Q1 2026 Earnings Call Transcript

Ladies and gentlemen, thank you for standing by. Welcome to the American Express Q1 2026 Earnings Call. [Operator Instructions] 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, 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 Christophe, 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. 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 $17.9. 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 further 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 the strengths of our -- 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.

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% -- growing 8%, sorry, 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. resi 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 COGS 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 is 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 balanced 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 loan, 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 while 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 risk 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 -- as we see with our premium card products, our savings products is 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 VC 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 CapEx 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.

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 1 question. Thank you for your cooperation. And with that, the operator will now open up the line for questions. Operator?

[Operator Instructions] Our first question comes from the line of Ryan Nash with 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. I guess 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 was performance tracking better than expected? And where are you using that to offset?

Yes. So I don't know about the jets and the giants, but we -- that will have to play itself out. As we think about -- and let me go -- let me look at this at the beginning here. But as we think about sort of the year and we think about the spending, it continues to be strong.

And look, we just had the strongest quarter of spending that we had in the last 3 years. And obviously, spending will drive higher revenue. When you look at -- and I laugh a little bit about sort of the aspirational 9% to 10%, if you look at the last few years, whether it's FX reported or it's reported or FX restated, we've kind of hit the 10%. And 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. But 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, you have regulators in this business. And one of the regulators is making sure that we return what our shareholders are looking for. And so every year, as we go through our processes, we have ROI cutoffs. And we believe what I would say are really good investments on the table.

And so when you have an [indiscernible] delivery like we just had in the first quarter, it gives us that confidence that we can move those ROI thresholds down and continue to hit within our guidance range. And as I think about this business, the way I think about this business is, I don't think about it for this year, I think about it the next year and the year after. And what I'm trying to do and what we're trying to do as a company is to build and continue to build on that momentum. And so for me, I look at where we are today, it's a function of the decisions that we've made in the past and those decisions that we made in the past are reinvesting in the business versus just always dropping into the bottom line.

And so that's how we said it. As far as technology goes, we've been very fortunate with some of the results we're seeing from an AI perspective and that we're getting about 30% benefit with our programmers from a coding perspective and testing perspective. But what that has done is allowed us to get to more stuff. And when you have a company like ours in so many different areas, whether it's the many countries we're in, the merchant business, the network business, the consumer business, corporate or small business, there is just a huge appetite for technology.

And so the overperformance we've had gives us an ability to get to those things a little bit quicker, combined with the AI that we've had -- the AI efficiencies that we're seeing. So look, I feel really good about where we wound up this quarter and against a backdrop of an unstable world at this point. But against that backdrop of an unstable world, we saw record billings Christophe mentioned luxury spending in retail up 18% in front of the 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?

So maybe I can take the second part of your question, Ryan, around the offset in terms of this incremental investment. So you might remember the conversation we had at the end of the quarter, right? We had lot of spend momentum. One of the questions, one of you asked is like how are you thinking about 2026 and say, we'll see.

We don't know. We're seeing that we're maintaining momentum. We even have stronger momentum when you look at billings. So that's the check.

The other thing is that when you study the P&L, there were also a few unexpected items either on operating expenses. I'll mention 2 that went in our favor. One is a core decision regarding VAT in Europe. So we booked that.

And there was also a gain that we registered as we completed the acquisition of the half of the joint venture we had in Switzerland. So that allowed us to book a small gain. So the completion of that acquisition, the court case in France give us a little bit of more confidence in terms of expenses and releasing investment capacity on marketing and technology.

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

I guess I have a follow-up on the bill business trends. It is quite remarkable how strong they were in the midst of all this geopolitical activity in the backdrop. I know Christophe, you mentioned there is some softness in airline spending that you've seen over the last few weeks. I'm just curious, is there a way to quantify that?

And sort of is it material enough that -- it doesn't sound like it, but that it could deter some of the upside? And then I'm just wondering, is there any other impacts that you've seen across the spending cohorts as a result of the higher fuel prices? And then I guess offsetting that is the momentum you have in platinum. So I'm just trying to think about the interplay between these 2 factors?

