American Express Company (AXP) Earnings Call Transcript & Summary

Okay. We got a hot start here. We're going to go right into it. This man doesn't need a big introduction, certainly not in this town. He's the Chairman and CEO of American Express. Steve, 4 years hard to believe.

4 years in February, yes.

4 years. Wow, they didn't think you'd make it.

No, they didn't. 37 years, they just ran out of candidates.

Exactly. That's awesome. He's a dear friend but he is even a better business partner. When you think about companies that are on the leading edge of innovation in -- certainly in fintech, and the platform that Steve and his team is driving around digital, around new forms of payment about creating a premium experience coupled with that. Delta could not be aligned with a better partner, the values that we share and how we go to market. Steve and I've got to know each other...

You could do my review from my Board actually. It's really good.

Okay. Well, to that point, yesterday, I spoke of Steve's leadership and he interviewed me. So we're kind of...

What's interesting, and I was telling my wife is today, this is the fifth time I've seen Ed in 30 days. I haven't seen my wife that much in 30 days, and she's a lot better looking than Ed.

That's fair. But when you think about our companies, when you think about American Express, when you think about Delta, when you think about what we spoke on this morning about a premium experience, a trusted consumer brand, a brand that transcends the airline space. I could not imagine 2 better companies aligned on that purpose. And a lot of the work we're doing to invest in brand, to invest in premium just because of the relationship with our good friends at American Express. So Steve, thank you. Thank you for joining.

My pleasure to be here and it's a different group of analysts that I would normally have an opportunity.

They may want to buy some [indiscernible].

You don't know. We'll see.

You never know. Well, I want to start off talking about the partnership. And one of the things we're very proud of is the unique nature of our partnership. And all airlines have credit card partners. I think many times, they're somewhat transactional. I will tell you personally, and I've been around this space for over 20 years working with American Express. At one point, ours was very transactional. It's morphed over the last decade to be very strategic. Speak to the unique nature of what we create together.

It's a pleasure to be here. And I said, Ed was -- I had a leadership meeting yesterday and was sort of reversing roles a little bit. I was interviewing Ed a little bit. But when you look back at American Express and Delta relation, it goes back to 64 years. It started from a merchant perspective. And 25 years ago, we got involved from a co-brand perspective. And now it's co-brand, it's business travel, it's leisure travel, its membership rewards, it's lounges that we share, and it continues to go on and on. But when you look at the 2 companies, we share the same values. And I was saying yesterday in my own leadership meeting, values are an interesting thing because a lot of people put those values on a plaque and they put them on the wall, but when the [ trips ] are down, that's when you really look at values. And our values, the first thing for us is it's all about our colleagues, right? The first thing is you got to take care of your colleagues because if you take care of your colleagues, they'll take care of your customers. And there's no better example than during a pandemic, no layoffs, right? I mean there were no layoffs. We had no layoffs. I mean that is -- those are values to really value your employees. When you look at customer, we put customer at the forefront of everything we do. We're all about experiences. And when you look again at the pandemic, that's what it was. So when you look at this unique nature of this particular relationship. And Ed talked about it, we're in the co-brand space with lots of different entities across the world. Some of them are transactional and that becomes disappointing. But this is not transactional. This is really a strategic relationship. And so you sign a contract. And for us, we sort of put the contract in the drawer, and we look to do what's right for the customer. And when you look at our customer base, boy, we overlap pretty nicely. You've got the #1 airline, and you've got the #1 credit card. And that's a -- that's a pretty special place to be.

So 1 plus 1 equals 3.

That's -- yes or 4, that's why I didn't major math. But yes, but 1 plus 1 equals 3 in this case is really, really a good thing.

Yes. Speak to the importance of the Delta relationship within American Express?

Yes. And it emanates -- and what's interesting is -- and Ed said this, we are -- we have become dear friends. I took over 4 years ago. And I think I had met you once prior to that. I was purely the Mister inside. They didn't want to let me out in public.

You were in the basement. I mean you existed...

I was in the basement with the jet engines and so forth that run American Express. But what happened was there was 2 phone calls I made the second day that I was named back in October of '17. The first one was to Warren Buffet because if that 1 didn't go well, there'd be no more phone calls to make. And then I called Ed, but the first person that I went to see and with my team was Ed and his team because it is a critical relationship. It is the most important and the broadest relationship that we have. And it's one that we continue to nurture. It's one that drives tremendous value for us, not only with those cardholders who are Delta cardholders, but those cardholders will hold our Platinum Card and our Centurion Card. And it gets back to the fact that when you think about values and you think about the customer base, they are so intertwined and so special. And so the American Express team and the Delta team, if you were in the room, you couldn't tell who was -- who is wearing what uniform, especially now when everybody with jeans on all the time, it doesn't make much of a difference. But that's the reality. The reality is that they look at this as we are here to drive this relationship forward. And the other important thing, and this is very different than other relationships. It's not my customer and it's not Ed's customer. It is our customer, and that's how we treat it. And we make decisions based on what's best for our customer. And sometimes, those decisions may not be the best at the moment for one of the partners. But in the aggregate, it's best for the customer. And if you treat the customer right, good things will happen overall for the partnership.

