American Express Company

Ladies and gentlemen, thank you for standing by. Welcome to the American Express Q4 2025 earnings call. At this time, all participants are on a listen only mode. Later, we will conduct a question and answer session. If you wish to ask a question, please press star then one on your touchtone phone. You will hear a tone indicating you have been placed in queue. You may remove yourself from the queue at any time by pressing star then two. If you're using a speakerphone, please pick up the handset before pressing the numbers. Should you require assistance during the call, please press star, then zero. As a reminder, today's call is being recorded. I would now like to turn the conference over to our host, Head of Investor Relations, Mr. Kartik Ramachandran. Thank you. Please go ahead.

Thank you, Donna, 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. 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'll begin today with Steve Squirey, Chairman and CEO, who will start with some remarks about the company's progress and results. And then Christoffel Kayak, 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 Christoph. With that, let me turn it over to Steve.

Thank you, Karthik. Good morning and welcome to our fourth quarter earnings call. We had another year of strong performance, continuing the momentum we delivered since introducing our long-term growth aspirations in January of 2022. Full-year revenues were up 10% to a record $72 billion, and EPS was $15.38, up 15% over last year, excluding the certified gains. Card member spending was strong throughout the year. Card fee growth continued in double digits for 30 straight quarters, and we maintained excellent credit quality. Importantly, we continued to invest in areas that strengthen our membership model and drive our growth. For example, we continued our successful product refresh strategy with refreshes in close to a dozen countries around the world, including the launch of our new U.S. consumer and small business Platinum Cards. We renewed and expanded our relationships with key international co-brand partners, including British Airways, ANA, and Air France KLM. We continued to build our membership assets with new lounges, the expansion of our hotel network, the Toast partnership, and a series of new card member experiences. And we expanded global merchant acceptance to over 170 million locations worldwide. And we continued to deliver innovative mobile experience. Turning to 2026 guidance, given the strength and stability in our premium customer base, the momentum we're generating from our investments in the business, and the flexibility we have to drive leverage in our business model, we expect 2026 revenue growth of 9% to 10% and EPS of $17.30 to $17.90. We will also continue our strong track record of returning capital to shareholders with a planned 16% increase in the quarterly dividend to 95 cents. For the last several years, we've been managing a company with a focus on accelerated revenue and EPS growth. This has generated consistently strong momentum, which gives me confidence in our ability to not only deliver on our 2026 guidance, but also to continue driving strong growth over the long term. The key to driving our growth has been our investment philosophy. We consistently invest to strengthen our competitive advantages across key areas, including our customer value propositions, marketing, technology, partnerships, and coverage. In 2025, for example, we invested $6.3 billion in marketing, an increase of around 75% since 2019. And in just the last two years, both marketing and technology investments are up 20 plus percent. We apply a rigorous return discipline, focusing on outcomes that drive growth. For example, after a product refresh, in addition to its financial results, we measure customer demand and engagement, credit quality, retention and relationship expansion. In evaluating our marketing investments, we measure the spend and revenue efficiency of our marketing dollars across thousands of campaigns. As a result of this process, we've created a robust marketplace of ideas, where we fund the best opportunities from across the company. This return discipline, combined with our investment flexibility, enables us to dynamically reallocate resources to those opportunities that represent the highest returns. A great example of this is our recent decision to quickly redirect marketing investments to our U.S. platinum products, given the strength we saw towards the end of the year. One of the key lessons we've learned in executing this philosophy is that the investments we make in our value propositions pay off in multiple ways, including increasing customer demand and engagement, driving business to our merchant partners, maintaining strong credit performance, and driving efficiencies by enabling our marketing dollars to go further. We're seeing this in our new U.S. Consumer Platinum Card, which continues to perform even better than our expectations. Customer demand is high, engagement is up, Credit quality continues to be excellent, and we're seeing no change in retention rates as the new fee kicks in. At the same time, investments in our marketing capabilities have driven acquisition incentives to some of the lowest levels in the last couple of years. Powering the success of our product refresh strategy and our growth overall are the investments we're making in technology. This enables us to quickly introduce new capabilities that drive customer engagement and satisfaction, add new partners and categories that our card members value, and develop new customer experiences that enrich Amex membership. We now spend $5 billion annually on technology. At a high level, we categorize our tech spending into two broad categories. One I would call run the business investments, things like infrastructure, software licenses, and cybersecurity, and investments in development activities. Development includes things like new mobile experiences and capabilities, and the ongoing modernization of our core systems, which we upgrade regularly, similar to our product refresh strategy to stay on the cutting edge. For example, we're rolling out our new third-generation data and analytics platform, which will enable greater personalization and marketing, improve servicing experiences, augment our industry-leading fraud capabilities, and enable new Gen AI and agentic use cases. The new platform, which is built on the public cloud, is already reducing the time for key processes in marketing and fraud by 90%, and we expect to migrate 100% of our data and analytics processes to the new platform by 2027. We continue to invest in enhancing our app experiences in a number of ways, from the new platinum onboarding experience and the launch of our travel app to digital journeys that enable self-servicing. As a result, We're driving more revenue generating engagement via the apps, and we're creating operating efficiencies from digital self-servicing. Over the last three years, for example, the number of calls per account coming into our service centers has dropped by 25%. We're also expanding our digital capabilities for business customers, including the integration of centers expense management solution, which we plan to launch later this year as part of a suite of offerings for small and middle market commercial customers. And we've created an enterprise AI enablement layer to support the development and launch of Gen AI and Agenda capabilities, including those already in market, such as our travel counselor assist tool, our dining companion experience, as well as the deployment of Gen AI tools to nearly all our colleagues worldwide. By successfully executing this investments philosophy over the last several years, we've delivered on our goals of accelerating revenue and EPS growth, while maintaining best-in-class credit performance. At the same time, we are substantially increasing capital returns to shareholders. Our expectations for 2026 are no different. We expect to continue delivering the pace and quality of growth we've seen in recent years, while also continuing to invest in areas to sustain our growth and deliver strong capital returns to shareholders. In summary, we are operating from a position of strength, thanks to our loyal premium customers and the dedication of our world-class colleagues, and I'm confident in our colleagues' ability to continue to innovate for our customers as we invest for growth to drive long-term consistent results. Now, I'll hand it over to Christoph for more details about the quarter and full-year results, and then we'll take your questions.

