American Express Cuts 5% Of Staff, Shares Fall—Promises New Crackdown On Gamers

American Express reported record quarterly revenue and beat expected profits in the third quarter. And they announced plans to eliminate 5% of jobs or roughly 3,500 people. Their stock fell 3.7% on Friday. Customers are paying higher annual fees. They’re spending more. They’re using American Express travel and dining. But spending growth is slowing and expenses are growing just as fast as revenue because they’re basically bribing cardmembers to use their cards. Amex loaded the Platinum card with credits worth far more than its $200 annual fee increase. That works! Spending Growth Is Slowing Down American Express reported $20.06 billion in third quarter revenue, up 9% but missing Wall Street expectations of $20.12 billion. Cardmembers charged $454 billion during the quarter, up 8% compared to 9%in the second quarter. U.S. consumer spending grew 9.4%. Travel and entertainment spending grew 10%. Airline spending grew 13%, though higher ticket prices drove that. Restaurant spending grew 9%. International spending grew 11%. Commercial spending grew just 3%, or 5% excluding the Amazon and Lowe’s cobrands that exit Amex. And American Express spent heavily to produce these results. Their total expenses rose 9%, the same growth as revenue. Statement credits, lounge access and other benefit costs rose 36%. American Express Paid Customers To Accept An $895 Annual Fee The consumer Platinum card went from $695 to $895, but Amex added about $1,680 in new or increased annual statement credits against that $200 increase. Not everyone will use every credit but I get multiples of the annual fee back from expenses I’d incur anyway. The card is lucrative enough to keep at the higher cost. Amex’s bet is that they’re bribing customers to use it enough that it stays top of wallet. Amex says the consumer Platinum portfolio retained 99% of spending after the refresh. While card fee revenue grew 17% to nearly $3 billion for the quarter. They added 3.1 million cards, and 76% of new accounts were annual fee products. The higher fee works because cardmembers believe they’re receiving even more in return. Amex is giving customers more than the increase costs them to provide. Amex Bought More Resy And Hotel Spending With Fee Credits U.S. spending at Resy restaurants grew 18%. Spending and bookings through Fine Hotels and Resorts and The Hotel Collection grew about 50%. Platinum gives cardmembers up to $100 per quarter, or $400 per year, in statement credits for spending at eligible Resy restaurants. It provides $300 every six months, or $600 per year, for eligible prepaid Fine Hotels + Resorts and The Hotel Collection bookings. If you give cardmembers $100 to spend at Resy restaurants they’ll spend more at Resy restaurants. Amex owns Resy, so their card business subsidizes activity on their restaurant platform (and vice versa). That makes Resy more valuable to restaurants while making Platinum appear more valuable to cardmembers. The hotel credit pushes bookings through American Express Travel, where Amex earns a commission. The cardmember gets a statement credit, the hotel gets a booking, and American Express captures part of the hotel payment. American Express also says its newer Membership Rewards option allowing customers to redeem points against specific statement balances has seen strong adoption. Chief Financial Officer Christophe Le Caillec told investors that this gives customers more flexibility while “supporting the overall economics of the program” because it’s poor value redemption. It reduces Amex’s blended average redemption cost. Now They’re Tightening The Hotel Credit Starting January 1, 2027, Fine Hotels and Resorts stays will require a minimum of two nights to earn the $300 semiannual Platinum lodging credit. Today a one-night Fine Hotels and Resorts booking qualifies. A longer hotel stay generates more commission revenue against the same $300 statement credit. Some cardmembers won’t find a convenient two-night stay and will fail to use the credit at all. Amex is adding eligible Airbnb Luxe (high margin) stays to the newly renamed lodging credit, but those also require at least two nights. Amex says its Membership Rewards model doesn’t depend on customers failing to redeem points. Its financial statements estimate a 97% ultimate points redemption rate. But the Platinum statement credit model benefits from breakage. American Express Says More Controls Are Coming To Fight Gamers Analysts repeatedly about customers using artificial intelligence to optimize card rewards and extract every available benefit. It seems like they may know about CardPointers and think it’s AI? Squeri said customers have always optimized across cards, that Platinum offers more than points, and that Amex has tools for dealing with people who game benefits. He said artificial intelligence may make optimization easier, but will also make it easier for Amex to identify what cardmembers are doing and modify the product. Then came the warning: “You’ve seen us do this…with a $75,000 limit in terms of passes for the Platinum card, and you’ll see other controls…” The $75,000 annual spending threshold earns complimentary Centurion Lounge guest access but does nothing to deter someone who gets Platinum for the initial bonus, uses all the statement credits across years, charges airfare at 5 points per dollar and puts everything else on better earning cards. Nonetheless he wouldn’t be talking up “other controls” on an earnings call if they didn’t have more in the pipeline. American Express Renewed Marriott, Wants Your Other Banking Business About 10% of American Express U.S. card customers now have an Amex bank account, which is unchanged from the second quarter. Squeri says banking products will play a larger role in acquiring cardmembers and expanding existing relationships. Deposits give American Express lower cost funding, more information about customers and another reason for those customers to remain inside the company’s ecosystem. Amex also extended its long term agreement with Marriott including its U.S. cobrand credit cards but didn’t disclose the term or economics. Marriott separately reported its cobrand fee revenue would grow about 35% this year after increasing the royalty rates charged to Chase and American Express. Topics on this page