AMERICAN EXPRESS COM

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Transcript : American Express Company Presents at Goldman Sachs 2022 US Financial Services Conference, Dec-06-2022 10:40 AM

06/12/2022 | 16:40

Presenter Speech
Unknown Analyst (Analysts)

We're going to get started here. Up next, we're excited to have American Express joining us. Amex is focused on improving its long-term growth profile through a differentiated customer acquisition strategy and value property for the Millennials and Gen-Zs. This, along with an industry-leading high-end brand, has positioned it well for what we believe will be a long runway of double-digit revenue growth. Here to tell us more about how they're going to accomplish this is Chairman and Chief Executive Officer, Steve Squeri. Excited to have Steve back here. Today's presentation is going to be fireside chat.

Question
Unknown Analyst (Analysts)

So Steve, maybe just to start off, big picture. The last year has proven to be very strong for the company. Revenue growth in the 23% to 25% range, even higher on an FX adjusted basis. And almost every part of your business is producing at above pre-pandemic levels given very strong customer acquisition. So while this has clearly been a strong year. There's obviously some uncertainty on the horizon. So with that as a backdrop, how are you just broadly thinking about '23? And what gives you -- can you give us a sense of how the company is positioned to win into next year?

Answer
Stephen Squeri (Executives)

Yes. So it's good to be back. It's been a long time for me in 2019. So glad to be here. Look, back in January, we put out our new growth plan, which basically said we would grow 18% to 20%. This year, we'd be mid-teens revenue next year, and then we get to a steady state in 2024 of double-digit revenue growth in mid-teens EPS growth. And look, we'll be 23%, 25% as we changed our guidance. So what gives us that confidence -- and I think we're in a great space, premium consumer segment, small business both on a global basis, which is important. I'm very pleased with the investments that we've been making in our brand, coverage, value propositions, technology and talent.

But what's driving my -- what's really fueling my confidence is the success that the strategy has had, the momentum that we've gotten and then there's been a structural shift, I believe, in the payment space. And when you look at the success, we've been able to get to become more generationally relevant. You look at our acquisition, we're bringing in younger and higher spending consumers. B2B, we're penetrating even more B2B, even though we have a really good position from a small business perspective, we're penetrating a lot more. We continue to make coverage gains. And I think one of the things that sort of goes a little bit unnoticed is our retention.

We've got higher engagement with our card members right now and we're retaining more. And when we think about that, I think that's really an outgrowth of the virtuous cycle that we talk about, which is really our membership model, where we're signing up high-spending card members, we're getting more and more merchants, they're engaging, and we've got this sort of flywheel going. And you put that against a backdrop of changing structural environment in the payments landscape, more digitization of payments, more small business formation. And the premium consumer group is actually growing, I believe, at a faster pace than the consumer group in general. So all of those things give us really a lot of confidence.

Question
Unknown Analyst (Analysts)

So maybe just to build on some of the things that you touched upon. You talked about the success of the strategy. How does all this translate into better than 10% revenue growth beyond 2023? And then you touched on a couple of things, maybe dig a little bit deeper on what is giving you the confidence in this...

Answer
Stephen Squeri (Executives)

Yes. Well, I mean, look, we've had 6 straight quarters of 24% revenue growth, so that will give you a little bit of confidence. But I think -- everything that I just said -- and we're staying focused, we're staying focused as a company. I think our business is a lot stronger after the pandemic than it was pre-pandemic. I think we learned a lot. We invested a lot in our customers. We've changed our model in terms of retention. We've changed value propositions, and we stood by our customers. And they've rewarded that with higher spending and more engagement. And so for everything I just said gives me the confidence that, that 10% in 2024 is possible. And as we said sort of mid-teens revenue growth in 2023, we think is very probable.

Question
Unknown Analyst (Analysts)

So in each of the presentations that we've had thus far, there's obviously been discussions about a lot of uncertainty as it pertains to '23, particularly in the back half, your customer base is obviously a bit unique, but you're talking about revenue growth, as you just said mid-teens for next year. Can you maybe just talk about some of the drivers of the above-normal growth and as well as your degree of confidence given all the uncertainty on the horizon?