Thanks, Steve, and good morning, everyone. In 2025, we generated 10 percent revenue growth and EPS of $15.38, up 15% at Certify. If you look back at our performance over the past three years, what you see is a track record of delivering consistent and strong results. We have driven average return growth of 11% per year and have generated mid-teens EPS growth with three consecutive years. Importantly, we delivered these results while maintaining a discipline focused on premium products and high credit standards. Our momentum continued in 2025. We sold healthy spending and loan growth throughout the year and continued demand for our premium products. Net card fee grew at 18% and reached a record of $10 billion for the year. And we drove greater scale of the business through increased investment, enhancing our ability to drive operating leverage over the long term. Overall, our business model is performing as we expected driving our confidence in the year ahead. Turning to build business trends for the quarter, total spend was up 8% effects adjusted, consistent with Q3. Both goods and services and T&E continued to grow at a faster pace than during the first half of the year. Retail spending continued to show good momentum in the quarter, up 10%. And spending at luxury retail merchants was up 15%, reflecting the continued strength of our customer base. Growth in airline and lodging spend was largely stable, and restaurant spending was up 9% once again this quarter. Our dining assets are driving high levels of engagement with spend at U.S. residue restaurants by U.S. consumer customers, up by more than 20%. Momentum from younger customers also continued. As of Q4, Millennial and Gen Z customers now make up the largest share of U.S. consumer spending. and they remain the fastest-growing cohorts. That momentum is driven by our success in attracting younger customers into the franchise. For example, the average age of new customers is 33 on the US Consumer Platinum Card and 29 on the US Consumer Gold Card, giving us a long runway to grow our relationships with these customers over time. International also delivered another very strong quarter, we spent up 12% FX adjusted. Growth remains broad-based across consumer and business customers and across geographies. Overall transactions growth of 9% was consistent with what we've seen throughout the year and reflects continued engagement from our customers. Looking at the first three weeks of January, we continue to see good momentum in spend trends. As we look ahead to 2026, we are encouraged by the strength and stability that we continue to see across our customer base. Turning to new acquisition, demand for our premium products remains very strong. Although the overall number of new cards is down versus Q3, we reallocated marketing dollars away from lower-cost cashback products to platinum, and platinum new acquisitions were up significantly. In fact, the percentage of fee-paying products for U.S. consumer is up 8% percentage point year-over-year. Turning to balance growth and credit, loans and card member receivables increased 7% year-over-year, FX adjusted, growing at a similar pace to Bill Business. There was about a one percentage point impact on balance growth from our health to sale portfolios again this quarter. In 2026, we expect loans and receivables to continue to grow largely in line with Bill Business. Our credit performance throughout the year was remarkably strong and stable. Delinquency rates were flat throughout the year and write-off rates remained best in class. Notably, both delinquency and write-off rates are still below 2019 levels. In 2026, we expect credit metrics to remain generally stable with some seasonal variation in provision across quarters. Turning to revenue on slide 14. Revenue was up 10% effects reported for both Q4 and the full year. Momentum was broad based across revenue lines with net card fees, NII and service fees and other revenue all growing at double digit rates. Net card fees reach record levels driven by continued success in acquiring new customers onto fee paying products, our ongoing cycle of product refreshes and our high retention rates. In Q4, Card fees were up 16% effects adjusted, moderating a bit as we expected. In 2026, we expect card fee growth to pick up as the year progresses as we see the impact from the Platinum Refresh exiting the year in the high teens. We have now started applying the new annual fee for US Platinum card members reaching their renewal anniversaries. For those customers we have seen