant 1-year commercial product expansion in the company's history. Together, these new offerings will give our business customers what they want, card products that combine high spend capacity and great value plus an integrated suite of tools that will help to manage expenses and cash flow, gain insights from their spending and automate day-to-day tasks, all backed by American Express' world-class global customer service. In addition to these announcements, we furthered the development of our AI capabilities in the quarter. As I said in my recent annual letter to shareholders, while it's still early days, we are embarking on a new era of commerce, where AI-powered agents can make autonomous decisions on behalf of consumers and businesses. But in addition to offering speed and convenience, Agentic Commerce brings added complexity and risk. This plays directly to our strengths of trust, security and service. Given our closed-loop network that provides an end-to-end view of transactions, and supported by the investments we've been making in our technology and risk capabilities, we are well positioned to deliver intent-driven authorizations, enhanced fraud protection and strong security features to help protect our card members and merchants. Earlier this month, we introduced the Amex Agentic Commerce Experiences or ACE Developer Kit, which will enable the integration of American Express cards into AI-powered transactions with trust and control. Along with the kit, we announced Amex Agent purchase protection, an industry-first commitment to back our card members by protecting registered agent purchases. We have more AI-powered products and capabilities under development that will roll out this year to help transform and grow our business. This includes upcoming announcements with leading AI companies to make our membership assets discoverable and actionable on their platforms and building proprietary AI-powered experiences across our own platforms. In summary, our business continues to perform at a high level, exhibiting continued momentum from executing our proven strategy and making meaningful progress on the strategic use of AI to drive long-term growth and efficiencies. With our loyal premium customer base, our talented customer-focused colleagues and a differentiated business model, we are confident in our ability to deliver long-term sustainable growth. Now I'll turn it over to Christophe for more details about the quarter, and then we'll take your questions.

