American Express Company (AXP) — Q1 2025 Earnings Call Transcript

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. 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'll 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, 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.

Thanks, Kartik. Good morning, and thanks for joining us. We had another strong quarter to start the year. We delivered revenues of $17 billion, up 8% year-over-year on an FX adjusted basis, or 9% excluding the leap year impact, and we generated net income of $2.6 billion or $3.64 per share. During the first quarter, our premium customer base continued to spend at healthy levels. Total card member spending grew 6% in the quarter, or 7% excluding the impact of the leap year, with spending on goods and services continuing to grow at a faster rate than in 2024. In T&E, while we saw a sequential slowdown in airline billings growth, billings in restaurants and lodging remained strong in the quarter, and overall T&E growth was in line with the steady levels we saw through most of last year. We also continued to grow our customer base, adding 3.4 million new cards in the quarter. As in past quarters, Millennial and Gen-Z consumers made up over 60% of new consumer accounts acquired globally in Q1. In addition, card fee growth was up 20% on an FX adjusted basis. Retention continued to be high, and our credit performance remained excellent. While it's still very early in the second quarter, through the first week and a half in April, overall spending levels have remained consistent with what we saw in the first quarter in both goods and services and T&E, and across all customer segments. Based on the steady spend and credit trends we've seen to date, we are maintaining our full year revenue growth guidance of 8% to 10% and EPS of $15 to $15.50. While we recognize that uncertainty in the environment has increased, the guidance incorporates the changes that we see in the macroeconomic outlook as of today. As we think about the near future, we have a resilient and differentiated business model that positions us well to navigate a range of economic environments. First and foremost, we have a global premium customer base at scale. In fact, as our customer base has grown over the past several years, it has gotten even more premium. Our card members at high incomes are loyal, high spending, and have excellent credit profiles. And as you know, we underwrite all our card members through the credit cycle. Another key differentiator of our model is our mix of revenues, with the combination of spend and fees accounting for 75% of our overall revenue base, which makes us less reliant on lending revenues and less sensitive to credit cycles compared to our competitors. Also, we have significant expense leverage and flexibility that has grown as our scale has increased over the past several years, enabling us to effectively control our costs while continuing to invest for the long term. In addition to the natural hedges and our customer engagement expenses, we have several levers across our marketing and operating expense lines, enabling us to quickly pivot if the environment changes. Looking ahead, we'll need to see how things play out in the coming months. That said, we are operating from a position of strength, and we have a set of principles that guide us. Our fundamental objective, as it is with everything we do, is to manage the company for the long-term growth for our shareholders. As we do so, we are focused on four core principles. Above all, we'll back our customers through ongoing enhancements to our products and services, as well as providing support for those who may need it. We'll also back our colleagues so they continue to focus on innovating for our customers and providing a world-class experience that is core to our brand. We'll exercise disciplined expense management, using the various levers in our business model to maintain financial flexibility. And we'll continue to invest strategically for the long-term in areas that strengthen our foundational capabilities such as technology, control management, and customer acquisition, as well as capitalizing on opportunities that emerge for our expanding membership model with new and enhanced products, services, and experiences. As we move ahead, we are committed to following these principles and leveraging the advantages of our business model, which makes me confident that we are well positioned for continued growth over the long-term. I'll now turn it over to Christophe to provide more color on our first quarter results, and then we'll answer your questions.