So on airline softness, I mean, yes, we saw definitely noise towards the end of March, beginning of April. And where it was the most visible is in the volume of refunds that were still being processed. It's always hard to know exactly what happened with these refunds is that people booking on a different schedule, different airline, but we definitely saw a spike in terms of customer reform. This being said, the impact is not that large.

And I don't think that it is something that you should worry too much about. I'll take advantage of that to mention as well that this is where our assets, both in terms of TLS or the benefits we offer in airports really were valuable to our card members. We were able to rebook I think, something like 18,000 of our customers who have tickets to the Middle East and we also saw a spike in terms of engagement with our partner, clearer at the airport. So definitely, I don't think this is something that should create an impact to our overall billing trends.

In terms of fuel, yes. I mean we saw the average ticket price go up, and we definitely saw an increase in terms of the fuel spend. Now fuel is less than 2% of the overall bill business. So the impact is just not very visible on the overall bill business, and it's really, really hard as well to see if there is any offset anywhere.

And when we study that at the different product levels, cohort levels, geography, we don't see any discontinuity. And we see as you mentioned, strength, momentum, stability across the board and across the portfolio.

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

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

Yes. So thanks, Don. Yes, look, we'll -- in the next few months, we'll relaunch or launch center. And it certainly has been an area of focus for us.

And I think when you look at that expense management software. If you take the commercial business and break the commercial business into 3 parts, small business, middle market and large corporate and global, I think where we're seeing a lot of strength is truly in small business and in large and global where the expense management, I think, will really come in is in those middle market companies, especially those small businesses transitioning to middle market. And that's somewhere that we will release, I think, will help us solidify our position that we have there. Additionally, to the software, and you may have seen, we just acquired a company called HyperCard, we brought in a group of people who we've been working with for a number of years who are really in expense management space and we have a lot of expertise in expense management agents and we'll be integrating those into center.

And so as we think about our overall corporate commercial portfolio, it's a combination. It's 8 new products, benefits and enhancements that we're releasing through. So it has been and continues to be an area of investment because we still see it as an area of opportunity for us. I mean, we're known for small business, middle market and corporate, still a leader in that space, but we are investing now significantly in that, obviously, with the center acquisition over a year ago with the HyperCard acquisition and just the investment that we're making.

So it's an area of focus and will continue to be an area of focus for us.

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

I just wanted to make sure that your investors are taking away sort of the right message on the revenue and expense dynamics. And I know Ryan tried to get into this in his question, but it sounds like from everything, Steve, that you said that your -- you've hit 11% revenue growth. Clearly, you're trending above that 9% to 10%. And given that you are at the top or a little above that revenue range, then you're reinvesting that back to the company, and that's why you're reiterating the EPS.

In other words, the key takeaway from this quarter is really that sort of upside to revenue. Is that sort of the correct message that your investors should be taking away?

Well, I think you have a couple of things. I think the message our investors should be taking away is that we're reaffirming guidance of 9% to 10%. I think while we had the 11% growth this quarter, one thing I will point out, as the year goes on, the Amazon and the Lowe's book will roll off. That will have a slight drag on revenue, zero impact on PTI.

And so I think what you should take away from this is that we're reaffirming the 9% to 10%, and we're taking the over delivery from an EPS perspective and investing that back into the business.

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

I appreciate that it was a relatively modest acceleration in build business and commercial services. But are you seeing any green shoots there that give you optimism about a bigger recovery and just kind of the organic spend there? And what kind of incremental tailwind might you get from this kind of record year of product launches across the commercial suite?

Well, I think that one of the green shoots that we're seeing is organic is not as stressed as it has been in the past. And while we had a minor uplift sequentially, we think that as you think about the product enhancements that we've been doing is that, that will play out a little bit more over the longer term as opposed to this year. So those products take some time to get into the marketplace. We just launched the cashback product from a small business perspective.

