We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
U.S. Cellular (USM) Q1 Earnings Lag Estimates, Revenues Down
Read MoreHide Full Article
United States Cellular Corporation (USM - Free Report) reported soft first-quarter 2023 results, with the top and the bottom line missing the respective Zacks Consensus Estimate. Despite efforts toward cost optimization to improve productivity and investment in network advancement, the Chicago-based leading full-service wireless carrier reported a top-line contraction year over year. The downside was caused by net reductions in postpaid retail and prepaid connections. However, Improvement in tower revenues and fixed wireless partially cushioned the top line.
Net Income
U.S. Cellular reported a net income of $13 million or an income of 15 cents compared with $49 million or 57 cents per share in the year-ago quarter. The bottom line missed the Zacks Consensus Estimate by 3 cents. Top-line contraction and higher operating expenses hurt the bottom line during the quarter.
United States Cellular Corporation Price, Consensus and EPS Surprise
Quarterly total operating revenues stood at $986 million, down from $1,010 million from the prior-year quarter’s levels. Declining Service revenues and a reduction in net subscriber count negatively affected the company’s first-quarter net sales. The top line fell short of the Zacks Consensus Estimate by $40 million.
Service revenues declined to $767 million from $787 million in the prior-year quarter. Revenues from Equipment sales declined by 2% year over year to $219 million. The top line was dented by a decline in postpaid retail connections. Smartphone connections fell to 86,000 from 89,000 in the prior-year quarter. Loss of net prepaid connections were 23,000 in the quarter. In postpaid connection, fixed wireless subscribers improved to 87,000 from 53,000 reported in the prior-year quarter.
Total cell sites in service improved to 6,950 from 6,899 in the year-ago quarter. Tower revenues increased to $24.7 million from $22.3 million reported in the prior-year quarter. This partially supported the top line.
As of Mar 31, 2023, postpaid average revenue per user (ARPU) increased to $50.66 from $49.71. Postpaid average revenue per account (ARPA) increased to $130.77 from $129.93 in the previous-year period. The post-paid churn rate reduced to 1.27% from 1.3% and prepaid ARPU declined to $33.19 from $34.59 in the year-ago quarter. The prepaid churn rate was down to 4.63% compared with the prior-year quarter’s levels of 4.84%
Other Quarterly Details
Total operating expenses increased 2% to $960 million. Operating income declined to $26 million from $71 million in the year-ago quarter. Lower net sales and higher general and administrative expenditures led to a 63% decline year over year.
Adjusted EBITDA came in at $252 million compared with $289 million in the prior-year quarter. Adjusted OIBDA (non-GAAP) was $206 million compared with $137 million in the prior-year quarter.
Cash Flow & Liquidity
In the first quarter of 2023, U.S. Cellular generated $41 million of cash in operating activities compared with $311 million cash generated in the prior-year quarter. The company reported a negative free cash flow of $162 million against a positive cash flow of $159 million in the prior-year quarter. As of Mar 31, 2023, the firm had $154 million in cash and cash equivalents and $3,297 million in long-term debt.
Outlook
For 2023, U.S. Cellular estimates service revenues in the range of $3,050-$3150 million. The company expects adjusted EBITDA in the band of $875-$1025 million and adjusted OBIDA within the range of $725-$875 million. Management expects capital expenditures in the band of $600-700 million.
Zacks Rank & Stocks to Consider
U.S Cellular currently carries a Zacks Rank #5 (Strong Sell).
Bandwidth Inc. (BAND - Free Report) , carrying a Zacks Rank #2 (Buy), delivered an earnings surprise of 341.97%, on average, in the trailing four quarters. It operates as a Communications Platform-as-a-Service (CPaaS) provider, offering avant-garde software application programming interfaces for voice and messaging services. It is the only application programming interface (API) platform provider that owns a Tier 1 network with enhanced network capacity, primarily catering to business enterprises.
With 8,800 on-net rate centers, it delivers unparalleled network quality and proactively monitors network operations 24/7 to resolve quality issues, capitalizing on an efficient cost structure for seamless connectivity and speed-to-market.
Meta Platforms Inc. (META - Free Report) , sporting a Zacks Rank #1, delivered an earnings surprise of 15.46%, on average, in the trailing four quarters. Meta Platforms is the world’s largest social media platform. The company’s portfolio offering evolved from a single Facebook app to multiple apps like photo and video sharing app Instagram and WhatsApp messaging app owing to acquisitions.
Meta is considered to have pioneered the concept of social networking, which is why it enjoys a first mover’s advantage in this market. As developed regions mature, Meta undertakes measures to drive penetration in emerging markets of South East Asia, Latin America and Africa.
Workday Inc. (WDAY - Free Report) , carrying a Zacks Rank #2, delivered an earnings surprise of 7.67%, on average, in the trailing four quarters. In the last reported quarter, it pulled off an earnings surprise of 11.24%.
Workday is a provider of enterprise-level software solutions for financial management and human resource domains. The company’s cloud-based platform combines finance and HR in a single system that makes it easier for organizations to provide analytical insights and decision support.