Thank you, Steve, and good morning, everyone. In the first quarter, we generated 8% FX adjusted revenue growth or 9% excluding the impact of the leap year and earnings per share of $3.64. These results are tracking in line with the guidance we gave for the full year. Key business indicators such as spend, retention, credit performance, and demand for our premium products continued to be strong and stable in the quarter. While the level of macroeconomic uncertainty has increased, the activity that we see across our customer base is consistent with, and in many cases, better than what we saw in 2024. Turning to Billed Business performance, starting on Slide 3, I'd remind you that the growth over from leap year in 2024 drove about a percentage point drag on year-over-year growth rates across segments and spend categories. As we look at spend trends over the next few slides, I'll speak to Billed Business growth rates that are adjusted for leap year as well as FX. Total Billed Business was up around 7.5% year-over-year. This growth is around a percentage point higher than what we saw for the full year 2024. Goods and Services spending sustained the uptick we saw in Q4 of last year, continuing to grow at a faster pace than what we saw in 2024. And T&E grew in line with the steady levels we saw for most of last year, reflecting continued strength in restaurant and lodging spending. We did see a deceleration in airline spending relative to 2024 trends, although spending on front cabin tickets remained strong, up around 11% in the quarter. As we break down spend trends across our business over the next few slides, there are a few key points I want to highlight. We continue to see solid growth across our affluent U.S. consumer base, with spend up 8%. Millennial and Gen-Z customers once again drove our highest billed business growth within this segment. Commercial Services spend was up 3% versus last year, consistent with the trends we saw in 2024. U.S. SME spending at wholesale merchants saw a modest acceleration in growth over the quarter, possibly reflecting higher purchases in advance of potential price increases. International Card Services' spend was up 14%. The strong growth was seen across geographies, with each of our top five markets growing by double-digits, and we continue to see strong demand for and engagement with our products. Turning to lending performance, loans and card member receivables increased 7% year-over-year on an FX adjusted basis. Our premium products continue to be the primary driver of that growth, with our pay over time and co-brand portfolios driving around 80% of growth in card member revolving loans in the first quarter. These products tend to attract high creditworthy customers, supporting our model of growing lending while maintaining best-in-class credit performance. Our credit performance continues to be very strong. Both delinquency and write-off rates were below pre-pandemic levels and flat to the prior year. The profile of the portfolio has strengthened over the past few years. Looking at our recent acquisitions, the delinquency rate of low tenure customers, defined as those with 24 months or less of tenure, is about 30% lower than 2019 levels for U.S. consumer card members. This quarter, we had about $1.2 billion of provision expense. This includes a slow reserve release, mostly reflecting the strong quality of the portfolio and the macroeconomic outlook as of quarter end. Total revenues were up 8% year-over-year on an FX adjusted basis or 9% excluding leap year. Before we discuss this quarter's trends, I'd remind you that the strengthening of the U.S. dollar that occurred throughout last year continues to be a headwind to reported revenue growth, although a bit less than we anticipated earlier in the quarter. Our CET1 ratio was 10.7% within our 10% to 11% target range. We returned $1.3 billion of capital to our shareholders, including $0.6 billion of dividends and $0.7 billion of share repurchases. And this quarter, we increased our dividend by 17%. Our differentiated spend and fee-driven business model generates a strong ROE, which was 34% in the quarter, providing us with very strong capital flexibility. Before we turn to our 2025 guidance, let me talk about the trends we're seeing in recent weeks. As Steve discussed, looking at the first week and a half of April, overall spending trends are consistent with Q1. We are seeing this performance for both T&E and goods and services as well as across our U.S. consumer, international, and commercial customer segments. Given the environment, we have also seen SME purchases accelerate with wholesale merchants. Additionally, demand for our products is in line with our expectations. This brings me to our 2025 guidance. Given the stability of our performance to date, we are maintaining our guidance of revenue growth of 8% to 10% and earnings per share between $15 and $15.50. This guidance incorporates a macroeconomic outlook with a peak weighted average unemployment rate of around 5.7%, higher than the outlook as it stood at quarter end. Of course, there are clearly many uncertainties in the macroeconomic environment, but given the balance of factors, we believe this guidance is appropriate. And more importantly, we remain confident and focused on the long-term growth of the company. With that, I will now turn the call back over to Kartik, and we will 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 yourselves to just one question. Thank you for your cooperation. And with that, the operator will now open up the line for questions.

Sorry, I was on mute. Good morning. Sorry. So Steve, we've heard a lot about pull forward of spending. And I'm just curious, if you guys have seen any indication that that's sort of propping up spend volumes. And then just sort of along the lines, if we do see some volatility or weakness in spending and revenues, how far do you want to go in terms of sort of protecting earnings? How low do revenues need to go for you to sort of just cut the line in terms of expense reductions? Thanks.

