✦ The Middle Market and the Expense PlatformNarrow moat

American Express (AXP) — the future bets

American Express is trying to win back mid-sized companies with expense software, because the card alone has stopped winning them.

Commercial Services is the slowest-growing of American Express's card segments, and the company's answer is software. Commercial billed business grew 3% in 2025 to $541.9 billion1 and 5% in the second quarter of 20262, against 11% for U.S. consumers and 13% internationally. In the second quarter the company "piloted its new expense management platform to an initial group of middle-market customers"3.

Billed business growth, Q2 2026 (%)+13%International Card Services+11%U.S. Consumer Services+5%Commercial ServicesAmerican Express Q2 2026 statistical supplement
The commercial business trails the other two.

The commercial customer matters more than the growth rate suggests. Spending by small business and corporate clients was about 41% of worldwide billed business in 20254, and commercial cardholders spend the most per card: $35,153 on average in 20255. Commercial Services earned pretax income of $3,668 million on revenue of $16,926 million, a margin of about 21.7%67.

The middle market is where Amex has been weakest. On the call management acknowledged continued softness in middle-market commercial spending, and said the expense platform is meant to support retention and new wins8. The small-business side is losing two cobrand portfolios, Amazon and Lowe's, which the company says will moderate spending growth9.

A payment card wrapped in expense software is harder to replace than a card alone. A finance department that runs its approvals, receipts and reports through the card issuer's platform faces real work to switch.

That makes the bet sensible and slow. Software sales to companies take years to show up in volume, and the pilot has no disclosed customer count.

Commercial cardholders have also been the ones with the most to lose from a cooling economy. The segment's pretax income fell from $2,936 million in 2021 to $2,880 million in 2022 and $2,861 million in 2023 before rising to $3,668 million in 20251011; the new platform is meant to make the next plateau shorter.

Commercial billed business growth is the figure that will show whether it works. It was 5% in the second quarter of 202612; growth that stayed below the consumer segment's for two more years after the platform's launch would say that software had not solved a problem that is really about companies spending less on travel.

Moat trajectory: Holding steady

CS billed business +3% (2025), +5% (Q2 2026); expense platform in pilot.

The number that tests this moat
Reported
Commercial Services billed business growth, latest quarter
+5% (Q2 2026), from +3% (2025)

Whether the middle-market push works; growth below the consumer segment for two more years would say the problem was travel, not software.