We've got the cash back better from a corporate -- cash back product from a corporate perspective, which comes out later this year. So I think as we go into next year, we expect that to give us a bit of a tailwind into next year, not as much of an impact for this year.

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

I wanted to ask about the Platinum Refresh for a second. It's -- we're going to lap that in September. And I'm curious if you can -- if you can separate perhaps how much lift you got in spend from that refresh from existing card members versus new customers? I'm trying to get my hands around how much of a decel we might see as you grow over that in terms of billed business growth later in the year?

So it's a good question. I guess you're looking at the -- one of the slides that we have with U.S. consumer platinum accelerating by 6 percentage points. The majority of that, given the size of the portfolio is coming from tenure card members. Although we're very pleased with new account acquisition, the majority of that 6% lift is coming from the back book, and that's a very strong sign.

As you think about projecting that into 2027, we'll see what happens. But I don't think at this stage, we should expect like a further acceleration in 2027. I expect that step-up to maintain into 2027. But I don't think that you should expect to see another one. So we're going to lap that at some stage in '27.

Our next question comes from the line of Rick Shane with JPMorgan.

Look, a really big part of the journey in American Express over the last decade is reinvigorating your products and penetration to younger cohorts, and it's been a big part of the success here. I am curious as we think about sort of a more uncertain, more volatile economic environment. If you think about that younger cohorts, are they more sensitive to changes that we see, whether it's in terms of spending pattern credit? Is there greater sensitivity sort of beta to the cycle in their behavior versus your more seasoned cohorts?

I think ultimately, there'll be less, not more. And I'll tell you why. I think the younger generation is more equipped for the changing dynamics in the world today that, in fact, maybe more middle-aged people, maybe more people, Christophe and my age, I think they're more adaptable, more technology savvy, more into what's going on in the marketplace today. So I feel a lot more comfortable having a card base that is actually skewed a little bit younger than one that would be what you used to see 10 years ago.

I think the other thing that's really important is to understand that when you look at our -- when you look at the millennials and you look at the Gen Z that's in our card base, it's not every millennial and Gen Z. It's the creaming the crop. And we show the slide a quarter ago, 2 quarters ago, where our millennial and Gen Z credit performance is better than the industry is Gen X and baby boomer credit performance and is significantly better than the industry's millennial and Gen Z performance is. So one of the things that we've seen with the millennials over time is we get [indiscernible] high share of their -- we get a high share of their wallet right out of the gate.

But what we've seen with millennials is as time goes on, that high share translates into even more spend as they continue to move through their lives and continue to be successful, so forth and so on. So I actually feel a lot more comfortable with the SKU of our base today, then if you would have asked me this question, if my base hasn't skewed because I'd be more concerned with my GenXers and my boomers. I mean the reality is when you look at it, and we showed a slide on the consumer, you see the Gen Z is up 38%. The millennials are up 13%.

Our GenX are actually really strong at 8%, but then you look at the boomers up about 4%. And so I think we're -- we will continue to depend on that for our growth and just look at our card acquisition. So I feel very confident on who we're acquiring because of the characteristics that they possess and the characteristics that they have to deal in an ever-changing world. So that's how we think about it.

Maybe I'll have one data point, Steve. And I mentioned it in my remarks, but if you look at like in terms of like the quality of the GenZ and millennials that we attract to the franchise, one interesting data point is to look at the profile of the high cell customers. And I mentioned that half of these customers are actually Gen Z and millennials. Of course, they represent 1/3 of the balances or they have lower balances.

But if you had asked me a few years ago, where are the balances going to come from, where are the account is going to come from. I wouldn't have told you that I'm confident it's going to come from the younger cohorts. And -- but that's what we're saying, right? So it tells you something about the profile of these younger customers that are joining the franchise.

They have savings.

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

I wanted to ask about the relationship between spending growth and balance growth. Back in January, I think the commentary was for balances to grow in line with spending. And I know you've got the co-brands rolling off there. But if we could normalize for that, how do you think about balanced growth if the acceleration in spend from this quarter continues, would you expect to grow balances concurrently?