So look, we really haven't seen any pull forward at all. I think when you look at the entire first quarter, and I think you really want to focus in on March and then in early April, there's really been no pull forward at all. We see a little bit in small business and a little bit in wholesale pull forward, but I mean, you're talking a couple of points here. You're not talking about anything significant. So I don't think that has been a phenomenon. Having said that, it's still early in the game, right? I mean, we're early innings here, and we'll just have to see how it all plays out. But just to be clear, from a consumer perspective, we see no pull forward at all. And people continue to book, and we didn't talk about this in the call, but we had the highest number of travel bookings that we've ever had, including a high in international as well, from our travel related services. So I think that we haven't seen a pull forward. We're seeing our customers act as they have acted in the past. The other two points I'll make, and then I'll get to the revenue one is that, one thing that has not been associated with our card member spending has either been what's happened with the stock market or what's happened with consumer confidence. Our card members may say they don't have confidence in the economy, but they still continue to spend, and they're not spending off what's in the market. So those two factors, which I get asked a lot about, are not really factors in our customer spending. I think, look, as we've said before, from a guidance perspective, and I said this at conferences, we believe that at that 8% range, we can make our EPS number. But the other thing that I will say is that I'm not going to pass up good opportunities to invest for the future just to hit a number. I mean, it's not how I've run the company over the last seven years or so. And as I said, even during COVID, we continued to invest when others might have pulled back. And so I just want to reinforce, we are running this company for the longer term. If I see a good opportunity, I'm going to continue to invest in it. But I do believe, where we are right now with the macroeconomic situation the way it is, that we can continue to be within our guidance range on both revenue and EPS. And as we've said in the past, we have the aspirational goal of 10% revenue, however, we also have said that we can make our EPS range if revenue goes lower.

Yeah. Thanks. So, if some of these steeper tariffs go through as initially proposed, Steve, can you just talk about which segments of your business you would expect to be under the most pressure? And is there anything you can do from a risk management perspective to get out in front of that?

From a risk management perspective, we are continuously adjusting our inputs and models on a daily basis. We believe we are well-prepared for any potential impacts. Initially, I think small businesses may be the most affected. When it comes to our consumers, they generally tend to spend a bit less and revolve less. Reflecting on COVID, our balance sheet is largely composed of accounts receivable, and as consumers decrease spending, they manage risk accordingly. Small businesses will be a key focus for us, as they could struggle to compete effectively in the market due to rising costs. We are proactively monitoring this situation, similar to our approach before COVID, examining credit lines and our franchise criteria. Currently, our card base is more premium compared to 2019, with higher FICO scores. Additionally, our Millennial and Gen-Z cardholders are performing significantly better in terms of FICO scores and delinquency rates than the overall industry. Moreover, the delinquency rates of our low tenured card members are lower now compared to those in 2019.

Hi. Good morning. Steve, can you talk a little bit about card refresh and fee growth? I know one of your competitors recently raised fees on co-brand cards. In this environment, do you still feel like you have the ability to sort of grow fees?

I want to emphasize that we are still dedicated to product refreshes. We have refreshed over 150 products in the past five years, and we have several more refreshes currently underway. The final number will depend on how everything develops. There is quite a bit in progress, and the key aspect will be how these initiatives navigate through our development pipeline this year. We remain committed to refreshing our products. Regarding fees, we do not raise them randomly. We increase fees only when we add significant value. Our strategy is to justify any fee increase with corresponding value enhancements. When we consider product refreshes, rest assured that any fee increase we implement is tied to substantial value additions. This should make the decision to continue using our product or even to acquire it more appealing for our customers. The current market conditions will not influence our fee decisions since those decisions are entirely based on value, ensuring that our card members receive more benefit than what they invest. In fact, one could argue that it might be a more advantageous investment right now than during more favorable conditions.

Hey, guys. Thanks for taking my questions this morning. Hey, Steve. You talked about investing across the cycle basically as a strategic initiative. I'm curious tactically, given where we are, where you see opportunities? And I'm curious, sort of, where you're going to be more aggressive, where you're going to be more defensive? And I did note that the amount of capital you retain from first quarter profits was the highest it's been since COVID. So I'm curious, how you're looking at capital aggressively and defensively as well?

I'll let Christophe address the capital question. Our goal is to return about 80% of our earnings to shareholders, though this can vary from quarter to quarter. Historically, the first quarter is typically one of our lowest in terms of capital returned. This quarter, we returned about $300 million less than we did in the fourth quarter of last year, which isn't a significant difference. From an investment perspective, we recently completed the Center acquisition, which is important for our small business and middle market segments, and this will have capital implications, especially in the second quarter following the close. In our technology segment, we are continually enhancing our technology infrastructure, which includes not only hardware but also the systems that support it. Some of our projects may take a couple of years, while others are completed in months. However, we can't halt these upgrades or investments because we expect challenges ahead; our focus is on the long-term. It’s essential to maintain our refresh strategy and consistently improve our products and services. We have committed to refreshing all of our offerings on a three to four-year cycle, and discontinuing this would shortchange both our customers and shareholders. In response to the question about how much we would cut for EPS guidance, I believe in prioritizing long-term growth over short-term gains. Halting technology projects or refreshes just to boost earnings by a small margin would be unwise. Our objective is to ensure the company grows stronger day by day through ongoing investments and adherence to our core principles.

