American Express Company

Card fees are contractual and growing but represent roughly 12% of FY2025 revenues; the remainder is tied to transaction volumes that fell approximately 17% in FY2020. Net card fees have grown consistently across FY2021-FY2025 including through the 2022 inflation cycle, providing partial but not dominant forward visibility.

American Express reports four segments: Global Consumer Services Group (48% of FY2025 revenue), Global Commercial Services (23%), International Card Services (18%), and Global Merchant and Network Services (11%). All four are correlated to spending volumes and contracted together during COVID-19, providing limited downside diversification despite the apparent segment spread.

The United States contributed 77.6% of FY2025 revenue, with EMEA at 9.8%, JAPA at 7.2%, and LACC at 5.8%. This heavy US concentration leaves the company sensitive to a single regulatory and economic cycle.

The closed-loop model creates some operating leverage as incremental card spend flows through fixed network infrastructure, but it also demands ongoing investment in cardholder benefits and merchant relationships (marketing of $6.3B in FY2025, up approximately 75% since FY2019). Rising customer engagement costs drove the Q4 2025 EPS shortfall, illustrating the limits of operating leverage in the closed-loop format.

Premium cardholders with a net write-off rate of 2.1% in FY2025 (vs an industry average near 4.3%) give AXP above-average revenue defensibility. However, the majority of revenue is volume-based and tied to discretionary spending categories including travel and entertainment, which are non-contractual and cyclically exposed.