Q3 FY26 · Ended Sep 30, 2026 · View SEC filing
Richer benefits are costing more than the higher fees bring
Card Member services cost rose 35.8% in a year, faster than card fees, so more of each fee now goes back as benefits.
For investorsWhat has to hold for the Platinum refresh to pay off?
For foundersPricing a membership on a refreshed bundle of benefits
Card Member services cost rose 35.8% in a year, faster than card fees, so more of each fee now goes back as benefits.
Net card fees were $2.97B, against $2.55B a year earlier, and the average fee per card reached $136 on an annualised basis, against $119. Card Member services cost $2.01B, against $1.48B, a 35.8% rise that took the line to 10.0% of revenue. The cost line grew by more dollars than fees did: services equalled 67.6% of Net card fees, against 57.9% a year earlier.1
The filing ties the fee rise to higher average fees on its premium cards after product refreshes, and names the new U.S. Platinum benefits and higher usage of Card Member benefits as the cause of the cost increase. The company says it expects growth in these costs to moderate once the refresh appears in both comparison periods.1
AnalysisA refresh collects the higher fee in advance and recognises it over the year, but pays for benefits only as members use them, so the cost line can run ahead of fees early on. The test is whether services growth slows toward fee growth from here. If usage keeps climbing, the higher fee buys less profit than it appears to.
Among its stated uncertainties, the company lists rewards and benefit enhancements made "potentially in a manner that is not cost-effective," alongside competition for premium customers, attrition, and whether Card Members keep wanting to pay higher card fees.1
Revenue grew 8.9%, but a reserve release, a stake-sale gain and a lower tax rate lifted net income much further.
Provisions for credit losses fell 23.5% to $985M, against $1.29B a year earlier. The filing attributes this mainly to a reserve release driven by "enhancements to the models that estimate expected credit losses," against a reserve build a year earlier, partly offset by higher net write-offs.1
Other, net fell 26.1% to $1.32B, which the filing attributes to the gain on selling its stake in Global Business Travel Group, partly offset by higher legal reserves. Tax took 18.1% of pretax income, against 24.1% a year earlier, on discrete benefits from resolving prior-period items.1
Some costs ran the other way: salaries and employee benefits rose 14.8%, mainly on restructuring costs. Pretax income rose 18.5% to $4.53B. Diluted earnings per share were $5.42, against $4.14, rising faster than net income partly because diluted shares fell to 674M from 693M as the company bought back stock.1
AnalysisA reserve release from re-estimating losses, a stake-sale gain and a discrete tax benefit do not recur on a schedule. The cleaner measure is whether revenue keeps growing faster than rewards, services and partner costs combined, since that spread, not the one-offs, is what the card business itself produces.
Interest paid fell while card interest income rose, so net interest income outgrew the 8.5% rise in non-interest revenue.
Interest on Card balances and Other loans rose to $6.39B from $5.97B, on growth in revolving balances. Total interest expense fell to $1.92B from $2.13B, which the filing attributes to lower interest rates paid on customer deposits, partly offset by deposit growth. Net interest income reached $4.94B, 24.6% of revenue.1
Deposits are the main funding source: interest paid on deposits was $1.24B, against $1.37B a year earlier, and made up 64.8% of total interest expense. Interest on long-term debt and other fell to $676M from $760M.1
AnalysisSavings deposits gathered directly from consumers reprice with market rates, so funding costs fell quickly while card interest kept growing with balances. The same link works in reverse: if market rates rise, deposit costs would climb faster than the yield on existing balances.
The filing names governmental moves to cap credit card interest rates as a risk that could reduce net interest income.1
Growth, profitability and cash over the years, where American Express stands among its peers, and where its profit is made.
How the model works, where every $100 of revenue goes against the industry, and how long the company took to scale.
Ten years of filings where the company has them, each against its peers.
Growth against margin in each company's latest full year; the size of a dot is its revenue. Hover a dot to read it, click to open it.
American Express, FY2025: revenue +9.5% on the year, operating margin —. Triangles sit beyond the axes; their figures are in the tooltip.
The mechanisms behind the numbers. Pick one to read it.