So maybe to add a bit of color on capital, there's not a lot to add as a matter of fact, because you covered most of it. But as you know, Rick, the governor here is our CET1 ratio, that is what will define the amount of share repo that we're going to do, and we target between 10% and 11%. We're a little bit on the high side at 10.7%, but you shouldn't read anything in that. And if you look at the overtime, we have been at 10.8%, 10.5%. So we're ending up a little bit on the high side at the end of the quarter, and that's it. Right? But we distributed exactly the amount that we had in our plans in terms of capital. I will mention, though, that this is the first quarter where we increased the dividend by 17%.

Hi. Thank you. I just wanted to confirm the 8% to 10% revenue guide, you said something is effective that now takes into account a 5.7% unemployment rate. I just wanted to confirm that, a, you feel like you can generate 8% to 10% revenue growth even in light of an unemployment rate that we haven't seen in a while. And to that end, I think, Steve, you mentioned that the stock market really didn't impact spend. I'd be curious to understand, since your data is so good in terms of how spend progressed January through March, particularly in your affluent consumer segment. As you had mentioned in the last call that January is off to a strong start. And then just wondering whether or not the resilience had sort of carried through, even though we had all the headline risk and stock market volatility in March?

Sure. I'll provide some insights on spending. January, February, and March were virtually identical, showing increases of 0.2% each month. The early days of April have shown slightly stronger performance, maintaining that consistency without significant fluctuations. Small businesses did see a slight increase towards the end of March, about 0.5 points. There was also a minor uptick in the first 11 days of April, but we will need to monitor how that develops. April should be an interesting month due to Easter, as there tends to be less corporate and small business spending during this time, along with retail spending. Last year, Easter fell at the end of March. Regarding unemployment, we have factored in a rate of 5.7% in our macro forecast. We focus more on white-collar unemployment, as it influences spending more than the overall unemployment rate, factoring in the demographics of our cardholders. We are closely monitoring this but feel confident with our unemployment outlook, even though it’s higher than in the past. We are maintaining our guidance for now, and spending remains steady, which gives us confidence in our revenue projections.

Let me provide a bit more insight into how to interpret the 5.7%. We believed it would be helpful for investors and analysts to understand our approach to the credit reserve. As you know, we run various scenarios, and the calculations involve complex mathematics regarding lifetime losses. The 5.7% indicates the peak unemployment rate used for this reserve calculation. It does not imply that we expect unemployment to jump to 5.7% and remain there for the rest of the year. You should consider this in relation to the CECL calculation.

Hey, good morning. Thanks for taking my questions. Steve, I know the Millennial and Gen-Z cohort continues to be a source of strength for Amex. You're calling out the continued 60% plus of acquisitions, the better FICO and delinquencies versus industry, and your spend growth is running higher there. But just curious, are you noticing any sort of under the hood issues with that group from things like student loan repayment starting? There's been some reporting of some servicing issues for that group with the repayment starting. And I'm just wondering if there's any stats you can give on maybe spend per card or account for that cohort, just given that it's represented so much of your account growth so far? Thanks.

We haven't observed anything significant, so let's consider a couple of statistics. For this cohort in the quarter, spending growth in the U.S. consumer business was up about 15%, accounting for approximately 35% of our total spend. Internationally, it increased by 22% during the same period, indicating that Millennials and Gen-Z contribute even more overseas. As mentioned on Investor Day, we continue to see year-over-year growth. It's important to note that not every Millennial or Gen-Z individual has our card. As I mentioned earlier, our delinquency rate is much lower than the industry average, and the FICO scores are also higher. Many in this demographic are new to our franchise, and the delinquency rate is better than it was before COVID. We typically do not disclose the precise card account billings, and while we shared this information during the last Investor Day, I don’t have it readily available today.

So maybe what I can add to those, if you're looking for numbers, their Millennial and Gen-Z combined spend about 20% less than the older generation, so they do spend a bit less. They revolve a bit less as well. The other data point that we have shared in the past as well that echoes what Steve just said is that, at acquisition, the average FICO of this cohort is 750. So very strong, very strong.