Yes. And if you look at our relationship over time, again, I've been with Steve's various predecessors and teams for over 20 years following this. There was a good period of time, 10, 12 years that we were just very focused on whose customer it was. It was unclear. Is it a Delta customer or is it an American Express customer? And both teams had that struggle. And I would point, Steve, to your first -- one of your very first trips down, I welcomed Steve down, and I was looking forward to spending some time. And I said to Steve, I said, Steve, we have the 2 best -- the best card provider, we got the best airline. Don't you think we should have the best co-brand period. And Steve said, absolutely. And I said, "Well, we don't. We don't." And at that point, it kind of dawned on. We've got to go fix the economics to make it -- make that incentive so that we're truly aligned around that customer.

Yes. And that's really important, right? I mean you can sit here and I always tell my team because we always get asked about what the discount rate is in our business because that people look at that as a more. You guys don't care about discount rate. I'm talking Dan over here finance. You don't worry about it. But they talk about that because they look at it as a measure of sort of marginal profit. But the reality is making 300 basis points on 0 is not really a good answer, making 100 basis points on a lot is a much better -- is a much better answer. And so I think that -- and this relationship, I mean, Glen and Doug Buckminster, who runs my card business and Dwight, who's in back with the rest of the people and the team. These relations -- the relationship that Ed and I have transcends throughout the organization. And I think that's really, really important because we win together in this, and I think that's important. And so we fixed the economics. So look, one of the first things that we did, and I think this has played out brilliantly for us, especially during the pandemic, we extended our deal in my first year. We extended this out until the end of 2029. And what's really interesting is, if we hadn't done that, we would be sitting here now thinking about RFP, thinking about all those things and not thinking about the customer. But now we are sitting here thinking about the customer as opposed to slowing everything down, worrying about who's going to get this basis point, that basis point. And Ed and I developed a pretty good rapport just over that first 12 months, and we basically said we said to the team, you got 90 days, go out and do it. And that's what we did. And I met you in Detroit, when you were on your way to China, and we finalized the whole thing, and that was early 2019 and off we won it.

That was fabulous. So the last couple of years, I know how stressful it was for you and company -- our company. When you go inside your boardroom and you see your airline partners on its knees, what was the Board's response knowing that you had just signed us this rich new deal with us. Was there ever a moment of doubt or was there ever...

No, I think we got a pretty savvy Board, right? And you have 1 or 2 Board members that will always be an outlier, which is really good because you want contrarians in the room. You don't want everybody sort of, "Oh, well, he said it, so it must be so." And yes, you had a few, but the reality is, and look, while I haven't been in charge for 37 years, I've been in this business for 37 years. And things happen, but people will return to travel. I mean we saw that after 9/11. We saw that after the financial crisis when people didn't have maybe as much funding. But we are a society that has become globally intertwined. And so basically not traveling is like ripping somebody's heart out. You cannot imagine not traveling. And so the reality is what I had said to the board is, look, I don't know when we're going to come out of this, but now because we've signed this deal, we can actually focus on coming out of this and being stronger. And what's interesting is Warren Buffet owns 20% of American Express, which is a nice hedge against activists, investors and other kinds of things. But we're like-minded. He's got a little bit more coin in his pocket, but we are like-minded. And what we are like-minded around is exactly what Ed is like-minded around too, which is we focus on making sure we take care of the brand, and we also take care of our customers. And so during the pandemic, when it looked back, we were talking to each other every week during the pandemic. And I thought my situation was bad because I had a point in time where I had one day I was down 50% and Ed said to me I'll take it. I'll take it. And the reality is, we both decided, though, and this is why the values are so important, we were going to invest in the customer. He did that with extra safety, blocking the middle seats and we did that an extra value injection within the product, including the Delta product that we have, we put extra value in it because people were still using that product. So we made sure we invested in brand. And you had a few Board members that I said, look, the reality is we're 176-year-old company. You don't remain 176-year-old company by managing for the next 9 months. And so that's what we did. But no, the reality is this was, as I look back, extending our relationship. And in hindsight, it looks good. It was probably the best decision that we made because it gave us the opportunity to really invest and grow this business right now versus let's do the Kabuki dance, right? I mean, let's see, look at the networks in, do this, do that. And I think we shocked everybody when we -- when we extended it. I know we shocked our competitors, which was good.

So we're working well together. I'm going to talk about the recovery in a second. But we shared with our owners, our investors here that we have a goal to get to $7 billion. We -- in '21 were around $4 billion, little over $4 billion pathway, in the 5-plus range next year in terms of business, the contribution, remuneration not necessarily the P&L. It takes a little bit time to come through the P&L. What's your confidence in us hitting that $7 billion number in the next couple of years?