Source: American Express Q2 2026 statistical supplement ↗
References
  1. ReportedCommercial billed business grew 3% in 2025 to $541.9 billion and 5% in the second quarter of 2026, against 11% for U.S. consumers and 13% internationally.
    American Express fourth-quarter 2025 statistical supplement, Form 8-K exhibit 99.2 - card metrics, billed business by segment, balance sheet and the definition of variable customer engagement costs. — Q4 2025 · publ. 30 January 2026 · source ↗
  2. ReportedCommercial billed business grew 3% in 2025 to $541.9 billion and 5% in the second quarter of 2026, against 11% for U.S. consumers and 13% internationally.
    American Express second-quarter 2026 statistical supplement, Form 8-K exhibit 99.2 - segment results, card metrics, capital and credit - segment revenue, pretax income and billed business. — Q2 2026 · publ. 24 July 2026 · source ↗
  3. ReportedIn the second quarter the company "piloted its new expense management platform to an initial group of middle-market customers".
    American Express second-quarter 2026 earnings release, Form 8-K exhibit 99.1. — Q2 2026 · publ. 24 July 2026 · source ↗
  4. ReportedSpending by small business and corporate clients was about 41% of worldwide billed business in 2025, and commercial cardholders spend the most per card: $35,153 on average in 2025.
    American Express Form 10-K for fiscal 2025 - card metrics: billed business, spending per card, cards-in-force, fees per card and network volumes. — FY2025 · publ. 6 February 2026 · source ↗
  5. ReportedSpending by small business and corporate clients was about 41% of worldwide billed business in 2025, and commercial cardholders spend the most per card: $35,153 on average in 2025.
    American Express Form 10-K for fiscal 2025 - card metrics: billed business, spending per card, cards-in-force, fees per card and network volumes. — FY2025 · publ. 6 February 2026 · source ↗
  6. ReportedCommercial Services earned pretax income of $3,668 million on revenue of $16,926 million, a margin of about 21.7%.
    American Express Form 10-K for fiscal 2025 - reportable segments (Note 23) and revenue and pretax income by region. — FY2025 · publ. 6 February 2026 · source ↗
  7. Moat Explorer calcCommercial Services earned pretax income of $3,668 million on revenue of $16,926 million, a margin of about 21.7%.
    Moat Explorer calculation from American Express's reported figures ($ millions unless stated). Incentives (variable customer engagement costs = Card Member rewards + business development + Card Member services): 2021 11,007 + 3,762 + 1,993 = 16,762; 2022 14,002 + 4,943 + 2,959 = 21,904; 2023 15,367 + 5,657 + 3,968 = 24,992; 2024 16,599 + 5,886 + 4,782 = 27,267; 2025 18,409 + 6,457 + 6,057 = 30,923; Q2 2026 5,051 + 1,755 + 1,949 = 8,755; Q2 2025 7,508. As a share of discount revenue: 16,762 / 24,563 = 68.2%; 21,904 / 30,739 = 71.3%; 24,992 / 33,416 = 74.8%; 27,267 / 35,192 = 77.5%; 30,923 / 37,401 = 82.7%; Q2 2026 8,755 / 10,163 = 86.1%; Q2 2025 7,508 / 9,361 = 80.2%. Discount revenue left after incentives: 24,563 - 16,762 = 7,801; 30,739 - 21,904 = 8,835; 33,416 - 24,992 = 8,424; 35,192 - 27,267 = 7,925; 37,401 - 30,923 = 6,478; Q2 2026 10,163 - 8,755 = 1,408; Q2 2025 9,361 - 7,508 = 1,853. Incentives / total revenue 16,762 / 42,380 = 39.6%; 30,923 / 72,229 = 42.8%. Incentive growth 30,923 / 16,762 - 1 = 84%; 30,923 / 27,267 - 1 = 13.4%. Discount revenue growth 37,401 / 24,563 - 1 = 52%; 37,401 / 35,192 - 1 = 6.3%. Rewards 18,409 / 11,007 - 1 = 67%; rewards / discount revenue 11,007 / 24,563 = 44.8%; 14,002 / 30,739 = 45.6%; 15,367 / 33,416 = 46.0%; 16,599 / 35,192 = 47.2%; 18,409 / 37,401 = 49.2%. Business development 6,457 / 3,762 - 1 = 72%; / discount revenue 3,762 / 24,563 = 15.3%, 6,457 / 