Yeah. Thanks. I appreciate you taking the questions. I wanted to go back to something you said earlier. Investors are spending time hardening their books for what is expected to be a significant change in the economy over the next, sort of, nine to twelve months. So you had mentioned FICO scores as consumer confidence wealth effect. Not to channel John Wick, but the Boogeyman of the last recession was FICO Creep and companies getting caught thinking they were making better loans, plus with consumer confidence falling and the wealth effect, especially how that might impact the younger cohorts. Maybe you can talk about what you're basing your view on that, that consumer confidence and wealth effect won't impact spend. And sorry, not sneak this in, but could you also let us know what percentage of SMB build business is related to e-commerce businesses? Thanks.

I can't provide the specific details you asked for because I don't have that information readily available. However, I believe this will become increasingly significant over time, and we will explore it further. Regarding our perspective on the wealth effect and consumer confidence, we rely on historical data from our cardholders. I've been with the company for 40 years, experiencing major events like 9/11, the financial crisis, and COVID, and none of these have been the main drivers of credit issues for us. We will continue to consider FICO scores, and while we acknowledge there have been some accelerations in certain FICO scores, it is not the only factor we assess. It’s a convenient metric to reference, but it doesn't fully capture what we analyze in our credit models, which include many other elements. We focus on the historical performance of our card base and the factors affecting it. In that context, I'd say that white-collar unemployment has been a more significant concern for us than anything else.

I'll add one thing, Craig. If you take a step back from FICO and look at delinquency rates, you would see that the variability from a credit standpoint is higher with low tenure card members. That's why I shared this new data point for you to understand how we're considering credit risk. For low tenure card members, those who have been with us for less than two years, their delinquency rate today is 30% lower compared to the same group back in 2019. This reflects various factors, including the strategy we implemented over the past five to six years to acquire premium card members and manage the portfolio carefully. The delinquency rate is a good metric to consider, and it looks significantly better than before COVID, at which point we were already the best in the industry.

Good morning. Thanks for taking the question. Steve, you mentioned the acquisition of Center that comes after a string of other deals, whether it's Kabbage, Nipendo, others. Can you just talk about that journey and kind of give a state of the union on the SME technology investments? And then how can that translate into better organic spend over time? Thank you.

We are focused on enhancing our capabilities for small and medium-sized enterprise (SME) customers. Our goal has been to increase our relevance with these customers, and Kabbage has become the primary platform for them. It allows users to view card information, conduct cash flow analysis, manage checking accounts, and apply for loans. One AP and Nipendo aim to automate the B2B aspects of our services. We realized that expense management was a crucial element that needed to be central to our strategy. We already have a travel service in place, and we are continuously expanding our offerings for small businesses. While we need to observe the impact on organic spending, we believe these additions will enhance retention and acquisition efforts. By leveraging One AP and Nipendo, we aim to facilitate more B2B payments through that channel. Our goal is to integrate all these elements into a cohesive ecosystem, which we expect will drive greater retention and acquisition, as well as increase organic spending. Historically, organic spending reflects how businesses operate, and we've seen fluctuations pre-COVID, during COVID, and post-COVID. We are enthusiastic about Center and the capabilities we've developed for SMEs.

Hi. Thank you. Good morning.

Good morning.

Maybe to just follow up on your comments around refresh strategy. You called out about 35 to 50 planned product refreshes for this year last quarter. And I get that you want to invest in the long-term, and you don't want to stop the refresh strategy. But just given that there's so much macro uncertainty and maybe potential uncertainty around the ROI of those refreshes, do you kind of adjust or delay some of those until there's more clarity? And what does that mean for your marketing budget for the year? Thank you.

Yeah. So at the moment, no changes to the marketing budget at all. I don't think the refresh itself, when you're looking at the refresh, I think that as I said before, we haven't stopped refreshes in the face of even the pandemic. I mean, we were working through our platinum refresh at that particular level and green at that particular point in time. And also working on others behind the scenes because, as I've said before, refreshes don't happen overnight. Years ago, we got a lot of credit for reacting to the Chase Sapphire, but it's something that we started nine months to 10 months ago. So no, we're not going to stop the refresh strategy. I don't think that from an ROI perspective, there would be what, as I would say a reason to do that. As we go to acquire cards, we look at where the credit box is at that particular point in time. So we'll see, but these refreshes happen over a period of time. So it's hard to stop them once they're in progress, and I think we have a lot of confidence once they're done to put them out into the marketplace.

