All in all, last quarter was another good one for credit card outfit American Express (AXP +0.40%). Total revenue grew 10% year over year to $19.6 billion, pushing per-share income up from $4.08 a year earlier to $4.53 for the three months ending in June. The company even raised its 2026 revenue guidance to 10% above last year's top line of just over $72.2 billion, up from the predicted range of 9% to 10% given with this year's first-quarter results.
Curiously, however, American Express didn't raise its full-year earnings expectations in step with its upward-revised revenue guidance. It still anticipates reporting per-share earnings of only $17.30 to $17.90 for 2026. What gives?
The company actually dropped a small hint during its second-quarter earnings conference call.
Not exactly a veiled secret
If you were listening for it, CFO Christophe Le Caillec plainly connected the dots by commenting during the second-quarter earnings call, "As we increase investments in new customer acquisition and technology development, we are maintaining our full-year EPS guidance of $17.30-$17.90." Le Caillec added during the call that spending on marketing could be up 10% in the second half of 2026.
Image source: Getty Images.
CEO Steve Squeri also highlighted the planned acquisition of online restaurant reservation and management platform TheFork as a potential driver of long-term growth as an example of these intended investments. He added for good measure, "There is no shortage of technology investments or enhancements or refreshes that need to occur."
And for what it's worth, we're already seeing glimpses of this profit-crimping spending. Last quarter's card-member services costs grew 50% year over year to $1.95 billion, while outlays on data processing and equipment grew 13%, to over $800 million.
Not a reason to avoid American Express stock
As a shareholder of any company, it can be a bit concerning to see that organization ramp up its spending plans so much that revenue growth isn't paired with comparable profit growth. American Express's investors certainly panicked on this news, sending AXP shares down more than 4% the very same day the news was announced.
NYSE: AXP
Key Data Points
Just don't lose perspective on the matter. American Express has a fantastic long-term track record of producing meaningful growth from these sorts of investments. With the exception of pandemic-plagued 2020, not once in the past 10 years has Amex failed to grow its annualized top line. In fact, its revenue has more than doubled during this stretch. So have its profits, even if more erratically.
AXP Net Income (Quarterly) data by YCharts
So, don't sweat the seemingly disappointing guidance surprise too much. It's a short-term annoyance with a much longer-term payoff.
It's also possible that American Express's management team is just making sure it doesn't overpromise results it won't end up being unable to deliver. There's still a good chance it will outperform its own profit guidance, just as it's topped analysts' earnings estimates in nine of the past 10 quarters.
