While the headline out of American Express‘s earnings yesterday was the $1 billion of gain from the sale of its Costco Wholesale Corp. credit portfolio, the underlying story — at least from an innovation perspective — was the continued increase in technology spending at the payments giant.
Amex records its technology payments within its “Occupancy and Equipment Expense” on its profit-and-loss statement, and that line increased 6% last quarter — that’s both on a monthly and annual basis. Amex said the increase was “primarily driven by spending on technology development, partially offset by lower rent expenses.”
Specifically, Amex spent $438 million last quarter, up from $415 million during the same quarter in 2015. Year to date, Amex has spent $903 million on “Occupancy and Equipment Expense,” compared to $806 million during the same period last year.
During yesterday’s earnings call, Jeffrey C. Campbell, American Express’s chief financial officer and executive vice president, said the “technology investments … are about building capabilities in infrastructure.” He did not elaborate.
He did add, however, that technology spending should “roughly dial down” next year:
Part of the elevated spending or elevated investment spending that we’ve been talking about is a lot of technological or technology development work that we think is going be really valuable long-term. That’s the kind of stuff where we can actually dial it up even as we go through the back half of 2016 and very roughly dial it down in 2017.
American Express has a market capitalization of about $60.2 billion.1 - Reader Likes This Post