Hey. Good morning, Steve. Good morning, Christophe. I wanted to ask around restaurants. It seems like a lot of the work done there has been key in winning Gen-Z Millennial share versus other premium value props available in North America. How do you think about enhancing the value proposition there? And similar vein, can you talk about other categories or maybe your experiential differentiation where you're not really competing on the rewards, but more like the services to further help capture that Gen-Z Millennial base? Thanks.

Well, Millennials and Gen-Z are spending way more in restaurants from a transaction perspective than any other cohort that we have. And if you just look at the refresh strategy, look at what we did with Gold. I mean, Gold could have been renamed the restaurant card between the rewards accelerator, the Resy credit, and the Global Dining collection. I think, look, you go back to the acquisition of Resy, you go back to the acquisition of Tock, you look at Rooam; all three of those things are really targeted at trying to build a moat around the restaurant industry, not only from a card member perspective, but also from a restaurant perspective. I mean, it is a microcosm of our closed-loop, right? When you think about what we've done with Resy and Tock, and then as we integrate the Rooam capabilities in, it’s a closed-loop within a closed-loop. And I think that is something that's really appealing to our restaurant customers and it's also appealing to our card members, especially Millennials and Gen-Z. Look, we'll look for other verticals where that makes sense. Look, one would argue that the other verticals where it does make sense with our travel businesses is also with lodging and with airlines, right? I mean, if you think about it, you look at the Platinum Card and being able to book through Platinum travel services, it's another example of a closed-loop within. And when you look at the Platinum Card value proposition, with fine hotels and resorts, it is really a way to provide value, especially to our younger customers. I mean, when you book a fine hotel and resort, the value proposition there is pretty good; I mean, it's early check-in, late check-out, upgrades, free breakfast, $100 credit. So that's another example of where we're connecting our card members with our partners from a hotel perspective, and obviously, we've been doing that with airlines for years. So I think when you think about Millennials and Gen-Z, I think leaning in those areas for them are pretty critical. And the Gold card relaunch is a really good example. And our partnership with Dunkin was a really good example of really leaning into the transaction affection that they have for dining and for all things in our dining.

Good morning, guys. I wanted to follow up a little bit more on the SMB technology side with Kabbage, Center, etc. Steve, I think you mentioned eventually having one ecosystem. Could you speak to the integration effort there? How all these platforms come together? How that looks for the end customer today? And then, when do you expect you could go to market with the full expanded product suite inclusive of Center? Thanks.

We just completed the acquisition of Center yesterday. This will be a gradual process. If you're a small and medium-sized enterprise customer using the Kabbage platform, you can access MYCA. Many of our cardholders primarily engage with us through the app, while previously it was done through My Card Account. Through Kabbage, you can connect to your My Card Account, apply for loans, and check your transaction accounts. At this point, everything is in place. The next step involves integrating Center, but I can't provide a specific timeline for that. As a bank holding company, we need to ensure certain preparations for the Center product before fully integrating it into our platform. I just want to emphasize that we completed the acquisition yesterday.

Hi. Good morning, and thank you for taking my question. Steve and Christophe, you're striking a pretty confident tone on the call today about the outlook in a variety of macro environments. I think you've also talked before about being more confident in achieving the mid-teens EPS versus maybe some noise in year-over-year revenue. So I just wanted to go back to where we started the Q&A, where Sanjay side of the Q&A. Can you just talk a little bit more about the cost structure and the potential for cost optimization if things get choppy? Like, I understand there's rewards costs and things like that, that naturally get lower. But big picture, just talk a little bit about the expense flex in the model as you continue to invest? Thanks.

You can expect that as spending decreases, rewards and card member service costs will also decline. We remain committed to our technology plan and will not disrupt it. Our marketing budget has never been larger, and in uncertain times, we might raise thresholds and have less clear visibility into credit. There is significant flexibility regarding expenses in both our marketing and operating expenses. However, we will not just reduce expenses to boost our earnings per share if we see promising growth opportunities. During COVID, we curtailed acquisitions because we lacked clear visibility into creditworthy cardholders but redirected that budget to enhance our value propositions, which resulted in better retention and greater customer engagement. Moving forward, it’s important to focus on long-term investments and make sound decisions, while still having flexibility in our marketing and operating expenses.

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.