Or do you kind of like the balance growth at the level that you laid out back in January?

Yes. I think first, I like it when I see spend accelerates. And the fact that balances are growing at a slower pace, like 7%, some of it is just rounding. So I would not interpret it too much.

The other thing is that typically balance lag. The final thing is that we're not chasing balance growth. We're chasing customers who are going to spend with us. And if they feel the need to revolve, then we're going to put in front of them the best possible products so that they can revolve at the pace they want, including pay over time, which typically has shorter revolve durations.

And so that's the kind of revolve that we like. So I'm not too concerned about that. And you've seen that 7% kind of like stable over the past few quarters. What you've seen as well is, over the last few quarters, NII outgrowing that balanced growth, and I think has been stable in that 12% range as well.

And some of it is coming from what I just mentioned a few minutes ago, we are successful at funding those balances with either high-yield savings accounts that are a cheaper funding source for us, and that's helping the NII growth as well. So the dynamic is very stable and consistent over the past few quarters.

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

I just wanted to follow up on Rick's question. I appreciate all the color and understand, obviously, that you've got a healthier consumer in there. You view the Gen Z more adept at handling these changes in technology. But just given the market focus on AI jobs-related displacement.

Just curious if you're seeing any sort of impact in the customer base today? Or just if you have any sort of views on what that trend might look like for you over the next few years?

Yes, we're not seeing any impact at all on this at all. And maybe I'll just make a couple of comments. I think technological change over the years, no matter what it has been, whether it's been the Internet, the cell phone, what have you and even eliminating the word processor and going to desktop PCs has always brought a plethora of new jobs, number one; and number two, has fuel GDP. Now will AI lose some jobs?

Yes, it would. But who would have thought about influencers, podcasters, web developers, AI programmers years ago. Probably nobody. And if you think about the jobs that are out there today, and where these jobs are, can I think more Gen Z and millennials are going to be more trained for this and more ready for this.

And so will jobs go away. Yes, jobs will go away. A number of the service jobs will go away. I mean, even at American Express today, if you look at our volume increase and you look at our ratio of volume to how many people we have on the phones, it's decreased.

Not as many people want to talk on the phones and plus we're making the people that are answering the phone is more efficient because they have AI tools at their disposal, whether that's for travel or whether that's for card servicing. We'll always have a representative there that you can call up and talk to, that's never going to go away from American Express. We're always going to be able to serve our customers how they want to be served. But I think from an AI perspective, yes, you'll see a bunch of jobs go away, but I think you'll also see a tremendous creation of new jobs.

And I think this cohort will be much more likely to fill those jobs and create new jobs, new opportunities. The last thing I'll say is a lot of people talk about white collared workers. Our base is not just white collared workers. Our base is premium consumers and premium small businesses that from a consumer perspective, want access to experiences and want access to service and special offers and things like that.

And that runs the gamut. I mean, that runs the gamut for the individual entrepreneur to the TikToker and to the influencer and to the podcaster, to as well as people that are research analysts, investors and hedge funds and everything else. So I think that will be there, and we'll see how it all plays out. But again, technology has, over time, fueled GDP, not crush GDP.

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

Steve, you recently launched your Agentic Commerce Experience developer kit, I know you wrote about it at length in your letter. So just given our checks are indicating in general across AI and agentic, if there's been more fraud on some of these transactions. It's early days, but you're still seeing some of the questions on that. And then just structural questions around networks in an increasingly agentic world.

Just I'd love to hear how you would think about through all your closed loop data [indiscernible] these transactions?

Yes. I mean, look, I mean, I think from my perspective here is that in an agenetic world, data is king. Data is a king from a service perspective, an identification perspective, a fraud perspective, a credit perspective, data is king. And when you look at our -- when you look at our business model, we have the card member, we have the network and we have the merchant.

And we have a free flow of information and it's a perfect information as you're going to get in this model. And so when you think about Agentic eCommerce and you think about a lot of the early forays into it, yes, it is -- can be fraught with fraud and it can be fraught with -- it's a lot riskier environment that you're dealing in. In a normal e-commerce world, in a normal bricks-and-mortar world, off-road is significantly less than the competition, significantly less. And why is that?