no change to our very high retention rates relative to pre-refresh. Net interest income was up 12% again this quarter, continuing to grow faster than balances. We expect NII growth to continue to outpace growth in loans and receivables in 2026. Turning to expense performance, the VCE to revenue ratio was 45% this quarter. The VCE ratio stepped up from earlier in the year as we expected, driven by the investment we made in the value propositions of our U.S. platinum cards. As Steve noted, VCE investments are an important part of our model. They support revenue growth by driving customer acquisition and engagement. They improve credit outcomes by attracting highly credit-worthy customers, and they drive marketing efficiency by increasing demand for our products. In 2026, we expect the VCE to revenue ratio to be around 44%. driven by these investments and ongoing mixed shift towards premium products and assuming a similar spend environment to what we've seen recently. We continue to drive leverage from operating expenses with OPEX as a percentage of revenue down four points since 2022, even as we increased our technology spend by 11% for the year. In 2026, we expect operating expenses to grow in the mid single digits. Marketing expense totaled 6.3 billion for the year Up 4% year over year. We expect marketing expense to be up in the low single digits in 2026 as we look to generate efficiencies from the investment in product value propositions and technology as Steve discussed. Before leaving expenses, let me add to Steve comments about our investment approach and where those investments sit in the P&L. At a high level, when we think about growth, we consider three types of investments. The first is spent on welcome offers and distribution channels that generate demand for our cards. These expenses are reported on the marketing line. Second, a significant part of our technology spend drives growth. For example, the new travel app or the enhancements we made to the Amex app for the Platinum Refresh. These expenses are reported in operating expenses. And third, are the customer benefits and partnership associated with card membership, which generate demand and customer engagement. The recent step up in car member services on the Platinum Card is a good example of this type of investment. These expenses show up in VCE. Every year, we balance how much of these investments to deploy for growth across these investment categories. For 2026, we plan for investment levels to continue to be high with a record level of technology development, the step up in the value proposition of our U.S. Platinum Cards, and with a large marketing budget. And we plan to invest at these levels while generating strong bottom line growth in line with our aspirations. Moving on to capital, we continue to deliver very strong returns with an ROE of 34% for the full year. We returned $7.6 billion of capital to our shareholders, including $2.3 billion of dividends and $5.3 billion of share repurchases. In 2026, we expect to increase our quarterly dividend by 16% to $0.95 per share. consistent with our approach of growing our dividend in line with earnings and our 20 to 25 target payout ratio. With this plan increase, the dividend will be up by more than 80% since 2022, and we have reduced the share count by 7% since then, while maintaining capital well in excess of regulatory minimum levels. This demonstrates our confidence in the sustainability of earnings generated by our model and our disciplined capital management. We also have a robust and diverse funding stack supported by our continued demand for our high-yield savings accounts with balances up 8% year-over-year. The majority of those balances come from our con members who on average hold higher deposit balances than non-con members given strong engagement with our brand and the premium nature of our con member base. With less than 10% of our U.S. consumer con members currently holding a high-yield savings account with us, we see a long runway for growth. This brings me to our 2026 guidance. We continue to run our business with an aspiration to achieve 10% plus revenue growth and meet teams EPS growth. As shown on slide 21, for the full year 2026, we expect a revenue growth of nine to 10% and earnings per share between 1730 and 1790. 2025 was a very strong year for the company. We are well positioned to continue our track record of strong growth into 2026, and we feel good about the year ahead. With that, I'll turn the call back over to Karthik, and we'll take your questions.