Yes. Look, we're -- I'm very confident that we're going to hit that number. And what's interesting is I say we're very confident to hit that number, and that's a good thing for me because this is a good deal for both of us. So I am happy to pay the remuneration of $7 billion. I look forward to doing that.

And would it go more?

No. Well, yes, listen, the nice thing is I'd love to pay more because what happens is so much of this is built on volume, so much is built on getting more cards. And if you look, and I think you showed a slide today. In November, we're up 22% over '19. When you look at our results year-to-date, we're over '19, we're going to end with the most volume that we've ever had. And we're on a really good glide path right now. And the reason we're on that good glide path is because this product is not just used on Delta. In fact, less than 10% of the volume actually is on the airline. This is a product that is used broadly. And you see 70% of the spending is goods and services, which is why the value injection that we did during the pandemic, whether it was some dining credits for takeout or grocery credits to put on there, the extension of the travel certificates. That's not a contract anywhere. That's just good business between 2 good business partners, and that's what was really important. So yes, I'm really confident that we're going to make it because I believe we're going to grow at a really good rate next year. And remember, in 2019, we were growing at 11%, which is a great growth rate. And so we're on a glide path right now, and I think we'll definitely make that $7 billion.

That's great. That leads me to -- I showed a slide earlier today as part of my presentation that kind of dissected spending. We know the consumer has accumulated a tremendous amount of wealth, $2.5 trillion is the general estimate that people are using. But -- and we know the spending rates have been high because of that well, but we know they've gone deeply into goods versus services because of the pandemic. Our expectations that services are going to start to catch up and then start to potentially even over time pass goods. Can you speak to that? Because you have good insight into the consumer wallet?

Yes. So we look at it. And typically, our business is about 70% what we would call goods and services. We used to call it non-T&E, but it seemed so defeatist. So we changed it to goods and services. It took us 40 years to do it, but we changed it. And then you have travel and entertainment. And so travel and entertainment, hotel, airline, restaurant, car rental that was about 30% overall. Right now, we're probably running at about 80-20 or so. And you're seeing travel spending down, and we've talked about this approximately 20%. We said by the end of the fourth quarter, we'll get to about 80% of our traditional T&E spending. But we're really seeing a boom in goods and services. And what's really interesting is we look at it, a lot of that goods and services spending was spending that we didn't have, okay? So I'll give you an example. We didn't get maybe as much cell phone service. We didn't get as much streaming on our card and things like that. We may not have had as much grocery. So a lot of the moves that we've made with the portfolio were to get people to shift their behavior. And when we talk about shifting behavior from one card to the other card. And the reason for that, and this is why these cards are so important is people love to accumulate for those trips that they want to take. They want to accumulate the status. They want to -- and which I think is going to become even more important as we move forward, and they want to accumulate for their rewards overall. And so I think that's a permanent shift. Having said that, then you look and say, well, the travel is going to come back. And if you look at the profile of our customer, we are taking share, I believe, from other cards because we never have 100% of somebody's spend. If we can get to 50%, 55% [indiscernible] 100% of my spend, it makes sense. But we don't get 100% of everybody's spend. So if we can get up to that 55%, 60% of share of wallet, you're now moving some goods and services, and with travel coming back, it will be a tailwind for us. And that's why we're confident that next year we'll actually be able to retain some of the growth rates that you're seeing right now in the portfolio.

So when we're talking about the recovery, we spent a lot of time this morning talking about the shape of the recovery in terms of demand for our business, for the airline. I don't think there is a whole lot of pushback that consumer demand is pretty strong. There's pent up. There's new wealth. There's new opportunities, new categories, premium consumer that we've really haven't invested as much in that we're investing in, and we seek the growth. But the big source of debate and there's a thousand different opinions is around the business recovery in terms of business spend. What's your view on how the business recovery spend in our business will shape?

Yes. So look, I think that's been slow, right? I mean the business reviews -- so let me talk about it in the context of the card. Let me just talk about the context of sort of the macro, I'll go micro to macro. When you look at our card product, the majority of our cards, the Delta American Express cards are consumer cards, right? They are consumer cards. We have small business cards, a very small percentage, but they do punch above their weight. They probably punch about 2 to 3x more than a consumer card does. And so we really don't have a lot of corporate. We don't have any corporate cards, Delta corporate cards. And so I think as you look at the portfolio, I think we have a huge opportunity, and we've talked about this at our meeting a couple of weeks ago, we have a huge opportunity with small business because small business today represents a small percentage of the overall T&E spending, and it also represents an even smaller percentage of the travel spending.

In your portfolio?

In the American Express Delta Card portfolio. Huge opportunity for us. And I think that's going to be a big tailwind for us because we're going to get focused on that.

But the macro on that is pretty high.