Christophe Le Caillec, Chief Financial Officer

Thanks, Steve, and good morning, everyone. Q1 was a very good quarter. Revenue growth accelerated to 11% or 10% FX adjusted, with broad-based growth across revenue lines. Spend growth stepped up to 10% or 9% FX adjusted, the highest level we've seen in 3 years, and we continue to see healthy demand for our premium products with over 70% of new accounts acquired on fee-based products. Credit performance remains excellent with both delinquency and write-off rates still below 2019 levels. And we continue to invest across marketing, technology and our premium value propositions to support long-term growth. We delivered very strong returns in the quarter with EPS of $4.28, up 18% year-over-year. Turning to Billed business on Slide 4. Overall spend was up 10% FX reported this quarter. That momentum reflects an acceleration in U.S. Platinum spend following the refresh last year and the benefit of our global footprint, with tailwinds from FX and high growth in international markets. These results demonstrate the strength of our premium focus and our diversified business. Spend growth was about 1 percentage point higher than Q4, driven by T&E spending, up 9% FX adjusted, while goods and services growth remained stable, up 8% FX adjusted. Retail spending kept up its momentum, up 11% FX adjusted, and spending of luxury retail merchants was up 18%, reflecting the continued strength of our premium customer base. Restaurant spending was up 9% once again this quarter. At the same time, airline spending picked up, growing 8%, driven by higher growth across consumers, SMEs and large corporates. These trends sustained throughout most of the quarter, but we did see airline growth soften in the last few weeks of March and into April, driven by travel disruptions from the Middle East conflict. In the U.S., we continue to see strong demand and engagement on platinum following the refresh last year, with accelerated spend growth on the portfolio, high retention rates and continued strong new customer acquisition. And we continue to capture a high share of the spin wallet from both new and tenured platinum customers. The refresh is also driving high levels of engagement with our membership assets by U.S. consumer card members. Lodging spend on our fine hotels and resorts and hotel collection programs is up 50% year-over-year. And in dining, spin at U.S. restaurants is up 20%. Looking at our international business, ICS had another strong quarter, up 13% FX adjusted, including the impact of the weaker dollar, spend growth was up 20%. Looking at New Card acquisition, we acquired 3.1 million new cards in the quarter with continued momentum in acquiring younger customers and attracting new customers onto our fee-paying products. Turning to balance growth. First, a quick note on presentation. The metrics shown on Slide 13, which we previously referred to as total loans and card member receivables, are now labeled total balances. Starting this quarter in our financial statements, we have combined card member loans and card member receivables into a single line called card balances, reflecting the evolution of our products through lending features like pay over time. This is consistent with how we've been presenting balances in our earnings slide for the past few years. Total balances increased 7% year-over-year FX adjusted, largely in line with spend growth. As a reminder, there is about a 1 percentage point impact on balance growth from the small business co-brand held-for-sale portfolios again this quarter, as we previously disclosed. As we exit this portfolio over the course of this year, we will see impact of certain metrics at the consolidated level and within the Commercial Services segment. Most notably, we expect a low single-digit impact to spend growth in SME starting in Q2 until we lap the portfolio exits. At the same time, we expect a negligible impact to pretax income. These impacts were incorporated in the guidance we provided for the year. Turning to credit on Slide 14. Credit performance remains very strong and stable. Delinquency rates were flat to last quarter while write-off rates were slightly down. These results are consistent with our expectations for generally stable credit metrics throughout 2026. Overall provision expense of $1.3 billion included a reserve release of $24 million. The reserve release this quarter was mostly driven by lower ND card balances versus Q4. Our reserves also reflect uncertainty in the macroeconomic environment. Turning to revenue on Slide 16. Revenue was strong this quarter, up 11%. We saw momentum across revenue lines with net card fees, NII and service fees and other revenue, all growing at double-digit rates again this quarter. Net card fees continue to be our fastest-growing line, up 16% FX adjusted, in line with Q4. We expect card fee growth to pick up as the year progresses as we see the impact from Platinum refresh exiting the year in the high teens. Importantly, about 1/4 of the overall U.S. consumer Platinum portfolio has been built for the higher annual fee, and we have seen no change to our very high retention rates relative to pre-refresh. Net interest income was up 12% FX adjusted again this quarter, growing faster than balances. Notably, we are driving strong growth in NII while growing balances largely in line with spending and maintaining best-in-class credit results. In fact, write-off dollars are up by only 4% year-over-year, while NII is growing at double-digit pace. We also continue to see strong demand for our deposit products with high-yield savings and direct CD balances up 9% year-over-year. As we see with our premium card products, our savings products are resonating with millennial and Gen Z customers, which make up over half of the accounts and about 1/3 of the balances. Looking ahead, we expect NII growth to continue to outpace growth in balances for the year. Turning to expenses. The VCE to revenue ratio was 44.7% this quarter, in line with our expectations. There is some quarterly variability in the ratio given seasonality. For the full year, we continue to expect the VCE to revenue ratio to be lower than Q1, around 44%. The step-up versus the first half of last year reflects the investment we made in the value proposition of our U.S. Platinum cards when we refreshed these products last year. Marketing spend was $1.5 billion this quarter, flat to last year. Given the strong performance we saw in Q1 and our confidence in the balance of the year, we plan to increase our marketing investments to support long-term growth. We now expect marketing expenses to grow in the mid-single digits for the full year. Moving on to capital. We returned $2.3 billion of capital to our shareholders including $0.7 billion of dividends and $1.7 billion of share repurchases. We continue to deliver very strong returns with an ROE of 35% this quarter. Our strong ROE enables us to return high levels of earnings to our shareholders around 75% over the past 3 years. And this quarter, we increased our dividend by 16%, demonstrating our confidence in the sustainability of earnings generated by our model. As we think about our capital requirements, we view the recent Basel proposals as an improvement from the prior proposal. Under the rules as proposed today, we expect the impact of capital requirements to range from neutral to modestly positive. As we evaluate the proposal in the Capital context or other regulatory considerations, we are encouraged by the first discussion of modernizing the tailoring framework and resulting bank category designations. We remain focused on maintaining a strong balance sheet and capital position. We plan to continue to return the excess capital we generated to shareholders while supporting growth and we do not expect a material change to our capital management approach in the near term. That brings me to our 2026 guidance. We feel really good about our momentum starting the year and our first quarter results. We are seeing stronger earnings than expected, and we have decided to increase investments in marketing and technology. As a result, we are reaffirming our full year guidance of revenue growth of 9% to 10% and earnings per share between $17.30 and $17.90. With that, I'll turn the call back over to Kartik and we'll take your questions.