Thank you, Christoph. 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?

Ladies and gentlemen, if you wish to ask a question, please press star then 1 on your touchtone phone. you'll hear a tone indicating that you've been placed in queue. You may remove yourself from the queue at any time by pressing star, then two. If you're using a speakerphone, please pick up the handset before pressing the numbers. One moment, please, for the first question. Our first question comes from Ryan Nash of Goldman Sachs. Please go ahead.

Hey, good morning, everyone. Good morning. Good morning. Maybe to start with the net cards acquired Steve, can you maybe expand on the comments regarding allocating away from cashback and putting this towards fee-paying products? And do you expect this remix to continue and maybe just talk about how it will impact the results going forward? Thank you.

Yeah. So I think, you know, as I said in my comments, we have the ability when we see opportunity to be really flexible with our marketing investments. And we saw a tremendous demand for premium products, particularly the Platinum Card. And, you know, as we go forward, we'll continue to adjust as necessary. I don't, you know, again, I don't think this affects the overall results because we don't really focus so much on acquiring cards as much as we focus on acquiring revenue. And, you know, we're hitting all our revenue targets and we're hitting our return on investment targets. So, you know, again, I wouldn't focus too much. I mean, if you look at it sequentially, it's a little bit down. If you look at it year over year, it's 100,000 cards. And, you know, that led to an increase in platinum cards. So we're really happy with those decisions. And we think it was the, you know, obviously the right thing to do.

Maybe I'll add two small things. The first one is that there is variations among the quarters. Some of that is just the function of our own marketing plans, whether we're running LTU limited time offers or not. And so that drives volatility from one quarter to another. And as you saw Q4 last year was also lower. The other thing that I mentioned is that if you focus just on fee paying cards in the US consumer business, the percentage of NCA paying a fee went up by eight percentage points from Q4 last year to Q4 this year. This is not exactly visible to you in the numbers that we are sharing with you, but shows that the efficiency of our marketing dollars is improving, and that's, at the end, what matters.

Thank you. The next question is coming from Sanjay Sakrani of KBW. Please go ahead.

Thank you. Good morning. I had a question on commercial services. Obviously, SME spend still remains pretty weak. I saw a slight deceleration. I'm just curious, as we think about next or this year, like what gets things going a little bit more, some of the investments you've made. Obviously, some of your competitors have made some M&A moves and are getting deeper into this space. How do you think that changes sort of the competitive backdrop in which you operate and how would you compare your products?

Thanks. Yeah, look, I think, you know, when you tease out SMB, you've got to look at middle market and you've got to look at at small business. I think small business is really, really strong. I think middle market is where you see a little bit of the slowdown. I think as far as the competitive space, and look, you just saw Capital One just acquired Brex. You've got Ramp out there. We acquired Center last year, which we'll be launching probably by mid-year. You know, it's a highly competitive space. Having said that, we're still three times larger than anybody else. Our platinum refresh has gone very, very well. And we're looking for a pickup as the year goes on. And we'll be communicating more in terms of just what's going to go on in our overall commercial strategy as the year goes on from a product refresh perspective. So, yes, it's a highly competitive space. Highly competitive market. I think the other thing to look at is it's not just us that is sort of slow on the overall growth as it relates to SMB. And I think most of it is middle market from an industry perspective. So again, competitive. I like the hand that we have. I like the plans that we have going forward. And we'll be communicating more as the year goes on on that.

Thank you. The next question is coming from Don Fandetti of Wells Fargo. Please go ahead.

Hi, good morning. Steve, you know, can you talk a little bit about 2026 in terms of U.S. consumer-built business and the health of the premium consumer? I know there's this sort of scenario where we could run a little hot, there's a lot of stimulus, and just want to get your kind of sense. I mean, you're running at 9% now. Is it like steady state from here, or could we accelerate?

Look, we saw a big uplift in platinum over the holidays, and I think the momentum that the new platinum launch has given us, the momentum that gold has given us, we're really bullish from a consumer perspective. Will it go ahead of nine? I don't know, but I like I like what our card members are doing with the product. They're really engaging. I think one of the big things that is sort of lost on a lot of people was the platinum app that we launched and the ability for our card members to really engage with the product and to go out there and spend. I mean, if you look at restaurant spending, for example, for the quarter, it's up 9%. If you look at Resi restaurant spending, it's up 20%. And that's really due to the engagement of our platinum card holders, and it's due to the engagement of our gold card holders with our Resi restaurant. So that synergy has really worked out very, very well from us. So as again, I'm not projecting more than 9%, but we do have very, very strong momentum. And that momentum, and as Christoph just talked about, as well, that momentum from a platinum acquisition perspective, we expect to continue.

Thank you. The next question is coming from Erica Najarian of UBS. Please go ahead.

Yes, good morning and thank you. I just wanted to revisit, you know, the net cards acquired number because this is a big talking point with investors before the call began. Emily Early- You know completely understand the message and, of course, you know the focus should be on revenue generation and not. Emily Early- That number, but as we think about this remix strategy as you refocus more of your dollars towards the fee paying cards. Emily Early- Does that over time, then impact the trajectory of net card fees, for example on slide 15 or. get you closer to that plus part of your long-term aspiration in terms of revenue growth?