37,401 = 17.3%. Card Member services 6,057 / 1,993 = 3.04 times (+204%); 6,057 / 1,392 = 4.35; growth 3,968 / 2,959 - 1 = 34.1%; 4,782 / 3,968 - 1 = 20.5%; 6,057 / 4,782 - 1 = 26.7%; 6,057 / 2,959 = 2.05. Card Member services / net card fees 1,993 / 5,195 = 38%; 3,968 / 7,255 = 55%; 6,057 / 9,993 = 61%; Q2 2026 1,949 / 2,862 = 68%. Membership Rewards liability 16.5 billion / equity 33,474 = 49%; URR +1 point = 4 x 229 = 916. Card fees: 9,993 / 4,042 = 2.47 (+147%); 9,993 / 5,195 - 1 = 92%; growth 6,070 / 5,195 - 1 = 16.8%, 7,255 / 6,070 - 1 = 19.5%, 8,449 / 7,255 - 1 = 16.5%, 9,993 / 8,449 - 1 = 18.3%; added 9,993 - 8,449 = 1,544. Share of revenue 4,042 / 43,556 = 9.3%; 5,195 / 42,380 = 12.3%; 7,255 / 60,515 = 12.0%; 9,993 / 72,229 = 13.8%. Average fee per card 131 / 58 = 2.26; 117 / 103 - 1 = 14%. Proprietary cards 86.6 / 70.3 - 1 = 23%. Marketing 6,252 / 12.5 million new cards = about $500; 6,252 / 1,544 = 4.0. Card fees plus net interest income (9,993 + 17,364) / 72,229 = 38%. Spending per card 23,496 / 20,392 - 1 = 15.2%; 24,059 / 23,496 - 1 = 2.4%; 24,608 / 24,059 - 1 = 2.3%; 25,453 / 24,608 - 1 = 3.4%. Billed business 1,669.8 / 1,070.5 - 1 = 56%; 1,669.8 / 1,550.9 - 1 = 7.7%; 870.7 / 1,070.5 - 1 = -18.7%. Network volumes 1,897.0 / 1,265.7 - 1 = 50%; 1,897.0 - 1,669.8 = 227.2. Merchant rate 2.51% - 2.24% = 0.27 points x 1,669.8 billion = about 4.5 billion; 4.5 / 37.4 = 12%. Pretax income 13,795 - 10,689 = 3,106. Revenue mix 2019: discount 26,167 / 43,556 = 60.1%; net interest income 8,620 / 43,556 = 19.8%; 2025: 37,401 / 72,229 = 51.8%; 17,364 / 72,229 = 24.0%. Net interest income 17,364 / 7,750 = 2.24; 17,364 / 8,620 - 1 = 101%; +100bp +19 / 17,364 = 0.1%. Card Member loans 151,832 / 87,400 - 1 = 74%. Held for sale 2,457 / 151,832 = 1.6%. Revenue 2020 36,087 / 43,556 - 1 = -17%. Deposits 152,488 / 210,300 = 72.5%; 156,973 / 152,488 - 1 = 2.9%. Delta: 13% x 1,669.8 = 217 billion; 8.2 billion / net income 10,833 = 76%; 8.2 / net card fees 9,993 = 82%; 8.2 / 7.4 - 1 = 11%. Other cobrands 26% - 13% = 13% x 1,669.8 = 217; proprietary 74% x 1,669.8 = 1,236. Valuation: market value 206.30 / 254.84 - 1 = -19%; P/E 206.30 / trailing net income 11.446 = 18.0; P/S 206.30 / 75.95 = 2.72; end-2025 254.84 / 10.833 = 23.5; end-2015 68.45 / 5.163 = 13.3; earnings yield 1 / 23.5 = 4.3%. Trailing twelve months to June 2026: revenue 72,229 + 38,544 - 34,823 = 75,950; net income 10,833 + 6,082 - 5,469 = 11,446; EPS 15.38 + 8.81 - 7.71 = 16.48. Diluted shares 696 / 1,003 - 1 = -30.6%. Net income 10,833 / 5,163 = 2.10; EPS 15.38 / 5.05 = 3.05. Berkshire 151.61 million / 675 million = 22.5%; 13F shares 1,149,942 + 149,061,045 + 1,399,713 = 151,610,700, value 388,967,882 + 50,419,898,471 + 473,452,922 = $51.28 billion (30 June 2026). Card balances consumer 144,974 / 218,054 = 66%. Card fees / discount revenue 9,993 / 37,401 = 27% (2025), 4,042 / 26,167 = 15% (2019). Marketing plus incentives 6,252 + 30,923 = 37,175. Provisions / net interest income 5,256 / 17,364 = 30%. Card Member loans growth 139,674 / 125,995 - 1 = 11%; 151,832 / 139,674 - 1 = 9%; billed business 1,550.9 / 1,459.6 - 1 = 6%. Price to book 305.50 / 48.42 = 6.3. Receivables 62,031 / (151,832 + 62,031) = 29%. GMNS Q2 2026 pretax 1,128 / 1,054 - 1 = 7%. Dividend yield 3.80 / 305.50 = 1.2%. Discount revenue at the 2013 rate 2.51% x 1,669.8 = 41.9 billion; each basis point of rate 0.0001 x 1,669.8 billion = 167 million (5bp 835, 10bp 1,670). Merchant locations at the start of 2026 about 190 - 20 = 170 million. Card Member services growth 2021-2025 +204% against net card fees +92%. A 2020-sized fall today: 18.7% x 1,669.8 = about 312 billion. Revenue outside the United States (7,073 + 5,218 + 4,194) / 72,229 = 23%. 