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TELUS (TU) Q1 Earnings Miss Estimates, Revenues Rise Y/Y
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TELUS Corporation (TU - Free Report) reported first-quarter 2023 adjusted earnings per share of C$0.27 per share (20 cents per share) compared with C$0.30 per share in the prior-year quarter. The bottom line missed the Zacks Consensus Estimate of 21 cents.
Quarterly total operating revenues increased 15.9% year over year to C$4,964 million ($3,671 million) owing to high service revenues in TELUS technology solutions and TELUS International. The top line beat the consensus estimate of $3,576.2 million.
The upside reflects higher demand for premium bundled offerings and strong customer retention efforts, resulting in total customer net additions of 163,000 in the reported quarter.
TELUS Corporation Price, Consensus and EPS Surprise
TELUS reports revenues in two segments — TELUS technology solutions (TTech) and Digitally-led customer experiences — TELUS International (DLCX).
In the first quarter, TTech revenues (arising from contracts with customers) rose 15.4% year over year to C$4,169 million, primarily driven by higher mobile network revenues, mobile equipment and solid performance across fixed data, agriculture and health services. Mobile network revenues rose 7.6% year over year to C$1,697 million due to increasing mobile phone and connected device subscriber growth and higher base rate plans.
Fixed voice services revenues declined 4% year over year to C$192 million. This reflects the ongoing decline in legacy voice revenues from technological substitution and price plan changes. This was partly offset by strong demand for bundled product offerings and migration from legacy to intellectual property service offerings.
Health services revenues increased C$283 million to C$423 million, driven by the positive impact of business acquisitions, higher uptake of virtual care solutions and health benefits management services.
The segment’s adjusted EBITDA of C$1,593 million increased 11% year over year, owing to an increase in direct contribution. Adjusted EBITDA margin came in at 37.8% compared with 39.4% in the year-ago quarter.
Revenues from DLCX soared 22.3% year over year to C$928 million. Operating revenues (arising from contracts with customers) rose 17.4% to C$756 million, primarily driven by growth within the banking, financial services, insurance, tech and games sectors.
The segment’s adjusted EBITDA of C$186 million increased 8.1% from the year-ago quarter’s figure. Adjusted EBITDA margin was 20.1% compared with 22.7% in the prior-year quarter.
Other Details
Adjusted EBITDA increased 10.7% year over year to C$1,779 million, driven by higher mobile network and fixed data services revenues coupled with increased contributions from the LifeWorks and WillowTree acquisitions.
Cash Flow & Liquidity
In the first quarter, TELUS generated C$761 million of cash from operating activities compared with C$1,135 million in the year-ago quarter. The free cash flow for the same period increased 29% to C$535 million.
Capital expenditures (excluding spectrum licenses) declined 14.4% year over year to C$713 million due to a planned slowdown in fiber network investments.
As of Mar 31, 2023, the company had C$877 million of net cash and temporary investments with C$24,055 million in long-term debt compared with C$974 million and C$22,496 million, respectively, as of Dec 31, 2022.
2023 Outlook
TELUS expects operating revenue growth of approximately 11-14%.
TELUS expects adjusted EBITDA to grow in the range of 9.5-11%. The free cash flow is anticipated to be approximately $2 billion.
Capital expenditures (excluding spectrum licenses) are expected to be $2.6 billion.
Zacks Rank & Stocks to Consider
TELUS currently has a Zacks Rank #5 (Strong Sell).
The Zacks Consensus Estimate for Dropbox’s 2023 earnings has increased 1.8% in the past 60 days to $1.71 per share. The long-term earnings growth rate is anticipated to be 11.5%.
Dropbox’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 5.4%. Shares of DBX have increased 29% in the past year.
The Zacks Consensus Estimate for Badger Meter’s 2023 earnings has increased 4.7% in the past 60 days to $2.69 per share.
Badger Meter’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 5.3%. Shares of BMI have increased 122.4% in the past year.
The Zacks Consensus Estimate for Enfusion’s 2023 earnings has increased 5.6% in the past 60 days to 19 cents per share.
Enfusion’s earnings beat the Zacks Consensus Estimate in two of the last four quarters, the average surprise being 18.8%. Shares of the company have increased 3.2% in the past year.