Hey, good morning, Erica. So yes, you're right. The overall portfolio is slowly getting more premium. The platinum portfolio is growing at a very fast pace. The spend, because of the strong engagement, is also growing at a faster pace than the rest. And we have celebrated on this call for many quarters, the growth and their sustained growth on card fees, which just reached $10 billion, right? And there is in the slides that we talked about this morning, you can see the trajectory over time. A lot of that is coming from the premium cards, especially platinum. And as you think about that card fee line in the P&L for 2026, which is Right now growing at 16%, which in itself is like an amazingly strong number for base like that is reaching $10 billion annually. We expect that growth rate to pick up in the balance of year as the year progresses and as more and more of our card members on the Platinum card are facing their renewal anniversary and we are moving them to the new price point. That's very much the dynamic indeed that is happening. The other proof points that are either visible that the portfolio is getting more premium is their incredible performance on the credit side. You see those delinquency rates, those write-off rates that are not only best in class, but they are flat. I compare and contrast that with many of our competitors that have guided for a small increase there while we're talking about stability when it comes to those metrics. So the portfolio is indeed moving towards a more premium portfolio, and either a lot of the P&A lines are reflecting that.

Thank you. The next question is coming from Rick Shane of JP Morgan. Please go ahead.

Thanks for taking my questions. It's sort of a follow-on to what Erica just asked. You know, when we look at 2025, marking the strong, the low, expense on credit on a relative side allowed you to aggressively ramp marketing and rewards. When we think about the 26 guidance, it feels like it is more in balance in terms of more normalized growth of credit expense. If credit expense continues to be low, as Christophe just alluded to, Is there incremental opportunity for investment, or is that something we would see fall to the bottom line? American Express has historically reinvested those excess returns.

Yeah. So to your point, Rick, credit is very low, and there is a hard limit to how low those numbers can be, right? And 2% is pretty much at that limit. co-component of the model, which we also try to illustrate this quarter, is the efficiencies that we're getting on operating expenses, right? So as we are expanding, increasing the value proposition on our premium products, as premium products are getting a bigger share of our portfolio, it's putting a downward pressure on credit, and we are generating efficiencies on marketing acquisition as well as on operating expenses. And that's very much how the model is working. And, you know, we try to illustrate that also by saying that this is not by constraining technology growth. We're actually growing technology. I think the CAGR is 11%. It's all the other operating expenses that are, you know, generating efficiency. So, you know, as you think about modeling American Express and thinking about how the business is working, that's very much how you should think about it. Now, when it comes to potential upsides and what we would do with it, We're guiding towards mid-teens EPS growth. We're providing a range. This includes a lot of scenarios, including where we overperform on some lines and underperform on some others. The idea here is just like we are committed to that EPS, but there will be certainly movements between the lines as the year progresses.

Thank you. The next question is coming from Mark DeVries of Deutsche Bank. Please go ahead.

Yeah, thank you. I had a question about kind of the impact you see on engagement and the level of spend from existing customers when you do a meaningful product refresh like you did with Platinum. Do you see existing customers actually change the way they use their card when you layer on new value? And if so, is there also a delay in that as they take time to kind of gain awareness of what's kind of new and incremental, you know, kind of in contrast to new customers acquired who presumably are being acquired because they are aware of that and very immediately engage around the new value you've layered on?

Yeah, I think with existing customers, they don't uptake it as quickly as new customers do. But what I will tell you is that it goes very quickly. The engagement with Lululemon, the engagement with Resi, the engagement with the hotel credit was pretty quick with our existing customers. With the new customers, it's what draws them immediately. And I think what's really important there is that that draw, is why, as you move forward, when you have a new value proposition, you don't need to heavy up as much as marketing. I mean, and Christophe's point about movement between lines. So there's movement between VCE, marketing, there's better credit performance, there's operating expenses. You've got to look at the entire thing. But the bottom line is new customers, you know, look at the product. They're very rational about it. And they engage customers. in everything they want to engage in the existing customers have a little bit of inertia but then all of a sudden they start to engage in one of the things that that really made a huge difference for us was the platinum travel app the platinum app it made it so easy to enroll in all the benefits and you know we didn't i don't think christoph mentioned this but we we certainly have it in we had an uptick of 30 in our travel bookings in the fourth quarter that is a direct result of that platinum launch and the engagement of our cardholders. So you get a lot more engagement across the board, and you just see what's going on with Resi. Our restaurant spending is up 20%. So all of the metrics that we look at speaks to the fact that this was a wildly successful product launch. It attracted new cardholders, and it engaged existing cardholders to spend even more.