Kartik Ramachandran, Head of Investor Relations

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

Operator, Operator

Our first question comes from the line of Ryan Nash with Goldman Sachs.

Ryan Nash, Analyst, Goldman Sachs

Congratulations on all the new partnership wins. Hopefully, it results in more victories for the Giants and Jets. Maybe, Steve, to kick off, clearly, we're seeing really strong performance in overall spend. For starters, do you think the momentum that you're seeing in the business is enough that we could start to trend towards that aspirational 10% revenue growth, is that on the table for the year? And you talked about increased marketing and tech spend. Can you maybe just talk about what that's offsetting in terms of where performance was tracking better than expected and where you are using that to invest?

Stephen Squeri, Chairman and CEO

Yes. As we think about the year and the spending, it continues to be strong. We just had the strongest quarter of spending that we had in the last 3 years. Spending will drive higher revenue. When you look at the last few years, whether it's FX reported or FX restated, we've kind of hit the 10%. Our guidance this year is 9% to 10%, and we've just delivered a quarter of 11%. So you can make your own judgment on that. We feel really good about that aspiration. If we didn't, we wouldn't put it down. So I think what you're seeing is momentum that I believe, if it continues, will allow us to achieve that. When you look at the increased investment in technology and marketing, one of the things we do each year is evaluate investments against ROI thresholds. We believe there are very good investments on the table. The overperformance we saw this quarter gives us the confidence to move those ROI thresholds down and continue to hit within our guidance range. I think about this business not just for this year, but for the next year and the year after. We're trying to build and continue to build on that momentum. The decisions we made in the past have been about reinvesting in the business versus just always dropping into the bottom line. As far as technology goes, we've been fortunate with some of the results we're seeing from an AI perspective; we're getting roughly a 30% benefit with our programmers from coding and testing efficiencies. That has allowed us to accomplish more. With a company like ours across many countries and many business lines, there is a huge appetite for technology. The outperformance we've had allows us to get to those initiatives a bit quicker, combined with the AI efficiencies. So I feel really good about where we wound up this quarter against a backdrop of an unstable world. Despite that backdrop, we saw record billings. Christophe mentioned luxury spending in retail up 18%, front-of-cabin is up 12%, and we're seeing great engagement from our platinum refresh. So I feel pretty confident about the rest of the year. Christophe?

Christophe Le Caillec, Chief Financial Officer

Maybe I can take the second part of your question, Ryan, around the offset in terms of this incremental investment. You might remember the conversation we had at the end of the quarter about spend momentum. We have maintained momentum and even have stronger momentum when you look at billings. There were also a few unexpected items in the P&L that went in our favor. I'll mention two: one is a core decision regarding VAT in Europe, which we booked, and there was also a gain we registered as we completed the acquisition of the half of the joint venture we had in Switzerland. That allowed us to book a small gain. The completion of that acquisition and the court case resolution in France give us a little bit more confidence in terms of expenses and released investment capacity for marketing and technology.

Operator, Operator

Our next question comes from the line of Sanjay Sakhrani with KBW.

Sanjay Sakhrani, Analyst, KBW

I have a follow-up on the billed business trends. It is quite remarkable how strong they were in the midst of all this geopolitical activity in the backdrop. Christophe, you mentioned there is some softness in airline spending that you've seen over the last few weeks. I'm curious, is there a way to quantify that? And is it material enough that it could deter some of the upside? And then are there any other impacts you've seen across the spending cohorts as a result of the higher fuel prices? Offsetting that is the momentum you have in platinum, so I'm trying to think about the interplay between these two factors.