Answer
Stephen Squeri (Executives)

Yes. Look, yes, there's uncertainty, but there was uncertainty in January of this year. And I think if we've sort of played into that uncertainty in January, I don't think we would have had the growth that we did. It hasn't played out. When you look at sort of where we are as a company right now, we've got record acquisitions, we've got record engagement and our credit losses and credit profile is better than it's ever been. I think when we look at 2023 from a momentum perspective, it really is the core business that is driving it, and I'll talk about that in a second.

But when you think about it and you look at our business model right now, 70% to 80% of our billings growth is really driven by transaction growth. And then we've got a lot of transaction growth that is out there. You've got some inflation obviously in there, and you got some normal uptick in some of the billings that we get every year. But when you look at the tailwinds that we came in this year, we came in with tailwinds in international. International was really hurt by -- in the pandemic. Corporate was another one and it didn't have as much travel. Travel haven't recovered. So I don't think you're going to have those tailwinds going into 2023.

You'll have a little bit of a -- you have a little bit of growth in the first quarter because international came back a little bit later, travel came back a little bit later because we were dealing, I guess, with Omicron in January and February of last year -- this year. But -- so I think it's really core momentum and that core momentum is generated by engaging existing card members. We also had record acquisition. We've had record card member acquisition, and they are spending at a higher level than previous vintages for us.

Question
Unknown Analyst (Analysts)

And maybe just -- so it sounds like you have a lot of confidence in the intermediate to longer term. Maybe just bring it home. In the short run, we've had a couple of other issuers of card, talk a little bit about decelerating growth trends in the fourth quarter. Now that we're 2 months through the quarter, maybe just give us a high-level update on billings performance, maybe what your expectations are for the holiday season. And given that your customer base is a little bit -- is a lot different than what we're hearing for some others, maybe talk about any big changes you're seeing, where there's discretionary [ big ticket ] in the last.

Answer
Stephen Squeri (Executives)

I mean, we still see record months for us. And obviously, I think you will see year-over-year deceleration because last year, what happened at this time, you were starting to see growth. And -- but overall, the consumer is strong. Small businesses continue to be strong for us. International is strong. And I'm talking about 2 months in here. We're talking about October and November. And so we're really pleased with the momentum that we've seen, and we're not seeing any change in sort of that credit profile.

What you have seen is you've seen some small businesses that have slowing down some of their advertising spending, you've heard about retailers talking about a decrease in sort of discretionary spending. But these are small sort of hits to our business at this particular point in time. And just looking at October and November, results are exactly what we would have expected and very, very strong at this point.

Question
Unknown Analyst (Analysts)

Steve, there's a handful of drivers across the company that are expected to impact the above pre-pandemic revenue growth. One of the biggest ones in the international growth and acceptance. If you think about it prepandemic, international SME was the fastest-growing part of the business. More recently, international consumer has been a big part. At the Investor Day, you laid out a strategy for 75% coverage in what you labeled as 48 priority cities. Maybe just talk about how the international growth is progressing? And how should we think about contributions to growth over the next few years?

Answer
Stephen Squeri (Executives)

Yes. So when you think about sort of international coverage, which is we get lots of questions on, just to put things in perspective, from 2017 to 2022, we've doubled the locations in international. We came out with a very focused strategy a few years ago about priority cities. We've increased those priority cities over time, and we introduced that up to 48. And what we did is we figured out those cities whether our card members are or card members travel to. I mean, international is a big place, right?

And so we said by 2024, our objective would be to have 75% coverage. Well, by the end of this year, we'll be halfway through. We'll probably be more than 2/3 through by the end of next year. And what we're really talking about there is 75% location coverage. We're not necessarily talking about spend coverage. And they're a little bit different because the Bodega and the Walmart, both count as one location. And we do a lot more spending, obviously, in a Walmart than we do in the local Bodegas. So we're really pleased with that 75% number because we think it translates into high spend coverage.

As we continue to drive coverage internationally, that does a couple of things for us. Number one, prepandemic, international small business and international consumer were the 2 fastest-growing pieces of our business with suboptimal coverage. As we continue to get more coverage, we expect that, that will continue to fuel that growth. As people travel into those cities where we are addressing those some of the coverage concerns, we expect that to continue to fuel growth.