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TELUS (TU) Q1 Earnings Miss Estimates, Revenues Rise Y/Y
TELUS Corporation (TU - Free Report) reported first-quarter 2023 adjusted earnings per share of C$0.27 per share (20 cents per share) compared with C$0.30 per share in the prior-year quarter. The bottom line missed the Zacks Consensus Estimate of 21 cents.
Quarterly total operating revenues increased 15.9% year over year to C$4,964 million ($3,671 million) owing to high service revenues in TELUS technology solutions and TELUS International. The top line beat the consensus estimate of $3,576.2 million.
The upside reflects higher demand for premium bundled offerings and strong customer retention efforts, resulting in total customer net additions of 163,000 in the reported quarter.
TELUS Corporation Price, Consensus and EPS Surprise
TELUS Corporation price-consensus-eps-surprise-chart | TELUS Corporation Quote
Quarterly Segmental Results
TELUS reports revenues in two segments — TELUS technology solutions (TTech) and Digitally-led customer experiences — TELUS International (DLCX).
In the first quarter, TTech revenues (arising from contracts with customers) rose 15.4% year over year to C$4,169 million, primarily driven by higher mobile network revenues, mobile equipment and solid performance across fixed data, agriculture and health services. Mobile network revenues rose 7.6% year over year to C$1,697 million due to increasing mobile phone and connected device subscriber growth and higher base rate plans.
Fixed voice services revenues declined 4% year over year to C$192 million. This reflects the ongoing decline in legacy voice revenues from technological substitution and price plan changes. This was partly offset by strong demand for bundled product offerings and migration from legacy to intellectual property service offerings.
Health services revenues increased C$283 million to C$423 million, driven by the positive impact of business acquisitions, higher uptake of virtual care solutions and health benefits management services.
The segment’s adjusted EBITDA of C$1,593 million increased 11% year over year, owing to an increase in direct contribution. Adjusted EBITDA margin came in at 37.8% compared with 39.4% in the year-ago quarter.
Revenues from DLCX soared 22.3% year over year to C$928 million. Operating revenues (arising from contracts with customers) rose 17.4% to C$756 million, primarily driven by growth within the banking, financial services, insurance, tech and games sectors.
The segment’s adjusted EBITDA of C$186 million increased 8.1% from the year-ago quarter’s figure. Adjusted EBITDA margin was 20.1% compared with 22.7% in the prior-year quarter.
Other Details
Adjusted EBITDA increased 10.7% year over year to C$1,779 million, driven by higher mobile network and fixed data services revenues coupled with increased contributions from the LifeWorks and WillowTree acquisitions.
Cash Flow & Liquidity
In the first quarter, TELUS generated C$761 million of cash from operating activities compared with C$1,135 million in the year-ago quarter. The free cash flow for the same period increased 29% to C$535 million.
Capital expenditures (excluding spectrum licenses) declined 14.4% year over year to C$713 million due to a planned slowdown in fiber network investments.
As of Mar 31, 2023, the company had C$877 million of net cash and temporary investments with C$24,055 million in long-term debt compared with C$974 million and C$22,496 million, respectively, as of Dec 31, 2022.
2023 Outlook
TELUS expects operating revenue growth of approximately 11-14%.
TELUS expects adjusted EBITDA to grow in the range of 9.5-11%. The free cash flow is anticipated to be approximately $2 billion.
Capital expenditures (excluding spectrum licenses) are expected to be $2.6 billion.
Zacks Rank & Stocks to Consider
TELUS currently has a Zacks Rank #5 (Strong Sell).
Some better-ranked stocks in the broader technology space are Dropbox (DBX - Free Report) , Badger Meter (BMI - Free Report) and Enfusion (ENFN - Free Report) , each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Dropbox’s 2023 earnings has increased 1.8% in the past 60 days to $1.71 per share. The long-term earnings growth rate is anticipated to be 11.5%.
Dropbox’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 5.4%. Shares of DBX have increased 29% in the past year.
The Zacks Consensus Estimate for Badger Meter’s 2023 earnings has increased 4.7% in the past 60 days to $2.69 per share.
Badger Meter’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 5.3%. Shares of BMI have increased 122.4% in the past year.
The Zacks Consensus Estimate for Enfusion’s 2023 earnings has increased 5.6% in the past 60 days to 19 cents per share.
Enfusion’s earnings beat the Zacks Consensus Estimate in two of the last four quarters, the average surprise being 18.8%. Shares of the company have increased 3.2% in the past year.