But the macro on that is -- look, the macro on that from a small business perspective, small business has been probably the most resilient segment that we have had. They're down a lot less than our corporate business from a T&E perspective, and they're coming back, and it's been really good credit quality. Because when people think about small businesses, you tend to think about the restaurateur, you tend to think about the small retail shop in your neighborhood. It's the lawyer, it's the dentist, see architect, see engineer, see HVAC. And let me tell you, those guys were busy and those gals were busy during this pandemic, right? Who didn't have something go wrong with their air conditioning or heating or what have during -- I saw more electricians and air conditioning people in my house than ever before, which I questioned my wife on, but that's another story? And so as you move along, corporations are still not back, right? They're not back in full force. Some of the banks are back. And I think that will come back -- it's going to come back different, and we've talked about this. I think you're going to have a much more virtual world. But it's probably going to mean different travel and it's probably going to mean even more connected. Just the reality is a more virtual world, I believe, will actually lead to more travel. Now that may seem like something that is completely crazy, but the reality is, is because you're not seeing as many people. So the people that were based in New York, the people that were based in Atlanta, the people that were based in Florida, may now be based in Colorado, may now be based in California. They're going to have more reason to get together, okay? Because they're not seeing one another in the office. So I think travel will change. And the other thing that's not going to change is customer travel. There is nothing like getting in front of a customer. I don't know how you close -- and you know there's stories of [indiscernible] deals that you closed over Zoom and so forth. But I was at the business roundtable meeting in Washington last week or the week before. And I saw 200 CEOs that I haven't seen in person, and it was energizing. It was energizing. And I think a lot of CEOs walked away saying, "You know what we need to do more of this." So it's not there yet. Our large and global business is down. We're probably at about 50% of where we were. But I think it's going to come back. It's come back by the end of '22? Does it come back by the end of '23? I think that's anybody's guess. But the death of business travel is completely exaggerated.

I completely share your view. I think anything that enables connectivity is going to grow travel. It's going to be good for our business. And that's whether it's a video conference we went back, we studied cell phone. That's kind of an interesting analog back in the mid-'90s when cellphones gained popularity. And over that kind of the 10-year period, what happened to travel during that period. Travel expanded because of cell phones because people wanted to connect even more because they had more opportunities to connect and it's a supplement, it's not substitute for a lot of what we do.

As I say to my team, look, there were really good things about being in person and some really good things about being virtual. Let's take the both of them and put those things together. And I think that's what will be interesting.

So last question, and then we're going to go to the floor for questions from our investors. What are some of the biggest lessons? We all talked about lessons learned these last couple of years and when you think about American Express specifically, what are some of the lessons that you've learned as you've led through this crisis that could be instructive for this?

Yes. I mean the first thing that you learned is when you're making a decision here, really be open to change. And I remember -- I remember March 15, 2020, in the morning, we were sending out a memo that was talking about we're going to go to red and blue teams or green and blue, whatever it was. By the afternoon, it was maybe coming once a week. By -- by the end of the day, it was stay home until further notice. And so I think you really have to make sure you're not only listening to your customers, but you're listening to your colleagues and you're really taking in the external environment in a full way. And it's not a weakness to change the decision. It's not a sign of weakness. It's actually a sign of strength. It shows confidence and we've had to change course many, many times. Your colleagues and your customers are a lot more resilient than you actually think that they are. They are resilient. And if you stick behind them, they will stick with you. And I think we both did that. We both said, we're putting a stake in the ground about our customers. And that's what we did. And you got to be agile. You really have to be agile. And everybody will talk about being agile. But agility means going down a different path than you would have gone before. Again, being able to change your mind. And the other thing is I think we democratize a little bit more decision making. And what I mean by that is, it used to be -- I'll give you a funny -- it's a funny story because -- it was funny to me, so I was young. We had to change some terms and we deal with regulators like you deal with certain issues that you have to deal with. And we had a change or so we had to send out 2 letters. 2 letters to a card member to change the terms, but they had to get this simultaneously. So -- well, that's easy, put the 2 letters in the envelope. And I said, we'll get people, but you can't get people together because it's COVID. So -- how long is it going to take? 8 weeks. 8 freaking weeks to put 2 letters in? So we wound up getting the programmer in the room, and this was on a Tuesday, we had the letters out on Friday. But you play this game of telephone in an organization, right, where the SVP tells the VP who then tells the director, who tells the manager, who forgot what the SVP said, so you got to go all the way back. But we wound up having the program. And when is the programmer ever in the meeting with the CEO. Now this CEO happened to be the CIO at one particular point in time. But still, I said, bring me the person that has to code this. And so the democratization of this -- and what I mean by that is bringing the right people in the room, stop with the hierarchy, stop with the nonsense and we're doing that on an ongoing basis.

And we're doing that with our teams collectively too. We've got -- and we hear from our teams at all levels. And I know...

Yes. Look at the meeting that we had, it was -- we had about 20 people there, and it was all levels.

That's right. All levels. Great. Okay. Well, let's turn it open to Q&A from this group.

Thanks very much. So I'm Helane Becker with Cowen. Nice to have you here. So here's my question. You just talked a little bit about corporate -- big corporate. I mean you mentioned smaller companies like lawyers and so on. So what's the opportunity set for SMEs over the next few years? How do you see that working through both your networks?