And the other thing that we've done even within those priority cities is we've looked at tourist destinations, obviously, hotels, restaurants, airlines and so forth and have set targets much higher than that. And then for local, we've set targets around e-commerce sites as well because that is the fastest-growing part of that business in international as well. So we feel really good about the approach. It allows us to get a lot more focus with our investment because, again, as I said, international is a big place. Not that we won't take coverage everywhere, but if you can focus your resources there, it will make things happen a lot quicker for us.

Question
Unknown Analyst (Analysts)

Maybe the -- thinking about small business, domestically, this has obviously been a big area of focus given the high levels of business formation. You talked at the Investor Day and recent earnings calls about particular shifts like digitization. So can you maybe just talk about the strategy in both the U.S. to grow this business despite what is already leading share? And maybe just talk about some of the things you're doing to really own the relationship with your small business customers.

Answer
Stephen Squeri (Executives)

Yes. I mean, so look, we've had a very strong small business presence for a lot. Here we created the category years ago after the corporate card business. We saw a space between personal and corporate for small businesses. And so while we're very pleased with where we are, it's a highly competitive market, just like a lot of the other markets that we participate in. And what we felt was not only is there opportunities with 23% more small business formations going on, digitization of B2B payments. And so we felt there was more opportunity to own the overall relationship, which really led us to the acquisition of Kabbage.

And that Kabbage really gave us a platform so that small businesses not only could have a transaction banking account with us, they could possibly have a debit card with us, can do online direct lines of credit, working capital loans and really view the entire relationship on that Kabbage platform. So it gives us an ability to deepen our relationship with those small businesses as they continue to digitize their payments. And some of the things that we do, that we'll send not only card payments, but you'll hear us talk about beyond the card and we'll send ACH payments. And so what we want to do is really own that entire working capital relationship. But we felt we needed a platform to do that. And that allows us to grow not only with existing customers, but it also allows us to acquire new customers with a wider variety of products and services.

And international is a little bit different. International is a little bit more of a nascent opportunity. And there, it's a traditional lead with the card product. And we've just combined our international issuing businesses and we believe we're going to get a lot more scale and we'll maybe able to adjudicate a lot better because sometimes a small business will come in through our consumer channel and sometimes a person will come in our small business channel. We'll be able to give people the right product with the right spending because when you look at us vis-a-vis our competition, the value propositions are a little bit different. There, you see the Platinum Card starting to diverge in terms of value within the cards, and you're also seeing spending levels that we give vis-a-vis the competition are a lot higher, giving people the purchasing power they need to run their businesses.

Question
Unknown Analyst (Analysts)

Maybe thinking a little bit about the consumer business. So Millennial and Gen-Z spend was up 39% year-over-year in the third quarter. Growing the younger cohort has been a big strategic push of yours over the last couple of years. Can you maybe just talk about how these cohorts are performing relative to your initial expectations? And maybe just help us understand the potential runway of growth for these over the next few years.

Answer
Stephen Squeri (Executives)

Yes. I think the big surprise here with sort of Millennials or Gen-Z, and not just for American Express, I think for the industry as a whole, was that they'd be willing to pay a fee and that everybody used to attack this segment with a fee-free product. And the reality is, as we talk about, 60% to 70% of our cards that we're acquiring, fee-based cards, are Millennial and Gen-Z because they're willing to pay for the service, they're willing to pay for the value, they're willing to pay for the experience. And they're very discerning consumers. Having 3 Millennials and 1 Gen-Z at home, I can tell you they are very discerning consumers.

And what's been interesting for us is having the strategy pre-pandemic, they were the first ones outspending. They were the first ones out traveling again, they were the first ones engaging back into the real world. And so having Millennials and seeing them grow at 39% and we're seeing that on both sides, we're seeing it from existing consumers that we have, we're seeing it from an acquisition perspective. What we're also seeing is loyalty is a lot higher. We're getting a higher share of their wallet. They're relatively high FICO consumers for us. They're also, as I said, very loyal in that -- the second biggest acquisition channel we have other than affiliates is Member Get Member. And so they are very focused on getting their friends with the product.