Thank you. The next question is coming from Craig Moore of FT Partners. Please go ahead.

Yeah, thanks. Good morning. I actually wanted to ask the flip side to the last question, which is, you know, when we think about card member services growth as we move through the year, you know, how much of, I'm trying to think of how much the growth rate itself could moderate while expecting it to remain high until you lap the, uh, the relaunch of platinum, but you know, how much do you think the fourth quarter growth rate was related to, you know, this being the new product and, you know, now that we're moving through, uh, into the, uh, early part of the year, some of that new car smell kind of wears off. And so engagement might wane a little bit versus where we were. So I'm just trying to think about the cadence of that spend through the year.

Yeah. I'll let me make a couple of comments and I'll let Christoph, uh, go a little bit further, but. I think that, you know, during that, you know, look, we launched on September 18th or so, and I think we got to certain engagement levels. I think those are probably the engagement levels we're going to get to. I think what you'll see is as new people come on, they will engage. But I think the existing card base has planted their flag, if you will. This is what they're going to use out of the new product. And a new card base, they've done what they're going to do. So as we plan for this, and we're fine with where the VCE levels are. I mean, it's expected. But as we plan for this, I think, Craig, you're right. I think you get to a point where it sort of stabilizes, right? Not every card member uses every single benefit. And that's not how we really design the product, right? We design the product so that it appealed to a wide variety of people. There are core benefits that, you know, a lot of people eat, right? So they'll use the resi credit and people take Ubers and things like that. But then there are other other credits on the side that they may not use. They may not use a Walmart Plus. They may not use a Lululemon and so forth. And so you get to that sort of balance, if you will, where it's a lot easier to project what's going to what's going to happen. You know, some things you get more uptake than you thought you were going to get and other things you get less uptake than you thought you were going to get. But in balance, We're very happy with the overall engagement, which then leads to a wide variety of spend and more spend on the product.

I don't have a lot to add. I would just say that in the guidance that we gave you, we are assuming that the VCE to revenue ratio will be around 44%. And we'll see whether we land there or not. The current level of spend, of course, because another big driver of that VCE is the rewards cost. But, you know, we are assuming around 44% for the balance of year, and we'll be watching it.

Thank you. The next question is coming from Jeff Adelson of Morgan Stanley. Please go ahead.

Hey, good morning, Steve and Christoph. I wanted to just ask about, you know, the 10% credit card cap proposal out there. Everybody's been quite vocal about this, the unintended consequences, et cetera. Just wondering what your view is of that, what might happen to Amex and the industry if this goes through. Obviously, it seems like Amex is more of a defensive mode against this with the premium card focus, but maybe just discuss that as well as maybe any conversations you've had with the administration.

Look, I think everybody's pretty much said everything that there is to say on this. I think affordability is really important. I don't think a 10% credit card cap is the answer to that. I think it would reduce the number of cards ultimately in the marketplace. I think it would reduce line sizes. America pretty much runs on credit. I think that would impact small businesses and so forth. And it just has. it just has this sort of effect of a downward spiral from my perspective. So, I don't think that's the answer. And, you know, I mean, obviously, we have conversations, and I'm not going to get into those, but we just don't think it's a good idea.

Thank you. The next question is coming from John Pancari of Evercore ISI. Please go ahead.

Good morning. Steve, you mentioned on the competitive backdrop, I know you mentioned the commercial dynamics already. Can you discuss a little bit more on the consumer side? I know competing card players are leaning in still to their travel rewards programs and all that. And then what poses the greatest risk to your 2026 outlook? Is it that competitive dynamic or would you say it's more macroeconomic or political at this point?

economic or political. The competitive dynamic has been here since the financial crisis. This became a very interesting business after the financial crisis because it's a great return. It's a category that continues to grow about 8% every year. It's a great return on assets for people and it's a great way to deploy capital. The competitive dynamic in consumer is as tough as it's ever been. You know, JP Morgan's out there, Citi's out there, Capital One's out there. And, you know, the challenge for us has been the challenge that we've faced for the last 15 years is to stay one or two or three steps ahead of our competitors. And, you know, when you look at what our competitors are doing, they are following our playbook. And so our goal is to continue to move that playbook to a higher level and that's what we'll continue to do and to execute and provide fantastic service to our customers. The one thing I'll say that nobody has really been able to replicate is our customer service. We continue year over year to perform and win the J.D. Power Award for service and I think service is sometimes an under looked component of the overall value proposition and it's one that we invest in quite heavily. It's a highly competitive market. We never rest on our laurels, and we'll keep fighting and keep anticipating where the competition is going to go and beat them to that point.

