American Express's premium-card strategy passed an important test in its third-quarter results: customers kept spending after a substantial Platinum annual-fee increase. The next test is whether the company can retain more of that revenue while paying for richer benefits and reducing its workforce.
The October 23 earnings release showed revenue net of interest expense rising 9% to $20.062 billion. Reported earnings per share jumped 31% to $5.42. Adjusted EPS rose a more representative 13% to $4.68, excluding the $982 million pretax gain on the Global Business Travel Group stake sale and the associated $336 million restructuring charge.
Platinum has retained spending after the price increase
One year after the U.S. consumer Platinum refresh raised its annual fee to $895 from $695, management reported 99% spend retention for the portfolio on the earnings conference call. That is meaningful evidence that the more expensive offering has preserved valuable customer activity.
The measure describes retained spending, not the percentage of individual cardholders who renewed. It therefore supports a conclusion about the portfolio's commercial resilience without proving that every customer group accepted the increase equally well. One renewal cycle also cannot establish how the proposition would perform through a sustained spending downturn.
New business reinforces the argument. Amex acquired 3.1 million proprietary cards; 76% of new accounts, excluding Corporate, were on fee-paying products. Millennials and Generation Z represented 65% of new global consumer accounts. These figures suggest that the membership proposition continues to attract customers willing to pay, rather than depending solely on an aging base of established users.
The competitive advantage is the combination of acceptance, service and benefits that encourages customers to keep using the card. A higher annual fee is valuable when it preserves that relationship. It becomes less compelling for shareholders if retaining the relationship requires an equally rapid increase in spending on customers.
The benefits bill is growing alongside fee revenue
The earnings presentation illustrates the tension. Net card fees increased 16% to $2.969 billion. Variable customer engagement expenses also rose 16%, to $8.891 billion, including a 36% increase in cardmember services to $2.006 billion. Rewards spending rose 10% to $5.09 billion.
Those totals cannot be subtracted to calculate the profitability of membership fees. Rewards and services support spending that also generates merchant revenue and, for customers who borrow, interest income. Nevertheless, engagement costs grew faster than overall revenue. Strong fee growth has not yet made the expanded benefits package inexpensive to deliver.
There is a credible favorable interpretation. The refresh created a higher expense base, and management expects engagement-cost growth to moderate in the fourth quarter as comparisons begin to include the richer offering. If customers keep spending while that growth slows, the economics can improve without another large price increase. That remains an expectation rather than an outcome.
The workforce plan adds a separate execution test. Management intends to eliminate roughly 5% of positions. Removing unnecessary layers and work could improve efficiency, but a premium financial-services business must preserve the responsiveness and reliability customers believe they are buying. Lower staffing costs would offer little durable benefit if service deterioration undermined retention.
Even the current expense comparison requires care. Operating expenses fell 3% on a reported basis, but increased 3% to $4.131 billion after excluding the sale gain, restructuring and $400 million of legal charges. That expense measure makes broader exclusions than adjusted EPS. The apparent reported decline should not be mistaken for proof that the cost reset has already delivered lasting savings.
A moderate valuation still needs durable profits
Credit performance provides support. The financial tables show credit-loss provisions falling to $985 million from $1.287 billion. The principal net write-off rate for consumer and small-business balances improved to 1.8% from 1.9%. However, the provision decline also reflected a reserve release, including a credit-model update, so it should not all be attributed to stronger customer finances.
At the October 23 close of $313.22, Amex traded at about 17.7 times reported trailing earnings. Against the $17.75 midpoint of its $17.60–$17.90 adjusted 2026 EPS guidance, the multiple was approximately 17.6. The second calculation uses management's full-year outlook, rather than consensus earnings for the next twelve months.
The shares sit below their $387.49 52-week high, but that distance alone does not establish cheapness. The earnings multiple suggests a moderate premium for the franchise's quality rather than euphoric expectations. Investors still need confidence that fee growth, customer spending and credit discipline can support profits after the full cost of the membership offering.
American Express has supplied persuasive evidence that customers value the refreshed Platinum proposition. The investment case now depends on making that proposition more profitable without making it less valuable to customers. Pricing power has passed its first test; sustained retention and slower expense growth must validate the cost reset.