But what gives me a lot of -- sort of confidence longer term is not only are we getting a high share of their wallet, not only are they a loyal group, but they're starting on their lifelong journey. And so we're in with them early. Their wallets are going to expand over time and the lifetime value of these card members will be a lot higher than the lifetime value of you and I if we went to acquire at this particular point in time. So we're very pleased with how that's played out, probably moderately surprised at how well, especially from a spending perspective and from a loyalty perspective, but certainly very pleased.

Question
Unknown Analyst (Analysts)

Made me feel a little depressed because I'm not a Millennial.

Answer
Stephen Squeri (Executives)

You're not.

Question
Unknown Analyst (Analysts)

No. I guess a question on card acquisition. So you've been seeing record growth in platinum and gold given continued strong customer acquisition and strong pricing. Can you support this level over -- of growth over the intermediate term? And do you think you can continue to do product refreshes over time and continue to increase the price, particularly as the card member base shifts around towards the younger cohort?

Answer
Stephen Squeri (Executives)

Yes. Well, doing product refreshes over time is nonnegotiable. You have to do product refreshes over time. I mean -- and I think we lost that discipline for a while, but we've been doing those product refreshes. When you look back at the third quarter, in the third quarter, we had record consumer Gold and Platinum acquisition. We had record small business Platinum acquisition. And if I take you back, when the Platinum Card, probably back in 2017 was $450, it's now $695. The base has doubled.

And so now would it have doubled with a $695 fee if we hadn't added the value? And the answer is no. But we've added the value. And so if you do sort of back of the envelope and look at $1,400 worth of value versus $695 fee, and as a consumer, you can figure out how you can navigate that $1,400, and I could tell you, Millennials and Gen-Z figure that out pretty quickly, that works. And so we'll continue to add rational value. We'll continue to add emotional value. We'll continue to add experiential value. And as far as how high it goes, look, in Mexico, we charge $1,000 for the Platinum Card.

So the reality is it will go as high as the value allows us to go. And what's interesting for us is that -- I mean, I talked about that virtuous cycle. I talked about that membership model. And we think about the membership model, we just don't think about that membership model from a consumer perspective. We think about the membership model from a merchant perspective as well, and they provide so much value into the Platinum Card, whether it's fine dining and hotels, whether it's a credit from Saks, Walmart, whatever it may be, we work with our merchant partners to do that to deliver high spending card members to them.

Question
Unknown Analyst (Analysts)

One of the things, Steve, that has changed since prepandemic is you made a big strategic decision to increase marketing from, call it, mid- to high 3s billion, roughly, let's call it, low to mid-5s this year to increase customer acquisition also relevance across your customer base. Can you maybe just talk about what drove this decision and where do we go from here? And is the opportunity set big enough that you can accelerate marketing and customer acquisition further? Or do you think we are going to move back to a more normal pattern of growth?

Answer
Stephen Squeri (Executives)

No. Look, I think we took -- we took our acquisition spending on overall marketing spending from about $3.8 billion, $3.9 billion to about $5.5 billion. And we did that because we felt we were leaving good investments on the table. There were many times when Jeff and I would say that we have a load of investments to fund and we just don't fund them, and then we said to ourselves, well, why not? And I think the pandemic gave us that opportunity to sort of take a step back.

And I think as we came out with the growth algorithm, we made a commitment that we said we were going to spend that kind of money to go get it, but we have a very analytical process. We push our marketing teams on efficiencies. So we look at that $5.5 billion of acquisition, we look for 10% efficiencies within that. So we try and make that $5.56, we try and make that $6, $6.5 and so forth until it runs out of a little bit of gas. And we set our ROI thresholds, and we feel, right now, we have line of sight into good acquisition. One other point that I didn't make with the Millennials is that -- and the Gen Z-ers is that you have over 4 million college graduates in this country every single year, and that's a very good pool for us to go after. And so one of the concerns people used to have with American Express, would the customer base die off, would the base just -- I'm not insulting you, again.

Question
Unknown Analyst (Analysts)

I mean, I'm only 44.

