American Express Q4 Earnings Miss on Rising Engagement Quotes Despite Revenue Beat and Strong Member Spending

American Express delivered a mixed fourth-quarter 2025 showing, with earnings per share of $3.53 slightly trailing analyst consensus expectations while revenues outperformed estimates. The financial services giant’s quarterly results underscore the mounting pressure from elevated engagement quotes and operating investments, even as card member spending and fee income provided meaningful support to the bottom line.

The company reported net revenues of $19 billion, surpassing the Zacks Consensus Estimate by 0.8%, marking a 10% year-over-year increase. However, EPS of $3.53 fell short of expectations by 0.3%, though it still represented robust 16% annual growth. This earnings miss largely reflected the cost of accelerating customer engagement initiatives, particularly around the U.S. Platinum Card refresh program.

Navigating Higher Engagement Quotes and Cost Pressures

Network volumes reached $506.2 billion in Q4, advancing 9% annually and beating consensus by 0.7%, driven by elevated U.S. consumer activity. However, total expenses surged 10% year-over-year to $14.5 billion, outpacing revenue growth and revealing the extent of American Express’s investment in member engagement quotes and operational enhancements.

Total interest income climbed to $6.6 billion, up 8% from the prior year but slightly missing expectations. The provision for credit losses rose 9% to $1.4 billion as increased net write-offs reflected normalized lending activity. The dual headwind of higher engagement quotes expenses and credit provisions compressed profitability despite strong spending volumes.

Segment-by-Segment Growth Dynamics

The U.S. Consumer Services division showed resilience with $9.2 billion in revenues, growing 11% annually, though pre-tax income of $1.6 billion marginally improved 0.3% year-over-year and fell short of consensus estimates by 5.3%. This segment benefited from expanding Gen-Z and Millennial customer acquisition, indicating successful long-term member engagement quotes strategy despite near-term margin pressure.

Commercial Services delivered stronger relative performance with $837 million in pre-tax income, up 3% annually and exceeding expectations. The segment generated $4.4 billion in revenues, gaining 7% year-over-year from higher net interest income, and beat consensus by 3.3%.

International Card Services posted a dramatic turnaround, reporting $316 million in pre-tax income compared to just $34 million in the year-ago quarter, significantly beating the $274.9 million consensus mark. Revenues jumped 17% annually to $3.5 billion, outpacing the $3.4 billion estimate, signaling robust momentum in overseas markets.

The Global Merchant and Network Services segment generated $2 billion in revenues, rising 8% annually, with pre-tax income of $884 million up 4% but falling short of the $1.1 billion expectation. This disappointment partially offset strength in other divisions.

2026 Growth Trajectory and Market Outlook

Management projects 2026 revenues will expand between 9-10% from the 2025 level of $72.2 billion, demonstrating confidence in sustained spending momentum. The company guided for 2026 EPS in the $17.30-$17.90 range, implying 14.4% growth at the midpoint from the 2025 actual earnings of $15.38, suggesting management expects engagement quotes investments to deliver normalized returns.

Balance Sheet Strength Amid Expansion

American Express bolstered its financial foundation, ending Q4 with $47.8 billion in cash and equivalents, up from $40.6 billion a year prior. Total assets advanced to $300.1 billion from $271.5 billion, reflecting the company’s scaling operations. Shareholders’ equity strengthened to $33.5 billion from $30.3 billion, though return on average common equity eased to 35.3% from 36.1%, reflecting elevated operating investments in engagement quotes and customer acquisition.

Long-term debt climbed to $56.4 billion from $49.7 billion, demonstrating the company’s willingness to leverage its investment-grade balance sheet to fund growth initiatives. The $1.4 billion in short-term borrowing remained modest.

During the quarter, American Express repurchased 2 million shares and maintained its dividend at 82 cents per share, signaling management confidence despite near-term margin pressures from elevated engagement quotes spending.

Investment Perspective

With a Zacks Rank #3 (Hold), American Express faces a transitional phase where rising engagement quotes investments temporarily compress margins, yet position the company for sustained long-term growth. The strong 2026 guidance and diversified international strength suggest management confidence that current spending on member engagement will drive higher-margin revenues down the line.