Because of data. And so while agentic commerce, that story is yet to be written. We're at the -- I would -- I think we're warming up at a bull pen. I wouldn't even say we're in the first [indiscernible] here of agentic commerce, but we're warm enough in a bull pen but it will take off fast eventually.

And so as we released our ACE developer kit, one of the things that we did were a developer kit is we said, look, to control the transaction to understand what's going on, what we want to do is have the agentic declare intent, and we want to match that intent with what was actually purchased. And so we want data from an intent perspective, all the way to a completion perspective. We don't even have that today in a normal bricks and mortar world. It would be hard to do.

But in an e-commerce genic world, we can get that data. And so I think it's going to make our fraud and our risk capabilities and our ability to detect fraud and our ability to back our card members even better than we would in a brick-and-mortar world or in a traditional e-commerce world, which is why we came out with Amex agent protection. It basically says if the developer and the agent register with us and we see the intent and we see what the purchase was and our card member is left holding the bag, we'll back our card member and we'll figure it out on the other side. So I think -- and as I wrote in the shareholder letter, I think this sets us up a lot better than our competitors because of the closed loop network and the amount of data that we have.

And I think anybody that talks to you about large language models will basically say to you, the model is as good as the data that it has. And so what we're trying to do is get as close to perfect data as you can in agentic transaction. And that's how we're thinking about it.

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

You mentioned that you're reinvesting the 1Q upside in technology and marketing. I think you've talked about technology investments a little bit on the call and even the commercial side investments. But maybe just a little bit more on the marketing. Where are you investing on the marketing side?

Is it to support the commercial? Is it just more programs across the board to brand marketing and like what is the payback period on these like business drive faster growth in '27? Just maybe more on the marketing investments you're making?

Yes. Mihir, thank you for the question. You simply said, it's going to go again our acquisition efforts, like new card acquisition efforts. As Steve said previously, at any point in time, we have a series of marketing ideas.

We call them investment opportunities that are not funded. We rank order them, and we start when we run out of capacity. These marketing ideas are ready to be executing, and that's what we're going to do with those incremental dollars. So what we're trying to do is take advantage of the opportunities we're seeing.

We expect the returns to be very strong, and that's why we're directing this incremental performance towards this investment opportunities.

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

Just wanted to touch on commercial. You just announced a pretty major expansion, which probably involves some level of investment. So I'm just curious, like should we expect some impact to the BCE from that kind of launch going forward?

Terry, on VC, you should not expect any impact, at least for the reason that, as Steve said previously, either those new product and capabilities that we are going to roll out, it will take time before they flow through the P&L before we see a lift in terms of volume. So I don't think you should expect to see a change to VCE ratio, and 44% is still the right number for the full year.

Yes. And I think if you look at the -- what we've just announced, you look at those -- they're more -- not a lot of additional benefits on those cards. It's more about capabilities here. I mean we have the OpenAI, ChatGPT benefit and the cash backlog will be the reports piece of it. But I think as Christophe said, it will be benign.

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

I just wanted to follow up on your prior comments. Steve, in your letter, you kind of mentioned how new technology can accelerate growth at American Express. Is there a way to frame kind of the opportunity today with data in agentic relative to prior innovations, such as e-commerce or mobile payments?

Yes. I think it's a little bit too early. And I think the company is so big at this particular point, as I said just before, I think it was so early stages. I think if you would ask me that question when e-commerce first started, I would have probably given you the same answer.

And I don't think anybody could have imagined what the phone -- what the phone would have ultimately represented, right? I mean everybody thought the phone was for making phone calls. And the reality is nobody makes phone calls with the phone anymore. I mean you're doing a lot of commerce on the phone.

It's been -- Uber has shown how you put private capital into the public market by having drivers out there. So I think it's -- our sense it will be an accelerant. I just think it's really hard to quantify it at this early stage.

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 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.