Answer
Stephen Squeri (Executives)

Yes, I'm a lot older and I'm in that category. But -- and so would that customer base go away? And the reality is, I think we've shown that -- and this is why I talk about generational relevance that generational relevance, we can be just as attractive to an old guy like myself, more of a middle-aged guy like yourself and a Millennial and Gen Z-er, making you feel better now.

Question
Unknown Analyst (Analysts)

I do. A little bit.

Answer
Stephen Squeri (Executives)

And so I think there's a lot of runway for us. And as long as we have that line of sight, if it makes sense to invest, we will invest. Look, we run this company for the mid to long term, and that may not make everybody happy all the time. But it's a 172-year-old company. We are looking to make sure we're around another 172 years. And what's really important is it's silly for us to leave good investments on the table. That's very different than saying, I need to just do something to keep up. And so -- because we've fallen behind. So it's much more from an offensive perspective than a defensive perspective. And I think that's an important distinction.

Question
Unknown Analyst (Analysts)

I can't even solve the debt this year because you're saying...

Answer
Stephen Squeri (Executives)

They're doing okay. I was a little upset on Sunday.

Question
Unknown Analyst (Analysts)

Me too. I was at the Giants game. Steve, maybe to talk about one of your favorite topics. So there was a poll on, I think, 93% of our economists said I think some sort of recession is coming next year, whether it's technical or a deeper one. On the earnings call, you talked about the recession playbook the team has. Can you maybe just about how does it differ if we get a smaller shallow recession versus the potential for just a deeper economic one? Obviously, nothing like a pandemic, but just a deeper economic -- hopefully not, nothing like a pandemic.

Answer
Stephen Squeri (Executives)

But look, we had -- look, the first 2 quarters, right? You had contraction from a GDP perspective, you had a little growth. So you could say, hey, we were in a recession in the first couple of quarters. I think it becomes a little bit self-correcting for us. And so we do a number of things. Our underwriting models will adjust, and we'll adjust that based on line of sight that we have, just what's going on. Obviously, you saw during the pandemic, we had no line of sight into the consumer. Basically, we didn't know what was going to happen and we pulled back completely.

So that's what I mean about self-correcting. We've already started to bring our sort of ROI hurdles up a little bit. I think the nice part about having a $5.5 billion marketing budget, and you don't have line of sight, you can drop that back down or you can do what we did during a pandemic, which is put into value proposition enhancement, which led to higher retention. So we have that degree of flexibility.

And finally, we have, obviously, the financial relief programs that will play. We don't have an in-house economist. For us, I think what drives overall spending is going to be unemployment and, obviously, bankruptcies. And so we'll just see. So I can't tell you how deep it's going to go. I can tell you the levers that we're going to pull. We've got the playbook. The playbook worked really well for us during the pandemic, it wasn't a pandemic playbook because nobody -- other than Wimbledon, I don't think anybody else had a pandemic playbook. And so for us, that winning through the cycle really helped us in terms of engaging not only with our colleagues, but our customers and keeping ourselves profitable.

Question
Unknown Analyst (Analysts)

Maybe one other on the topic that's more hypothetical. When I talk to investors, I think there's a concern about what billings growth could look like in a recession just given how strong your customer base has been, but obviously, higher inflation and the risk of white collar layoffs, we're all reading the same headlines. Maybe can you just talk about how do you think about the slowdown in spending on maybe one of the most vulnerable areas. And you've talked a lot about pent-up demand for travel. Is there a potential we could see consumers spend -- your high-end consumer spend through a downturn?

Answer
Stephen Squeri (Executives)

Well, I mean, look, there is still that pent-up demand for travel. If I look 3 months out, I'm still seeing record travel bookings, right? And so you're also seeing a little bit more of a shift from goods and services to travel. And I think you could see some of these consumers wind up going through. Let me take you back historically. When I think about sort of 3 major events as I've been here over the last 38 years, there was 9/11, and spending fell off a cliff for 4 months or so and then it came right on back. Then we had the financial crisis, and maybe that was 6 to 8 months, maybe 3 quarters, and then it came on back. And then we just had the pandemic, where if I sat here April 15, 2020, we're down 50%. And now we're at record levels.