2026 revenue guidance 72,229 x 1.10 = 79,452. Segments (2025, $ millions): revenue 34,814 + 16,926 + 13,000 + 7,759 = 72,499; less Corporate and Other 270 = 72,229. Shares of segment revenue: USCS 34,814 / 72,499 = 48.0%; CS 23.3%; ICS 17.9%; GMNS 10.7%. Pretax income 6,810 + 3,668 + 1,603 + 3,968 = 16,049; shares USCS 42.4%, CS 22.9%, ICS 10.0%, GMNS 24.7%. Pretax margins: USCS 6,810 / 34,814 = 19.6% (2020 3,103 / 16,347 = 19.0%; 2021 5,958 / 18,922 = 31.5%; 2022 5,400 / 23,914 = 22.6%; 2023 5,433 / 28,116 = 19.3%; 2024 6,377 / 31,427 = 20.3%); CS 3,668 / 16,926 = 21.7% (2020 1,013 / 9,234 = 11.0%); ICS 1,603 / 13,000 = 12.3% (2020 521 / 6,742 = 7.7%; 2021 929 / 7,435 = 12.5%; 2022 578 / 9,061 = 6.4%; 2023 973 / 10,430 = 9.3%; 2024 1,031 / 11,461 = 9.0%); GMNS 3,968 / 7,759 = 51.1% (2020 1,294 / 4,309 = 30.0%; 2021 1,874 / 5,129 = 36.5%; 2022 2,954 / 6,475 = 45.6%; 2023 3,656 / 7,396 = 49.4%). ICS pretax 1,603 / 1,031 - 1 = 55%. GMNS 2024 excluding the Accertify gain 4,398 - 531 = 3,867; 3,968 / 3,867 - 1 = 2.6%. Revenue 2020 to 2025: USCS 34,814 / 16,347 = 2.13; CS 16,926 / 9,234 = 1.83; ICS 13,000 / 6,742 = 1.93; GMNS 7,759 / 4,309 = 1.80. 2020 segment total 16,347 + 9,234 + 6,742 + 4,309 = 36,632; USCS share 16,347 / 36,632 = 44.6%. USCS Q2 2026 pretax 2,065 / 1,676 - 1 = 23%. Regions 2025: pretax 13,054 + 1,255 + 831 + 907 = 16,047; United States 13,054 / 16,047 = 81%; 13,054 / consolidated 13,795 = 95%; outside the United States (1,255 + 831 + 907) / 16,047 = 19%; revenue 56,015 / 72,229 = 78% - segment and regional shares, margins and growth. — 2013-2026 · publ. September 2026 · source ↗
    Method: Arithmetic on figures reported in American Express's Forms 10-K, 10-Q, earnings releases and statistical supplements, Delta Air Lines' Form 10-K and market data; operands shown in the source line.
  8. Third-party estimateOn the call management acknowledged continued softness in middle-market commercial spending, and said the expense platform is meant to support retention and new wins.
    American Express second-quarter 2026 earnings call transcript (third-party transcript). — Q2 2026 · publ. 24 July 2026 · source ↗
  9. ReportedThe small-business side is losing two cobrand portfolios, Amazon and Lowe's, which the company says will moderate spending growth.
    American Express Form 10-Q for the quarter ended 30 June 2026 - capital return, held-for-sale cobrand portfolios, discount revenue drivers and the Millennial and Gen-Z cohort. — Q2 2026 · publ. 24 July 2026 · source ↗
  10. ReportedThe segment's pretax income fell from $2,936 million in 2021 to $2,880 million in 2022 and $2,861 million in 2023 before rising to $3,668 million in 2025; the new platform is meant to make the next plateau shorter.
    American Express Form 10-K for fiscal 2022 - the realignment into four reportable segments, with 2020 and 2021 recast. — FY2022 · publ. February 2023 · source ↗
  11. ReportedThe segment's pretax income fell from $2,936 million in 2021 to $2,880 million in 2022 and $2,861 million in 2023 before rising to $3,668 million in 2025; the new platform is meant to make the next plateau shorter.
    American Express Form 10-K for fiscal 2025 - reportable segments (Note 23) and revenue and pretax income by region. — FY2025 · publ. 6 February 2026 · source ↗
  12. ReportedIt was 5% in the second quarter of 2026; growth that stayed below the consumer segment's for two more years after the platform's launch would say that software had not solved a problem that is really about companies spending less on travel.
    American Express second-quarter 2026 statistical supplement, Form 8-K exhibit 99.2 - segment results, card metrics, capital and credit - segment revenue, pretax income and billed business. — Q2 2026 · publ. 24 July 2026 · source ↗
Sources
Generated September 28, 2026