Christophe Le Caillec, Chief Financial Officer

On airline softness, we saw noise toward the end of March and beginning of April. It was most visible in the volume of refunds that were being processed. It's hard to know exactly what happened with these refunds; people may have rebooked on a different schedule or different airline, but we definitely saw a spike in customer refunds. That said, the impact is not large and I don't think it is something to worry too much about. This is where our assets, both in terms of travel benefits and the services we offer in airports, were valuable to our card members. We were able to rebook roughly 18,000 of our customers who had tickets to the Middle East and we also saw a spike in engagement with our partner, Clear, at the airport. So I don't think this should create an impact to our overall billing trends. Regarding fuel, we saw the average ticket price go up and we saw an increase in fuel spend. But fuel is less than 2% of overall billed business, so the impact on the overall billed business is not very visible. It's also hard to see any offset across product levels, cohorts or geographies. We see strength, momentum and stability across the portfolio.

Operator, Operator

Our next question comes from the line of Don Fandetti with Wells Fargo.

Donald Fandetti, Analyst, Wells Fargo

Steve, can you talk a bit about your confidence in enhancing the expense management offerings for middle market SME customers? And is this an area of focus in terms of the incremental investment?

Stephen Squeri, Chairman and CEO

Yes. In the next few months we'll relaunch or expand our center offering, and it has been an area of focus for us. If you break the commercial business into small business, middle market and large corporate/global, we are seeing a lot of strength in small business and in large and global. The expense management capabilities will be particularly relevant for middle market companies, especially small businesses transitioning to middle market. We recently acquired a company called HyperCard and brought in a team with expertise in the expense management space whom we've been working with for years; we'll be integrating them into center. As we think about our overall corporate commercial portfolio, this is a combination of eight new products, benefits and enhancements that we're releasing. It's been and will continue to be an area of investment because we see significant opportunity. We're known for small business, middle market and corporate and remain a leader, but we're investing significantly now with the center acquisition, the HyperCard acquisition and the ongoing investments.

Operator, Operator

Our next question comes from the line of Erika Najarian with UBS.

Erika Najarian, Analyst, UBS

I want to make sure that investors are taking away the right message on the revenue and expense dynamics. It sounds like from everything Steve said that you've hit 11% revenue growth and you're trending above that 9% to 10%. Given that you are at or a little above that revenue range, then you're reinvesting that back in the company, and that's why you're reiterating the EPS guidance. In other words, the key takeaway from this quarter is really the upside to revenue. Is that the correct message for investors?

Stephen Squeri, Chairman and CEO

I think the message investors should take away is that we're reaffirming guidance of 9% to 10%. We had 11% growth this quarter, but as the year goes on, some accounts, like the Amazon and Lowe's book, will roll off; that will have a slight drag on revenue with zero impact on pretax income. So take away that we're reaffirming 9% to 10%, and we're taking the over-delivery from an EPS perspective and investing that back into the business.

Operator, Operator

Our next question comes from the line of Mark DeVries with Deutsche Bank.

Mark DeVries, Analyst, Deutsche Bank

It was a relatively modest acceleration in billed business and commercial services. Are you seeing any green shoots there that give you optimism about a bigger recovery and organic spend? And what kind of incremental tailwind might you get from this strong year of product launches across the commercial suite?

Stephen Squeri, Chairman and CEO

One of the green shoots we're seeing is that organic demand is less stressed than in the past. We had a minor sequential uplift, and we think product enhancements will play out more over the longer term than this year. Those products take time to enter the marketplace. We just launched the cash back product for small business and we'll roll out a corporate cash back product later this year. We expect these to give us a bit of tailwind into next year rather than a large immediate impact this year.

Operator, Operator

Our next question comes from the line of Craig Maurer with FT Partners.

Craig Maurer, Analyst, FT Partners

I wanted to ask about the Platinum Refresh. You're going to lap that in September. Can you separate how much lift you got in spend from that refresh from existing card members versus new customers? I'm trying to understand how much of a deceleration we might see in billed business growth later in the year as you lap that.