So I think the thing is, is that it will always come back. The trends always will come back. What I focus on in those times, and I've been around now for a number of these things, it's really all about retaining the right card members. Because the spending can't come back if you don't retain the card members, the spending can't come back if you don't service the customer, the spending can't come back if the brand doesn't mean what the brand meant.

And so for us, and this is what you saw during the pandemic, we didn't worry about what the spending is. But I can't tell you how much the spending is going to go down. But what I can tell you is if you don't support your customers, they will not come back and they will not spend. In terms of our base, when you look at our base, it is a high premium base, one that is probably not impacted all that much by inflation because they would have already been impacted by inflation. It is one that does get affected by layoffs and so forth. So you could see a little bit of a hit there.

From a small business perspective, and I've said this many times, when a lot of people think about small businesses, what they think about is the restauranteur who goes out of business, the yogurt store just opened up across the street from 7 over yogurt stores and 1 is why they went out of business. That's not our small business base. Our small business base is made up of professionals, it's made up of some restaurants, it's made up from some retailers, but it's made up of dentists, lawyers, doctors, plumbers, electricians, so forth and so on. And so there will be segments of that small business base that will probably get hurt, but people still need to go to a doctor, they need to go to dentists, they need to go to a lawyer. So we'll see. But our focus has always been on making sure to retain the customer, treat the customer well in times of crisis because traditionally, it comes back.

Question
Unknown Analyst (Analysts)

Maybe shifting to spend a little bit of time on lending, which is obviously a much smaller part of our business, less than 20% of revenues and a high-end consumer. Growth rates have obviously been fast at over 30% in recent quarters. Can you maybe just talk about what has driven the outsized growth given the spend-centric model? And where do you see this headed over the intermediate term, talking about given some things you noted regarding the ROI model?

Answer
Stephen Squeri (Executives)

Yes. I mean, look, pre-pandemic, we were probably growing at about 11%. The industry was growing probably about 6%. And remember, while we may have about 50% or 45%, whatever that may be of our consumer's wallet, we don't have that percent of their spend. It may be a -- it may be 20% to 25%. And so we're making that available. We're making that available with pay over time. We've put -- obviously, we've had buy now, pay later on our cards since 2017. We put pay over time on our charge products.

But I think what people aren't looking at is the relationship between our revolving balances and our spend. Our relationship between our revolving balances on our spend right now is lower than it was in 2019. We are not back to where we were. So we don't have our fair share at this particular point in time. So I'm not concerned about that. But what I will tell you is you can expect us to grow slightly more than the industry will grow because our consumers are borrowing from other people. And I really don't want them to borrow from other people, especially I have line of sight. And most of our increase in lending is from existing customers who we know. You're not going to see balance transfers. You're not going to see outsized lending to new consumers. You will see this predominantly with people that we've had in our franchise.

Question
Unknown Analyst (Analysts)

I went back and checked my records. I think in all the years I've interviewing you and Ken, I've never asked a question about the allowance, but I guess it's a sign of the times. And not to get too far into the weeds on CECL. But one common question, I get from investors that has been an area of concern is just the fact that the allowance today at 3.3%, 3.4% is below where it was when CECL was implemented. We understand that, that was just a point in time. But you and Jeff have talked about the credit profile. Your book is stronger than it was back then. Can you maybe just talk about what some of the changes that have happened within the portfolio, why the allowance is lower?

Answer
Stephen Squeri (Executives)

Yes. I mean, if you look at the portfolio now, it's even more premium than it was pre-pandemic, higher income, if you look at our credit numbers, we were always better than our peers. We've widened that gap. When you look at our write-offs and so forth right now, you're at a situation where we're still under one, delinquencies are still there. Now that's going to come back, right? And especially as we grow our AR, you're going to have more provision. And we expect those numbers to come back, but we'll probably don't see it coming back to 2019 levels for quite some time.

Question
Unknown Analyst (Analysts)

So you've been able to generate outstanding customer acquisition. But we all know that acquiring and maintaining premium customers are expensive, I'm sure you have a lot of customers in the room here. And if you think about it, we've seen rewards business development, Card Member services costs rise from 37 to 42 from prepandemic to postpandemic. Can you talk about what is driving this? Is this competition? Is this customer mix? And given the competitive forces you're seeing, where do you think this goes from here?