Yes. So I'll take the first shot at it. But from an SME perspective, American Express is the #1 small business issuer in the United States. In fact, if you add it up, the next 4 issuers, we're still bigger. So we know small businesses. And the reason we know small business is because of the product that we have and the product that we have is one that provides them with no preset spending limit as opposed to a line of credit, which is really good if you're a small business from a working capital perspective. I think what we need to do and we focused a lot from a consumer perspective, I think there's tremendous opportunity for the 2 brands to work even more closely together on penetrating more small businesses. And we talked about that at our last meeting.

Yes. Helane, we talk about corporate travel and, Steve, you are there, do like correct me if I'm wrong, I think the total number of corporations included in our -- it's like 1,500, something like that?

Right.

1,500 companies. That's it. And everything else is SME. Just so think about the scale. So -- in small and medium business, given where we're focusing a lot on the larger spend because you can capture it more cleanly, you could RFP it easier. Then there's a lot of work to do, and we haven't had the orientation. We've had some products out there. We've been kind of mindful of it but didn't really understand it. Now we're deep in that space, and we're developing products together with Steve and his team, but also with our own loyalty.

And we're working together on it.

And I think that's -- I think the next 12 months, that's where the real opportunities for it. That's why I happen to be bullish that by the time, as I said earlier, we get to '23, early year, midyear, I don't know when that we're going to have total business back to '19 levels.

It's Conor Cunningham from MKM. Card spend has been incredibly resilient during the pandemic. I'm just -- it seems like the driving factor in the outperformance is just the way that customers are engaging with it and curious to see how Amex plans to position with the co-brand card to continue to morph into this everyday use card rather than just a travel type of card?

Yes. Well, I mean, I think that journey is well underway, and the train has kind of left that station. I mean where 70% of the volume is on goods and services and not travel. So -- and now it's probably more 80%. So I think we're going to continue to do that. And what you do is you add more benefits and you continue to prop up the value proposition so that it has benefits that encourages spending in those particular categories. But I think the other place that we'll be looking to hunt even more is with millennials. One of the things that we've had a lot of success in, and we're having -- we've had a lot of success from American Express perspective. And when you look at our -- and we talked about this in our third quarter results, 75% of our Gold and Platinum Card acquisition were millennials. And 50% -- quarter-to-date millennials are spending 50% more than they did in 2019, and that stat is not just an American Express overall. That's a American Express co-brand, Delta, stat as well. So I think we talked about focusing on small businesses, and they use this card to run their businesses. And that's still an opportunity to get more. But I think we've done a really good job of positioning it to everyday spend. And what the pandemic has done is accelerated the shift from cash and check to card. So you're seeing -- and so you're seeing these card numbers going up. But the question is, is how much actual incremental spend and how much is being cannibalized from cash and check. Go to a ball game now, go to a stadium, go just about anywhere. Nobody takes cash anymore and try encash a check, I mean, forget about that. But that's what we're going to continue to focus on.

Savi Syth from Raymond James. Just this is a bit more of a [indiscernible] question and you actually partially answered it already, but we've been surprised by just how much the airlines have done a good job in the Delta in just getting sign-ups. And what was driving that trend in kind of the U.S. here to see that level of going to more and more people signing up for cards because it's a fairly mature industry and a penetrated market. And as you partly answered this before, like past the pandemic, what are the factors that might change that? It sounds like it's going to accelerate.

Yes, I think it's going to accelerate. But we take a step back. The reason you do these partner -- you do these partnerships for 2 reasons, right? You take 2 great brands and 2 great products and you put it together and you get a great experience. And so now that's what we call value proposition, right? So that value proposition of what American Express can bring and what Delta can bring, we think, is better than other co-brand value propositions. Then what you do is -- the reason you do these particular deals is because it helps from a distribution perspective, right? Because you have a targeted audience and you have eyeballs that you can control through various outlets within the entire Delta network, whether that be at the airport, online, et cetera, et cetera. And so our view is that -- and I think you mentioned this in your -- that 1/3 of the -- I think the 1/3 of the SkyMiles, probably the active SkyMiles or participants have the card. So we have a lot of area to hunt in. And when you look at our product line, the refresh product line, we have 4 products. We have an entry-level Blue product. We have our Gold product, which allows you to earn even some more miles. Then we have our Platinum product which gives you some more miles and gives you some lounge access at a reduced rate. And then we have our reserve product, top of the line, which if you're a real frequent traveler. So we can bring people along a journey from a fee-free card to a fee card, and we're out there and modifying these value propositions. And I believe -- look, I'm biased, but I believe Delta is the best airline in the world. All you have to do is look at the statistics. And so you have, what I believe, is the best credit card in the world. You put the 2 of them together. And we're going to hit over -- we hit 1 million cards that we acquired, over 1 million in 2019, and we'll be exceeding that number as we move into 2021, 2022 and beyond because we're really focused on it from a team perspective.