Christophe Le Caillec, Chief Financial Officer

That's a good question. You can see a slide with U.S. consumer platinum accelerating by 6 percentage points. Given the size of the portfolio, the majority of that lift is coming from tenured card members, although we're pleased with new account acquisition as well. The majority of the 6% lift is coming from the back book, which is a very strong sign. As you project into 2027, I wouldn't expect a further acceleration; I expect that step-up to maintain into 2027, but I don't think you should expect another large step-up. We'll lap that at some stage in 2027.

Operator, Operator

Our next question comes from the line of Rick Shane with J.P. Morgan.

Richard Shane, Analyst, J.P. Morgan

A big part of American Express's journey over the last decade is reinvigorating products and penetration to younger cohorts. As we think about a more uncertain, more volatile economic environment, are younger cohorts more sensitive to changes in spending patterns or credit? Is there greater sensitivity or beta to the cycle in their behavior versus more seasoned cohorts?

Stephen Squeri, Chairman and CEO

I think ultimately there'll be less sensitivity, not more, and here's why. The younger generation is more equipped for changing dynamics in the world today; they are more adaptable and more technology savvy. I feel more comfortable having a card base that skews younger than one that would have existed 10 years ago. Importantly, we're not getting every millennial and Gen Z; we're getting the top cohorts. We showed a slide recently where our millennial and Gen Z credit performance is better than the industry's Gen X and baby boomer performance and significantly better than the industry's millennial and Gen Z performance. We get a high share of younger customers' wallets early, and over time that translates into more spend as they progress through life. For context, Gen Z spending is up 38%, millennials up 13%, Gen X up 8%, and boomers up about 4%. We will continue to depend on this cohort for growth and feel confident about the customers we're acquiring given their characteristics and adaptability.

Christophe Le Caillec, Chief Financial Officer

One supporting data point: when you look at the profile of high-skill customers, about half are Gen Z and millennials. They represent one-third of balances but their profile is encouraging. If you had asked a few years ago where balances and accounts would come from, I wouldn't have predicted this confidence in younger cohorts, but that's what we're seeing and it tells you something about the profile of these younger customers joining the franchise. They have savings and strong profiles.

Operator, Operator

Our next question comes from the line of Rob Wildhack with Autonomous Research.

Robert Wildhack, Analyst, Autonomous Research

I wanted to ask about the relationship between spending growth and balance growth. Back in January, commentary was that balances would grow in line with spending. You have the co-brands rolling off. If we normalize for that, how do you think about balance growth if the acceleration in spend from this quarter continues? Would you expect balances to grow concurrently, or do you like the balance growth level you laid out in January?

Christophe Le Caillec, Chief Financial Officer

I like to see spend accelerate. Balances growing at a slightly slower pace, around 7%, is partly rounding and typically balances lag spend. We are not chasing balance growth; we're focusing on customers who will spend with us. If they need to revolve, we will offer them appropriate products, including pay over time with shorter revolve durations. So I'm not too concerned about the balance growth rate. You've seen 7% stable over the past few quarters. NII has been outgrowing balance growth, stable in the low double-digit range, helped in part by our success in funding balances with high-yield savings products, which are a cheaper funding source and support NII growth. The dynamics have been stable and consistent over the past few quarters.

Operator, Operator

Our next question comes from the line of Jeff Adelson with Morgan Stanley.

Jeffrey Adelson, Analyst, Morgan Stanley

Following up on Rick's question, I understand you view Gen Z as more adept at handling technological changes. Given the market focus on AI-related job displacement, are you seeing any impact in the customer base today? Any views on how that trend might look for you over the next few years?

Stephen Squeri, Chairman and CEO

We're not seeing any impact today. Historically, technological change has created new jobs and fueled GDP, whether the Internet, mobile, or earlier shifts. Will AI eliminate some jobs? Yes, but it will also create many more, as we've seen with roles like web developers, podcasters, influencers and AI programmers that barely existed years ago. I think Gen Z and millennials will be better positioned to adapt. Also, our customer base is diverse, not only white collar. It includes entrepreneurs, content creators, and many others who value access to experiences and services. While some roles will change or be eliminated, AI has historically expanded opportunities and fueled economic activity. We're optimistic about the long-term impact.

