American Express Company

Ladies and gentlemen, thank you for standing by. Welcome to the American Express Q4 2019 earnings call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note that the instructions for entering the queue have changed. If you wish to ask a question, please press 1, then 0 on your touchtone phone. You will hear a message indicating that you have been placed in queue. You may remove yourself from the queue at any time by pressing 1, then 0 again. If you are using a speakerphone, please pick up the handset before pressing the numbers. Should you require assistance during the call, please press star, then 0. 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, Ms. Rosie Perez. Please go ahead.

Thank you, Leah, 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 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 materials for the prior periods we discussed. All of these are posted on our website at ir.americanexpress.com. We'll begin today with Steve Squeary, Chairman and CEO, who will start with some remarks about the company's progress and results. And then Jeff Campbell, Chief Financial Officer, will provide a more detailed review of our performance. After that, we'll move to a Q&A session on the results with both Steve and Jeff. With that, let me turn it over to Steve.

Thanks, Rosie. Good morning. I'm pleased to report that our 2019 fourth quarter and full year results continue the steady, consistent performance that we've delivered over the past two years. Our strong top-line growth continued with revenues growing 9% in the quarter. This marked our 10th straight quarter of FX-adjusted revenue growth at or above 8%. Once again, our revenue growth was broad-based, driven by a well-balanced mix of fees, spend, and lends. We added 11.5 million new proprietary cards in 2019, delivered solid billings growth, and continued to grow loans while maintaining industry-leading credit metrics. These results show that our strategy of investing in share, scale, and relevance is working. This strategy is the heart of our financial model, and it gives us confidence that in today's economic environment, we can sustain high levels of revenue growth, which is the foundation for steady double-digit earnings growth. My confidence in our ability to generate consistent, solid results over the longer term is based on several factors. The fundamental strengths we derive from our differentiated business model, the significant growth opportunities we see across our business, and our demonstrated success in executing our investment strategy against the four strategic imperatives I laid out two years ago. Let me take a few minutes to share some of the highlights of the progress we made on each of these strategic imperatives in 2019. We expanded our leadership in the premium consumer space by continuing our disciplined, strategic approach of refreshing our premium-charged products and upgrading our co-brand portfolios globally. In all these cases, we've added features that our card members value. Acquisitions remain strong, and approximately 70% of our new card members are choosing fee-based products, which help to drive 17% growth in subscription-like fee revenues for the year. Our new card members are skewing younger and are more digitally engaged. Our refreshed products are also enabling us to re-engage with our existing customer base, where we are seeing increased organic spend, all-time high net promoter scores, and steady retention. In our commercial business, we've taken our successful approach to strategic product refreshes and applied it to our business card portfolio in the U.S. and select markets around the world. In addition to the refreshes, we've expanded our commercial card offerings with the introduction of several new products for business customers of all sizes. And to deepen our relationships with our business customers, we continued our focus on growing our non-card product offerings by expanding our AP automation solutions, as well as offering a variety of lending and flexible payment programs to help our business customers manage cash flow and grow their businesses. In total, over the past two years, we've refreshed and launched over 50 proprietary products across both our commercial and consumer businesses around the world, resulting in greater customer engagement, and strong new card acquisitions, which are driving our revenue growth. Turning to the network business. In 2016, we set an ambitious goal of achieving virtual parity coverage in the United States by the end of 2019. Setting this goal was a recognition of the fundamental importance that our merchant network plays in driving growth across our businesses, and it galvanized our organization's focus on achieving it. I'm very pleased to report That is, at year-end 2019, based on our internal tracking and our understanding of the latest industry data, we have achieved virtual parity coverage, with approximately 99% of credit card accepting merchants in the U.S. now able to accept the American Express card. Of course, we recognize that virtual parity coverage will always be a moving target. The merchant landscape is dynamic, with hundreds of thousands of U.S. businesses opening and closing every year. Therefore, we will continue to focus on maintaining virtual parity coverage in the U.S. in 2020 and beyond. We're also making good progress to increase coverage across our international markets where our card members live, work, and travel to the most, and this will continue to be a focus for us. Going forward, as we continue to grow our network, we'll work with our merchant partners in the U.S. and around the world to ensure that our card members are warmly welcomed and encouraged to spend in the millions of places where their Amex cards are accepted. Finally, I'm also pleased to report that the People's Bank of China officially accepted our network application, an important next step in our plan to build a network business in China. On a digital front, we've been hard at work integrating the acquisitions we've made over the last few years into our mobile app to provide our card members with premium access and experiences across a wide range of travel, dining, and lifestyle services that differentiate us from our competitors. We're also working with our partners and our internal development teams to deliver a wide range of new online and mobile features, capabilities, and services to help our customers manage their life and their business efficiently and securely. Our goal in these initiatives is to deepen the digital ties we have with our customers so that American Express becomes an indispensable part of their lives. And we're seeing good results as customer engagement with our digital channels is strong and growing. Today, 81% of our active card members are digitally engaged with us via our app and our website, and we've seen a 26% increase year-over-year in the customers who use our mobile app daily. Those are just some of the highlights of our accomplishments in 2019. As I've reported each quarter for the past two years, the progress we've made in each of these areas is driving our performance and shows that our financial model and investment strategy has generated sustainable growth. That's why we'll continue this strategic approach and why we're confident that we have a long runway for steady growth over the long term. With that in mind, we expect to deliver revenue growth in 2020 of 8% to 10% on an FX-adjusted basis and earnings of $8.85 to $9.25. Looking ahead, our business is strong and our focus is clear. We have an incredibly talented team at all levels and strong relationships with a wide array of outstanding business partners, from our co-brand and digital partners, to our millions of merchant partners around the globe, all working together to deliver the best products and services for our customers. I'm excited about the opportunities that lie ahead in 2020 and beyond, and I'm confident in our ability to continue to deliver sustainable growth for our shareholders. Now let me turn it over to Jeff.