Good afternoon. That's fine. My name is [ Jamie Baker ]. I'm employed by one of your competitors. Delta knows where my wife and I are going to be in July. And notwithstanding my employment, Amex knows where I'm going to be, what I'm going to spend and what my spend patterns have been in the past because it is your card that I used primarily for travel. Is that knowledge -- I mean, this seems pretty valuable. You know exactly what I'm going to be doing and how I like to spend?

It's a little creepy, [ Jamie ].

Is this knowledge being fully leveraged? And if not, when will it be? And do those benefits accrue primarily to American Express or to Delta? What would the...

Well, I would say, look, we're still on a journey as everybody else is because what you're talking about is merging that data. So for example, if that car -- if that trip that you're taking on Delta is bought with an American Express Delta card, then reality is we know when and where you're going to be there. And when you think about offers that we could potentially make. And so who benefits by that? Both of us benefit by that because I'm going to get to spend, Ed's going to get to spend, we're going to get more loyalty. And that's where the whole digital journey comes along, and that's where we really need to do, continue to do more work in the app. Because we're not going to send you a coupon, right? I mean we really -- what we want to do is send that either to the Delta app or to the American Express app and integrate that in. And the teams are looking at that right now because our next big journey is how do we technologically do that to make it easier to communicate because that's the holy grail, right? The holy grail is to know where you are like Google or anybody else and then give you an offer or a recommendation that you say, "You know what, I use the American Express. I went with Delta using my Express Delta card, and I got an offer for a restaurant. I got an offer for a retail shop or something like that." And look, you can go into the Amex offers today and look at all of those offers, which are a lot of those are curated for individuals. But we can do the exact same thing with the Delta-American Express card as well.

My question is, is there a lot more to come?

We're at the beginning of this journey. -- yes. We're at the beginning of this journey because look, if there's not a lot more to come, I'm disappointed.

We have a -- obviously, we have a shared interest in this. We have a lot to learn from American Express. They're much further ahead of us in terms of overall experience management, but we're investing heavily. And we've got some very interesting technologies that we're out deploying. We'll be talking about those next year as we -- as they come up [indiscernible]. But it's beyond just making offers. It's about the experience itself. And the last time you flew this happened. Sorry, [ Jamie ], let us do this for you real time, right? And we're doing a lot -- a lot of it's around having a singular view of that customer. So architecturally, we're not ready to pull it all together, but we're working with some very, very interesting technologies that we both share and we both...

And the interesting thing is with the deal that we have, which goes all the way almost to 2030, investment makes sense, right? I mean, you really -- you're encouraged to invest together to do that. And that's what happens when it's a strategic relationship versus a transactional relationship. And that's what happens when you have relationships and culture at the top that merge because you don't mind -- it's not -- it's, oh my god, if I invest in this, is it throw away investment. That's not how we think about it.

And that's why we talk about Delta long-term ascending just an airline. I mean we're a travel company. We're a consumer brand. We're trusted. We're aligned with American Express and partners, and we bring value to you whatever you want to do. How much we have to pay Isaac to get the mic? I'm wondering. Just he walks very deliberately to certain people.

He knows. He was taking care of before.

Upside surprise. So in that basement with the jet engines that you were in, I assume you have some macro folks, and you have a good view into the consumer. So if you could, to what extent would you rank sort of categories that massively over-indexed through the pandemic, categories where you like, geez, I don't need to spend any time there because it's obviously going to come down relative to where it is today. And is there any category that you would be more excited about relative to travel from an upside perspective?

So what's interesting, the obvious category that over-indexed during the pandemic is online, any kind of online spending, right? I mean that's happened. And our customer over indexes more than the bank card customer by a lot, maybe almost twice. And you look at restaurants, we over-index from a restaurant perspective as well. And so -- and obviously, we over-index from a hotel and we over-index from an airline perspective. I mean that's what the American Express customer looks like. But during the pandemic, we saw an increase in customers that were into streaming services, which have become even bigger. We got a big bump in that, and I think that will continue. Same thing with wireless, which just didn't make a lot of sense, but it did bump up. And supermarkets, supermarkets, especially online delivery and an online delivery of restaurants. I mean when you look at restaurants right now, restaurants right now are back. I mean the ones that survived are completely back, but we don't look at it individually from a restaurant perspective. I look at it from a category perspective. And from a category perspective, take out and online dining is through the roof and has sustained that. But the in-person dining is also higher, okay? And so their biggest problem right now is getting cooks and waiters and things like that. So I think those are the categories that we have and that we'll continue to focus on. High-end retail has always been a big category for us as well. And that's pretty much what our consumers look at. Very different from a small business perspective. You'll see advertisers, you'll see service providers, Amazon Web Services is a big one as well. So that's how we see it.

Steve, Kenny Dichter, Wheels Up.

Kenny.

It's good to see you, Steve. Last time I saw you was at the Masters.

Yes, so it was true. You were walking around.