American Express issues the card, signs the merchant and runs the network, so it sets the merchant fee directly instead of splitting it with a separate issuer. That fee is charged on spending, and a large part of it goes back to Card Members as points.
What needs scale, what a startup can take, and how to test itAmerican Express, Q3 FY2026, to operating profit: $23 of every $100 is left. Its widest gap from the industry is operating margin: 22.6% of revenue against a median of 30.3%.
Each line as a share of revenue: the band holds the middle half of the Financials companies covered that report the line, the tick is their median, the dot is American Express.
Revenue grew 2.5x from FY2008 to FY2025, first doubling in 15 years (FY2023). The pins mark each doubling of the first year shown.
Every figure is computed from the companies' own filings. Peers are the Financials companies covered, each from its latest report, which is not a market and not a market share. A description of the business, never a view on its shares.
Revenue went from $28.4B in FY2008 to $72.2B in FY2025, over 17 years.
Q3 FY2026: free cash flow of $4.4B against net income of $3.7B in the quarter.
Capital expenditure is drawn below the axis as cash out. Cash conversion is operating cash flow over net income, shown in the tooltip for years with a profit.
Each breakdown the filing reports, as shares of revenue, for every period it restates.
Reportable Operating Segments (Details). The filing restates this breakdown for 1 period.
Click a member to isolate it across the years shown.
Margins, cash and growth for the period, each with what it was computed from.
Every breakdown the filing reports for the period, with each item's share.
| Uscs | $9.8B | 49.0% |
| CS | $4.6B | 22.7% |
| ICS | $3.7B | 18.4% |
| Gmns | $2.1B | 10.4% |
Source10-Q, us-gaap:RevenuesNetOfInterestExpense, as reported in the 10-Q filed 2026-10-23
| Operating Segments | $20.2B | 100.5% |
| Corporate and Other | -$96.0M | -0.5% |
Source10-Q, us-gaap:RevenuesNetOfInterestExpense, as reported in the 10-Q filed 2026-10-23
The cost lines beneath operating income, each as a share of revenue, then the operating result.
Costs are reported by nature: what they are (food, labor, occupancy, personnel, marketing), not what they were for, so there is no cost-of-revenue line and no gross profit.
| Cost line | Q3 FY2026 | Of revenue | Source |
|---|---|---|---|
| Total provisions for credit losses | $985.0M | 4.9% | Source10-Q, us-gaap:ProvisionForLoanLossesExpensed, as reported in the 10-Q filed 2026-10-23 |
| Total expenses | $14.5B | 72.5% | Source10-Q, us-gaap:NoninterestExpense, as reported in the 10-Q filed 2026-10-23 |
From the text of the filing rather than its statements, each with the sentence that states it.
30+ days past due as a % of total - consumer and small business 1.2 % 1.3 % 1.2 % 1.3 %
Average fee per card (dollars) (a) $ 136 $ 119 14 % $ 131 $ 116 13 %
Average proprietary basic Card Member spending (dollars) $ 6,735 $ 6,387 5 $ 19,910 $ 18,751 6
Discount revenue as a % of billed business 2.24 % 2.24 % 2.23 % 2.25 %
Net write-off rate - principal only - consumer and small business (d)(e) 1.8 % 1.9 % 1.9 % 2.0 %
The income statement, cash flow statement and balance sheet in the company's own order and words. Every line links to the filing.
Year to date, as a quarterly filing reports it.
| Line | Q3 FY2026 | A year earlier | Change | Source |
|---|---|---|---|---|
| Cash Flows from Operating Activities | ||||
| Net income | $3.71B | $2.90B | +28% | Source10-Q, us-gaap:NetIncomeLoss, as reported in the 10-Q filed 2026-10-23 |
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||
| Provisions for credit losses | $985.0M | $1.29B | -23% | Source10-Q, us-gaap:ProvisionForLoanLossesExpensed, as reported in the 10-Q filed 2026-10-23 |
| Statement of Cash Flows | ||||
| Cash and cash equivalents at end of period | $43.20B | $54.71B | -21% | Source10-Q, us-gaap:CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents, as reported in the 10-Q filed 2026-10-23 |
Merchant fees are half of revenue and fund the rewards that pull spending back onto the card.