Thank you. The next question is coming from Moshe Orenbach of TD Cowan. Please go ahead.

Great. Thanks. Most of my questions have actually been asked and answered. I was hoping you could expand a little bit on you know, how, how you're, you know, kind of positioning American express with your kind of recent acquisitions versus, you know, in that small business, uh, you know, uh, arena, you know, given the, the competition, which obviously has always been there from, uh, you know, some of those larger private companies. And now, you know, obviously, uh, one of them would be combining with, uh, you know, with a large bank.

Yeah. Look, I think that, um, As I said, with our center acquisition, especially from a small business perspective, rather than partnering with expense management providers as we've done with whether it was Concur or IBM before that, we'll now have our own expense management offering. And I think it's what small businesses want. It's what middle market companies want. I think additionally, and I'm not going to get into details on this call, but we will be sharing over the next couple of months just a roadmap of where we are going from a commercial perspective, both from a product perspective, an integration perspective, and, you know, other technical capabilities that we will be adding. I think the small business and middle market space is highly competitive. It's been very competitive as it relates to a value proposition perspective. And I think, you know, now the, you know, the puck is now moving and has moved to from a software perspective. I think the combination of Capital One and Brex is a very good move for Capital One. It's probably a good move for Brex as well. It's great software and you put a balance sheet together and I think that works. They'll work on their integration issues and challenges like you do when you have an acquisition like that. But I think when we're out in the marketplace, I feel that we're going to be able to compete quite effectively. So more to come on it. It is, you know, it's a, it'll be a battleground just like it has been. It's just that it's going to be a battleground on even more multiple fronts now.

Thank you. The next question is coming from Mihir Bhatia of Bank of America. Please go ahead.

Hi. Good morning. Thank you for taking my question. Steve, you kind of may have preempted a little bit of my question with that last answer, but I was just wondering, you know, obviously in 2025, the platinum refresh was a big, thing at MX. As we go into 2026, are there two or three initiatives that are really high impact that you're working on that we should be thinking about? What are the priorities, I guess, for 2026?

I mean, look, the priorities are pretty much, you know, if you think about even the platinum refresh, you go back to sort of strategic priorities that we have from a company perspective, which is really to win in the premium space. to continue to build our position in commercial, you know, obviously our coverage and our network initiatives. And we're going to continue to focus on those things. I mean, you know, listen, the Platinum Card is launched, right? Now we want to continue to get value out of that Platinum launch in both consumer and in small business. We're going to continue to build coverage, obviously, in international as that continues to grow and continues to be the fastest growing. um overall part of our of our business and we're going to continue to build more capabilities both digital capabilities and capabilities as we just discussed for our um for our small business customers um and then you know we've got resi and talk and we're going to be combining those as the year goes on as and i think those two acquisitions have been really great for us as you as you see the differential in overall restaurant spending and overall restaurant Resi spending, which is not only good for our card members, good for us, but good for the restaurants as well. So, I mean, I, you know, as I said to somebody on, uh, you know, one of our, one of our calls recently, I think when you, you sort of look at. This year, um, it's, it's more of the same for us, right? It'll be, we're still going to have product refreshes, not as big as we had from a platinum perspective this year. But the fact that we continue to refresh our products, that we continue to refresh our technology base, that we continue to make more things available to our consumers, that we continue to build on partnerships, and that we continue to use those partnerships to bring value to our card members is something that we're going to continue to lean into.

Thank you. The next question is coming from Brian Ferran of Truist. Please go ahead.

Hey, good morning. I guess you've touched on my question a little bit through various answers, but I just want to circle back. I do hear a lot of investor concern for Amex and for the market as a whole, just whether the cost to grow is getting too high. And it is tough to measure from the outside, partly because of the investment required upfront to get premium customers. And then partly, I feel like I've been doing this 20 years and I still have to constantly relearn the lesson that credit card accounting, pulls forward a lot of the expenses and spreads out a lot of the benefits uh you know you've been very clear the metrics you're watching show that you're putting on good very good very profitable growth you've shared some of them with us here you've talked about the rigor behind measuring that but I wonder as you look across all your businesses you know you touch a lot of customers geographies marketing co-brand channels rewards benefits is there any part of the market where you do think it's getting overheated and where you have adjusted or might need to adjust? Or is this kind of cost to grow concern in the market right now really just kind of economic and accounting dynamics showing us all the costs up front and the benefits more on the leg?