Just a quick thought about the way you described that cell phones and how it was going to affect travel and then Zoom. One thing is the father of 3 daughters, you talked about millennials, and I would say even younger Gen Z. Both of you have said the word experience a bunch of times, and I'm the biggest believer in the world that we're in the experience economy. And when I think about Snapchat, and I think about TikTok and I think about Instagram and I think about Facebook. To me, my daughters when we travel somewhere, I'm not sure it's even about the travel as much as it is about the post that they're figuring out and what they want to do. What kind of insights does Amex have at the influencers and everybody that's moving around and traveling on, this next generation, which I think is super, super bullish for where travel, Delta and where Amex ends up.

Well, I have 4 girls, I'm one up on you. And 3 are millennials. Yes, and one is a Snowflake, I guess, but that's what we call her around. So I guess she's Gen Z. But you're right, it's all about the experience. And my old -- my 2 older ones, my 30-year-old, my 26-year-old big, huge -- big Platinum card holders. And it's all about the experience for them. It's all about checking into the hotel early and then having a late checkout and getting a free breakfast and doing that. And then it's access. It's not only experience, but it's access, whether it's access to a show or access to something that only we can provide. And I think when you think about these 2 brands and what we can do together from an experience perspective, it's going to be huge, and which is why I'm really encouraged as I look at the American Express card base and I look at my proprietary business with 75% of my acquisition in Gold and Platinum being millennial and Gen Z, and we continue to increase that with Delta as we continue to move on. That's where I think a lot of people thought that the American Express card was your father's card, right? And it's not anymore. And the American Express Delta card is not your father's card. It is your card to unleash a whole world of experiences because you're right. I mean nobody can eat a meal without taking a picture at first. I mean the food gets cold, right? Because they're too busy taking angles of how are you going to take those pictures. So I think it's all about experiences, and that I think will serve our joint interest very, very well, and it's obviously serving me on the other side as well.

Back here it's Carcache, Wolfe Research. Steve, nice to meet you. Thanks for doing this. Some people on our side of the industry have suggested that the marketing component that you pay Delta is some crazy margin like 90% margin and Delta just like banks it to the bottom line, like free profit. So the question is, does that bother you when you hear that? Do you believe that? And then the second part of the question is, what is your expectation that Delta does with this money, the marketing component of the money that you give to them?

So what I would say is there are a lot of things that bother me when people say things, that's not one of the things that bothers me.

Would you say it's true?

Look, the reality is, I'm not going to get into the individual financials, but as the Delta co-brand card does well, I do well. And that's really important to me. And so from a marketing perspective, what I expect from my partners at Delta is that they create the best experience. And they have the same joint incentive that I do to acquire more cards and to drive more spending. And so what I would say is we are totally aligned in terms of the outcomes that we want and where the investment comes from is kind of irrelevant. We -- when we make investments, whether they be co-brand relationships, whether they be individual card relationships that we do, we have an ROI that we shoot for. And you just look at our return on equity, and you could see we're getting it. And Delta is the biggest partner that we have. And so if it wasn't a good, good relationship on both sides, I wouldn't be here and I wouldn't be smiling.

All right. And then just another quick one. How many people sort of trade up? What's the sort of life ecosystem going from a Blue Card to the...

Yes, it's a good question. We do, do a pretty good -- and I don't have the percentages off the top of my head, but it is part of the strategy. It is part of the marketing strategy to do that because -- and that's where you look at how people use the card. That's why I introduced the zero-fee card. And then you say, Hey, look, this is -- I'm not getting as many -- now every card we have, you get 2x whenever you spend on Delta. But then as you move up, you can get on dining, you can get on a hotel and so forth. And if you start to travel more, it makes sense for you to get the Platinum Card or it makes sense for you to get the reserve card. And that's where with information, you could target people to say, look, you could buy -- by upgrading this card, not only do you get -- you might get a welcome offer, but what you're also going to get is you're going to get access to the lounge. You'll get access to the lounge with the Platinum card and it's $39 to get in. However, if you get the reserve card, which was a charge $454 now, -- you get -- you can go to a lounge anytime you want, you can bring 2 guests. So how you use the product, which is exactly what Ed knows and what I know is that's how we can really market -- that's -- hopefully, that's some of -- how to use some of the marketing money as well.

Okay. We have time for one more question. Okay, [ Ravi ].

Maybe we can end with a bit of a longer-term question. It's to both of you, as I'd I love to get each of your views on this. You have a long-term contract that goes at almost 2030. My view is that both your industries are going to see some significant technology disruption in the next decade. Obviously, you're already seeing that with payments or things like crypto and digitization and ESG in the airline space. How relevant is that for each of your respective businesses? So how much do your card members care about ESG footprint of airlines? How much do your customers expect innovative new technology solutions from Amex and your partners? And how do you think that influences the relationship over the next decade?