Discount revenue, what American Express keeps from merchants for facilitating transactions between Card Members and merchants, was $10.17B, 50.7% of revenue, against $9.41B a year earlier. It ran at 2.24% of billed business, the same rate as a year earlier, so it grows with spending: average proprietary basic Card Member spending was $6,735 in the quarter, against $6,387.1
Card Member rewards were $5.09B, equal to 50.1% of Discount revenue, against 49.0% a year earlier. The same spending that earns the merchant fee also earns the points.1
AnalysisBecause American Express issues the card, signs the merchant and runs the network, it sets the merchant fee directly instead of sharing it with a separate issuer. The loop holds while its cardholders spend heavily enough that merchants accept a premium rate to reach them.
Lending grows with the same premium spenders who earn merchant fees, and the net write-off rate was 1.8%.
The consumer and small business net write-off rate, principal only, was 1.8%, and the share of those balances past due was 1.2%. Provisions for credit losses were $985M, 4.9% of revenue, against $1.29B a year earlier.1
AnalysisPremium products attract customers with high credit quality, and lending features on charge cards let them carry part of a balance. Interest income then rises with the customers who also generate merchant fees, rather than with customers acquired through credit offers.
AnalysisPart of this quarter's lower provision came from re-estimating losses rather than from fewer losses. A turn in early delinquencies would show first as reserve builds, before it shows in write-offs.
The merchant fee is the base of the model, and the filing names several forces that could push it down.
Interchange caps abroad have pushed down merchant discount rates, and the company exited its network business in the EU and Australia because of regulation. It calls surcharging "an adverse customer experience" that could have a material adverse effect, notes it is rising where laws allow it, and names merchant steering and antitrust suits against its anti-steering rules.1
The filing also describes an Australian review that now covers networks like American Express and an EU ruling on cobrand payments.1
AnalysisNone of this shows yet: discount revenue held at 2.24% of billed business. Because discount revenue is half of revenue and also funds the rewards, a lower rate would press on both sides of the loop at once.
After the quarter, the company consented to Federal Reserve and OCC orders on financial crimes compliance, with a civil money penalty.
After the quarter ended, the company and its bank consented to orders from the Federal Reserve and the OCC over its financial crimes compliance program, with a civil money penalty. It says failing those orders could bring further penalties or "material regulatory restrictions on our businesses."1
Becoming a Category II firm this year brings heightened capital, liquidity and reporting requirements, according to the filing.1
AnalysisLegal and regulatory costs sit inside Other, net, where the Global Business Travel Group gain masked higher legal reserves this quarter. Their weight will be easier to see in a quarter without a one-time gain.
Member research on this company.
What American Express's numbers depend on from here, read from the filing: the conditions behind this period's margins and growth, and where a change would show first.
AnalysisThe refresh bargain is the central test. Fees per card and benefit costs both jumped, and the cost line grew faster. For the economics to hold, Card Member services growth has to slow toward fee growth once the Platinum changes sit in both comparison periods, as the company itself expects. If benefit usage keeps climbing after that, the higher fee is buying less margin than it appears to.
AnalysisThis quarter's profit growth leaned on items that do not recur on a schedule: a reserve release from model changes, a gain on a stake sale and an unusually low tax rate, partly spent on restructuring and legal reserves. The cleaner read is whether revenue keeps growing faster than the combined rewards, services and partner costs, since that spread, not the one-offs, is what the business model produces.
AnalysisCredit looks benign, but part of the lower provision came from re-estimating losses, not only from fewer losses. For provisions to stay near this level, write-off and delinquency rates would have to stay low while balances keep growing with spending. A turn in early delinquencies would show first as reserve builds, before it shows in write-offs.
AnalysisMerchant pricing is the slow variable. Discount revenue as a share of billed business held steady, but the filing describes surcharging spreading where laws allow it, an Australian review that now covers networks like American Express, an EU ruling on cobrand payments and merchant antitrust suits. Any of these could press on the rate merchants pay, and that rate is the base of this model in a way it is not for a lender.
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Business Lens describes American Express from its own filings with the SEC. It is not a view on its shares, a target, or advice to buy, sell or hold anything; figures are as filed and may be restated by the company later. The filing, the dates and the version are under the financial data above.