Well, I'll let Christoph comment after I comment. I look at the last four or five years and I'd look at what our guidance is. And what we're basically saying here is consistently we're going to grow 10% and consistently we're going to deliver you mid-teens EPS growth. Not a lot of companies do that. And we are committed to doing that. And one of the earlier questions was, well, if you have extra flexibility, you're going to drop it down to shareholders. A couple of years ago, we had extra flexibility with the Certify game. We dropped it down to shareholders. I think one of the reasons we have been able to have this consistent growth trajectory over the last really five years now and going into this year is the plan is because we have stayed true to who we are and we have made investments for the longer term and not taken any short-term shortcuts. And so, you know, while people may not be happy all the time that, hey, you had some extra money and you invested it, why didn't you drop that to shareholders this year? It's because our goal is to drive consistent shareholder returns year after year after year to continue to grow our dividend in line with how we're growing EPS, to continue to do our share buyback program, to continue to return capital to shareholders, which has allowed us to drive our market cap up. and has allowed us to be consistent. It's really been the same old story with Amex for the last four or five years, and that's what we're going to continue. So I don't look at the cost to grow as all that expensive right now. I mean, we stay out of things that we think are non-economical. And there are portfolios out there that we do not think are economical. We do not bid on it. We have a large co-brand portfolio. We believe that that portfolio is a one plus one equals three for us. And we have a great premium customer base. We're growing very strongly internationally. And we still see those growth prospects over the horizon. As I said earlier, this is a market that continues to grow on a global basis by about 8%. So, again, I don't share the, it looks like it's too expensive to be in this business. I think you may see from time to time, you'll see some rewards costs that get a little bit higher. You might see some incentives offers get a little bit higher. But I think what people fail to do is to look in aggregate at the entire expense base and how one investment plays off another investment. And so when Christoph and I sit down and look at the expense base, we look at an investment, how it impacts our operating leverage, how it impacts our credit performance. how it impacts our ability maybe to dial back marketing, or maybe we have to dial up marketing. So there's a lot of levers that we're pulling. We've been doing this a long time now. And so we feel really good about 26 and beyond at this point, given the macro environment that we have, you know, with all the contingencies that are out there. But yeah, I don't view this as an overheated market in any way, shape, or form for us. It's competitive, no doubt, but I don't think it's overheated from a cost perspective.

Yeah, I'll add two more thoughts, Brian. The first one is, you know, when you look at the quarter we're reporting, these are an outcome of a lot of decisions we made two years ago, five years ago, 10 years ago, 25 years ago. that's the way we think about the decisions we're making now. When we are acquiring a new card member, we're thinking about that card member, not only in terms of what that card member will do to us this year or next year, we're thinking about the next 20 years. That's very much critical to the way we make all our decisions. And when you think about specifically the cost of growth, On the back of this platinum refresh, when I look at the cost of acquiring and welcome offers that we put on the market, we've seen some of the lowest cost of acquisition for platinum in the last two years happening like in Q4. And so it's definitely a very competitive place. We have invested in value proposition. We have an amazing brand. We have a technology that allows us to personalize those offers and optimize the cost of origination and acquisition. And when you put all of this together and you combine that with that long-term view that we have on those relationships, I can tell you the economics are very compelling. And that's how we are locating our investment dollars.

Thank you. Our final question will come from Chris Kennedy of William Blair. Please go ahead.

Morning. Thanks for squeezing me in. You've given a lot of great engagement metrics, and you do have the new data analytics platform on the horizon. Can you just talk about, you know, that journey and the tools that you'll have to drive more card member engagement as you get into AI, et cetera, et cetera?

Well, I think as, you know, look, and we're constantly, this is, I think in the last 10 years, the third big data mart conversion that we've done here as, you know, the technology gets better and better. I think what's really exciting for us is to be able to take large language models that are out there and take our data and insert that in and really come up with great card member authors, great card member insights, be able to create archetypes of various cardholders and be able then to treat cardholders and target cardholders in a much more effective way. And so, and we'll roll those tools out and access to that entire data mart across the entire company. And so, it takes until 2027 because you're doing it sort of organization by organization, process by process, application by application. but we're already seeing some benefits of that in some of our card member marketing, which again leads to some of the reduction in overall costs. So we're excited by that. We're excited that it's on the cloud, which gives us the ability to expand that on a very dynamic basis. And so I think as we go on, we'll be able to talk more about just how the proof points of that comes out. But this is a business that, you know, not only you have to invest in value propositions, you really have to invest in a light way in the technology behind it because ultimately it's a technology that drives those value propositions and it's a technology that drives the appropriate engagement with your cardholders.

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 13757801 after 1 p.m. Eastern Time on January 30th through February 6. That will conclude our conference call for today. Thank you for your participation. You may now disconnect.