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
U.S. Cellular (USM) Q1 Earnings Lag Estimates, Revenues Down
United States Cellular Corporation (USM - Free Report) reported soft first-quarter 2023 results, with the top and the bottom line missing the respective Zacks Consensus Estimate. Despite efforts toward cost optimization to improve productivity and investment in network advancement, the Chicago-based leading full-service wireless carrier reported a top-line contraction year over year. The downside was caused by net reductions in postpaid retail and prepaid connections. However, Improvement in tower revenues and fixed wireless partially cushioned the top line.
Net Income
U.S. Cellular reported a net income of $13 million or an income of 15 cents compared with $49 million or 57 cents per share in the year-ago quarter. The bottom line missed the Zacks Consensus Estimate by 3 cents. Top-line contraction and higher operating expenses hurt the bottom line during the quarter.
United States Cellular Corporation Price, Consensus and EPS Surprise
United States Cellular Corporation price-consensus-eps-surprise-chart | United States Cellular Corporation Quote
Revenues
Quarterly total operating revenues stood at $986 million, down from $1,010 million from the prior-year quarter’s levels. Declining Service revenues and a reduction in net subscriber count negatively affected the company’s first-quarter net sales. The top line fell short of the Zacks Consensus Estimate by $40 million.
Service revenues declined to $767 million from $787 million in the prior-year quarter. Revenues from Equipment sales declined by 2% year over year to $219 million. The top line was dented by a decline in postpaid retail connections. Smartphone connections fell to 86,000 from 89,000 in the prior-year quarter. Loss of net prepaid connections were 23,000 in the quarter. In postpaid connection, fixed wireless subscribers improved to 87,000 from 53,000 reported in the prior-year quarter.
Total cell sites in service improved to 6,950 from 6,899 in the year-ago quarter. Tower revenues increased to $24.7 million from $22.3 million reported in the prior-year quarter. This partially supported the top line.
As of Mar 31, 2023, postpaid average revenue per user (ARPU) increased to $50.66 from $49.71. Postpaid average revenue per account (ARPA) increased to $130.77 from $129.93 in the previous-year period. The post-paid churn rate reduced to 1.27% from 1.3% and prepaid ARPU declined to $33.19 from $34.59 in the year-ago quarter. The prepaid churn rate was down to 4.63% compared with the prior-year quarter’s levels of 4.84%
Other Quarterly Details
Total operating expenses increased 2% to $960 million. Operating income declined to $26 million from $71 million in the year-ago quarter. Lower net sales and higher general and administrative expenditures led to a 63% decline year over year.
Adjusted EBITDA came in at $252 million compared with $289 million in the prior-year quarter. Adjusted OIBDA (non-GAAP) was $206 million compared with $137 million in the prior-year quarter.
Cash Flow & Liquidity
In the first quarter of 2023, U.S. Cellular generated $41 million of cash in operating activities compared with $311 million cash generated in the prior-year quarter. The company reported a negative free cash flow of $162 million against a positive cash flow of $159 million in the prior-year quarter. As of Mar 31, 2023, the firm had $154 million in cash and cash equivalents and $3,297 million in long-term debt.
Outlook
For 2023, U.S. Cellular estimates service revenues in the range of $3,050-$3150 million. The company expects adjusted EBITDA in the band of $875-$1025 million and adjusted OBIDA within the range of $725-$875 million. Management expects capital expenditures in the band of $600-700 million.
Zacks Rank & Stocks to Consider
U.S Cellular currently carries a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Bandwidth Inc. (BAND - Free Report) , carrying a Zacks Rank #2 (Buy), delivered an earnings surprise of 341.97%, on average, in the trailing four quarters. It operates as a Communications Platform-as-a-Service (CPaaS) provider, offering avant-garde software application programming interfaces for voice and messaging services. It is the only application programming interface (API) platform provider that owns a Tier 1 network with enhanced network capacity, primarily catering to business enterprises.
With 8,800 on-net rate centers, it delivers unparalleled network quality and proactively monitors network operations 24/7 to resolve quality issues, capitalizing on an efficient cost structure for seamless connectivity and speed-to-market.
Meta Platforms Inc. (META - Free Report) , sporting a Zacks Rank #1, delivered an earnings surprise of 15.46%, on average, in the trailing four quarters. Meta Platforms is the world’s largest social media platform. The company’s portfolio offering evolved from a single Facebook app to multiple apps like photo and video sharing app Instagram and WhatsApp messaging app owing to acquisitions.
Meta is considered to have pioneered the concept of social networking, which is why it enjoys a first mover’s advantage in this market. As developed regions mature, Meta undertakes measures to drive penetration in emerging markets of South East Asia, Latin America and Africa.
Workday Inc. (WDAY - Free Report) , carrying a Zacks Rank #2, delivered an earnings surprise of 7.67%, on average, in the trailing four quarters. In the last reported quarter, it pulled off an earnings surprise of 11.24%.
Workday is a provider of enterprise-level software solutions for financial management and human resource domains. The company’s cloud-based platform combines finance and HR in a single system that makes it easier for organizations to provide analytical insights and decision support.