Answer
Stephen Squeri (Executives)

Yes. I mean, look, you're constantly investing. We talked about, do you see the refreshes continue. Well, the value propositions need to be invested in, we're continuing to invest in that range of card member, services rewards and so forth. And we're still able to maintain our margins. So I think the -- it's a competitive environment. We try and stay ahead of our competitors with this. I mean, you've asked me the question before, you pivoted so quickly when a Sapphire came out. Well, we're not that good. we pivoted way before that. And so you're going to constantly see us invest in Card Member services, invest in value proposition, investing in rewards in a thoughtful way because it's part of the overall value proposition that not only exists for existing customers. It's part of the value proposition that also acquires new customers for us. And look at our growth and look at our earnings power, and I believe it's working for us.

Question
Unknown Analyst (Analysts)

We've got a few minutes up here. I just wanted to hit on 2 or 3 more questions. So Steve, you've had a lot of successful bolt-on acquisitions over the past few years, including the technology from Kabbage, which you referenced earlier; Resy, which is helping customer acquisition, contributing to the brand more lifestyle-oriented and helping me secure reservations on the weekend. Just given how valuations have come in, are you more willing buyer of fintechs to add capabilities, whether it's a fintech or B2B? And what are the areas you're most focused on?

Answer
Stephen Squeri (Executives)

Yes. I mean, we're -- as you know, we have a venture group. We've got 50 different sort of investments at this particular point in time. It's how we won up acquiring things like LoungeBuddy and Resy and Mezi and a bunch of other things. We're always out there looking, and you want to buy things at the right price. But if things are strategically important, there is no right price. It's really always the right price. And so what I say to the team all the time is what are those capabilities that we need to have and what's the best way to get those capabilities? Is it partnership? Is it organic build? Or is it acquiring?

And for us, we hit on the areas. I mean, it's more about adding to the overall value proposition for card. What people don't realize Resy's been an outstanding acquisition for us. And it's been outstanding for 2 reasons. Number one, it's provide access to our card members, it has provided value to our restauranteurs. What people don't realize it is a huge card member acquisition vehicle for us as well because it's an open platform that is used by non-card members. And so we're constantly looking at those things, whether it's LoungeBuddy or Resy that can add to the overall travel experience, add to the overall card member lifestyle experience.

The same thing on the B2B side, Kabbage was a great opportunity during the pandemic and as an example of being offensive versus defensive and keeping your head in the sand during a pandemic, and you look at acompay, which is automating B2B. So we're looking at those kinds of things as well. And we're always on a hunt for them. And again, is it partnership, is it acquisition or is it organic build, and that's the mindset that we have.

Question
Unknown Analyst (Analysts)

So a good one to end with here, Steve, I've asked a couple of players in the space. I'm curious, when you meet with investors, I know you meet several times over the course of the quarter, what part of the story do you think is still at this point misunderstood or the perception relative to your expectations do you think you're still miscalibrated?

Answer
Stephen Squeri (Executives)

Well, I think the one I always laugh about is, let's say, well, say which is -- have you seen the slowdown in spending? And then I just turned around and say, "Well, you're my customer. Have you stopped spending?" No. And everybody in the room. No, I have and I'm traveling. You go on an Aruba right? And you're a customer.

Question
Unknown Analyst (Analysts)

I did cut a day off the trip.

Answer
Stephen Squeri (Executives)

Day off the trip. Yes, but I heard you added whale watching yourself. So -- but no, I think that's always the thing. It's like, oh, they're going to stop, are you stopping? And I said this to Carolyn Hyde and Bloomberg, I said, if you stopped, no. And so I think that -- but I think what people really don't understand, and they have a hard time understanding, it is the premiumness of the base and I think the diversification of small business and the power of the membership model. And I think intellectually, you can all understand it from your own personal perspective, but you have a hard time looking at that at a macro level. You understand it from a micro level, but you don't understand it from a macro level. And the reality is, there's lots of people, thank God, like you. And I'll end it with that.

Question
Unknown Analyst (Analysts)

Please join me and thank you, Steve.

Answer
Stephen Squeri (Executives)

Thanks. Good to be with you, man.

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