Well, look, I'll start. I think from an ESG perspective, I think when you look at millennials and Gen Z, they cared very deeply about it. And I think what Delta is doing and what has committed to do, I think, is right aligned and that bar is going to keep getting raised over time. And this is where values come in, right? And we both talk about being good citizens in our community. And it's one thing, as I said to my team yesterday, it's one thing to put that on the wall, it's one thing that put that out of place card. It's another thing to live it. And I'm confident and Ed and the management team and how -- and what Delta's mission is, is that they will continue to be good citizens in the community in which we live and work. And they've demonstrated that, and I believe they will continue to demonstrate that. So I don't -- I'm not concerned about that.

How about the question about crypto?

Yes. So look, I'll give you a long answer, it's 2 minutes, so this could be a filibuster. But look, I get asked about crypto all the time. And the reality is I'll take it to a different level. You really got to think about digital currencies, okay? It's just not about crypto. When you think about digital currencies, you've got 3 types. You've got cryptocurrencies, your Ethereum, Ripple, obviously, Bitcoin. And if you look at the market value of all that, it's about $2.4 trillion, $2.5 trillion today, maybe till March, $2.3 trillion, and it's $3 trillion after that. Then you look at gold. And gold is probably worth about $12 trillion. If you look at the M2 money supply, and that's about $145 trillion -- it is really hard for anybody to see cryptocurrency actually becoming a fiat currency that is accepted as a medium of exchange. You cannot have a value of something on a Friday when you get your paycheck be $48,000. And then on Monday, it's worth $36,000. And on Tuesday, it's worth $60,000. I don't know how people can live like that. So that's an asset class. The second one is stable coins, okay? And that's where you have people like Facebook, with DM, you've got JPMorgan Chase has a stable coin and so forth. And the reality is those things will ultimately be surpassed by centralized bank currencies. There will be centralized bank digital currency. Why? It actually becomes a national security issue. China is really moving very, very quickly from a centralized digital currency and they like nothing better to have everything traded in the Chinese RMB, right? I mean that's what they want. So the U.S. government needs to come up with their own digital currency. And I think the Fed is thinking about that and working on that because you need the dollars, I think, to be the medium of exchange, the international medium of exchange. And that's what will ultimately take over. Now why do we need a U.S.-backed digital currency? The reality is it's not going to change all that much, but you need to be able to operate in the new world, and you'll get rid of a lot of the intermediaries in the banking system and so forth. And you'll be able to do more cross-border payments. But it's really just going to be another form factor of how we transact today. How many of you use cash today? How many of you write checks today? The reality is all you do is ledger transfers today from your bank account to pay another bill and you do debits and credits. And so my belief is digital -- cryptocurrency is here to stay. You will see cards that provide rewards in crypto currencies. You might even see us use membership rewards to buy cryptocurrency. But it's not -- in my opinion, it's not going to take over from a currency that we will all use to transact. Having said that, and then I'll stop. But having said that, -- We're aware of everything that goes on. We look to play with everybody. I got investments in digital -- in cryptocurrency companies and stable coin companies because we want to learn. And the reality is, is that when you look at what's happened in fintech, there's been a lot of disruption in the space. But with that disruption comes opportunity. And when you look at a company like American Express, where we have a balance sheet, a brand, and we have scale, melding that with sort of fintech type capabilities in fintech companies can give us an advantage, which is why we -- last year, we bought Kabbage during the pandemic. And so we look to partner with a lot of these guys. And if we can come up with something that, again, gives us a 1 plus 1 equals 3 for the relationship, we'll do it. So that's my long-winded cryptocurrency.

That's a great filibuster. And I'll give you 30 seconds on the back end. Our customers are the same customers. They care about all the things we talked about; they care about sustainability. You didn't hear us talk a lot about ESG today because we wanted to be very focused on our recovery path. Don't let that kind of fool you to think that we're not all in. And candidly, we haven't talked this entire year much about ESG for that same reason. It's been about how do we survive; how do we get through it? There hasn't been a platform to really go after. Because when we talk about sustainability, we're serious. It's not about sending press releases or latest, latest flash in the pan or I'm going to do this, I'm going to do that. We want to have real development and real initiatives that we can talk to our consumers by that we can fulfill, and we can stay behind. Excited about bringing Pam Fletcher on board as she starts in February as our Chief Sustainability Officer and all the learnings that we can garner from the autos. Amelia DeLuca is here. Amelia worries. She is in the back. She's doing a great job leading. She's also going to be helping lead the sustain -- continue to lead our sustainability efforts as well. Amelia comes from the corporate sales team. And so she knows all the companies, your companies and all the companies out there that we do business, how they're thinking about it, too? So we're all in. It's going to be a big message and platform for us next year, but we wanted to get through the worst of the recovery first before we launch it because we don't think people could hear and it was just noise at a certain point. Well, Steve, thank you. You're dear partner and more importantly, you're dear friend. Hopefully, you got a chance to see inside the relationship and have a little confidence as to how we're working together, how we think and what that future holds. I think we have a long way to go to continue to develop the opportunities together, and you provide us great value and great insights.

As do you and your team. So we're excited about what's to come.

Thank you, Steve.

Thank you. Thanks.