Operator, Operator

Our next question comes from the line of Darrin Peller with Wolfe Research.

Darrin Peller, Analyst, Wolfe Research

Steve, you recently launched your Agentic Commerce Experience developer kit. Given checks indicating generally more fraud in some AI and agentic transactions, it's early days, but there are questions around that. And structurally, how do you think about networks in an increasingly agentic world? How do you think about this given your closed-loop data around these transactions?

Stephen Squeri, Chairman and CEO

In an agentic world, data is king for service, identification, fraud and credit. Our business model includes the card member, the network and the merchant with a free flow of information—a near-ideal information model. Early agentic commerce can be fraught with fraud and risk compared to normal e-commerce or brick-and-mortar. In those channels, our fraud rates are significantly lower than competitors, driven by data. Agentic commerce's story is yet to be written; it's early but we are preparing. With the ACE developer kit, we require the agent to declare intent and we seek to match that intent with the completed purchase. We want intent data through to completion. That level of data will enhance our fraud detection and risk capabilities and enable us to back our card members more effectively than in traditional environments, which is why we launched Amex Agent Purchase Protection. If a developer and agent register with us and we see intent and the purchase, and the card member is left holding the bag, we will back our card member and resolve it on the other side. This positions us better than competitors because of our closed-loop network and high-quality data. Large language models are only as good as their data; we aim to provide the closest thing to perfect data in agentic transactions, and that's how we're thinking about it.

Operator, Operator

Our next question comes from the line of Mihir Bhatia with Bank of America.

Mihir Bhatia, Analyst, Bank of America

You mentioned you're reinvesting the Q1 upside in technology and marketing. You've discussed technology investments and commercial side investments. Could you provide more on the marketing side? Where are you investing—support for commercial, broader brand marketing? What's the payback period and whether this drives faster growth in 2027?

Christophe Le Caillec, Chief Financial Officer

Mihir, the incremental marketing dollars will go against our acquisition efforts, new card acquisition. At any time, we have a series of marketing ideas—investment opportunities—that are ready but not funded. We rank order them and execute when we have capacity. These ideas are ready to be executed, and that's what we're going to do with incremental dollars. We expect returns to be very strong, which is why we're directing incremental performance towards these investment opportunities.

Operator, Operator

Our next question comes from the line of Terry Ma with Barclays.

Terry Ma, Analyst, Barclays

You announced a major commercial expansion, which probably involves some investment. Should we expect any impact to the VCE ratio from that kind of launch going forward?

Christophe Le Caillec, Chief Financial Officer

On VCE, you should not expect any impact. Those new products and capabilities will take time before they flow through the P&L and before we see a lift in volume. I don't think you should expect a change to the VCE ratio; 44% is still the right number for the full year.

Stephen Squeri, Chairman and CEO

If you look at what we've announced, most of these are capabilities rather than materially incremental benefits on cards. There are integrations like OpenAI, ChatGPT benefits, and cash back products, but Christophe is right: it will be benign on VCE in the near term.

Operator, Operator

Our final question will come from the line of Chris Kennedy with William Blair.

Chris Kennedy, Analyst, William Blair

In your letter, you mentioned how new technology can accelerate growth at American Express. Can you frame the opportunity today with data in agentic commerce relative to prior innovations like e-commerce or mobile payments?

Stephen Squeri, Chairman and CEO

It's a bit early to fully quantify the opportunity. The company is large and agentic commerce is in very early stages. If you had asked that question when e-commerce first started, you might have seen similar uncertainty. Nobody could have predicted how phones evolved from devices for calls into the primary commerce device. Agentic commerce will be an accelerant, but it's hard to quantify at this early stage.

Kartik Ramachandran, Head of Investor Relations

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.

Operator, Operator

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 13759550 after 1:00 p.m. Eastern Time on April 23 through April 30. That will conclude our conference call for today. Thank you for your participation. You may now disconnect.