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U.S. Cellular's (USM) Q1 Earnings Miss on Lower Revenues
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United States Cellular Corporation (USM - Free Report) reported soft first-quarter 2024 results, with both the bottom line and top line falling short of the respective Zacks Consensus Estimate. The company reported a revenue decline year over year, owing to a decrease in postpaid and prepaid retail connections. However, increasing customer growth in fixed wireless businesses partially supported the top line. Cost discipline initiatives enhanced operating margin. Growth in postpaid average revenues per user and lower postpaid churn rate are tailwinds.
Net Income
Net income in the quarter was $18 million or 20 cents per share compared to $13 million or 15 cents per share in the year-ago quarter. The bottom line missed the Zacks Consensus Estimate of 26 cents. The improvement was primarily attributed to lower operating expenses year over year.
United States Cellular Corporation Price, Consensus and EPS Surprise
The company generated $950 million in operating revenues compared with $986 million in the prior-year quarter. Net sales were negatively affected by a decline in postpaid and prepaid retail connections. The top line missed the Zacks Consensus Estimate of $953 million.
Service revenues decreased to $754 million from $767 million in the prior-year quarter. The figure surpassed the Zacks Consensus Estimate of $745 million. Equipment sales registered $196 million in revenues compared with $219 million in the prior-year quarter.
Fixed wireless customers grew 42% year over year to 124,000. Tower business witnessed healthy momentum during the quarter and registered revenues of $25.4 million. Management’s effort to diversify its third-party customer base is a positive factor.
Handset connections were 63,000 compared to 93,000 in the year-ago quarter. Handset churn rate was 1.03% compared to 1.06% a year ago. Connected devices were 43,000, down from 44,000 a year ago, while the churn rate was 2.52%, down from 2.78% in the year-ago quarter. Total postpaid connections declined to 4,051,000 from 4,223,000 in the year-earlier quarter. Total prepaid connections stood at 436,000, down from 470,000 in the year-ago quarter.
Postpaid average revenues per account improved to $132 from $130.77 in the year-ago quarter, with postpaid churn rates of 1.22% and 1.27%, respectively. Postpaid ARPU rose to $51.96 from $50.66 a year ago. Prepaid ARPU was $32.25, down from $33.19 in the prior-year quarter. The prepaid churn rate decreased to 4.06% from 4.63% recorded in the year-ago quarter.
Quarterly Details
Adjusted EBITDA in the quarter stood at $272 million, up from $252 million in the prior-year quarter. The 7.9% year-over-year growth was induced by various cost optimization initiatives. Adjusted OIBDA rose to $228 million from $206 million in the year-earlier quarter.
Total operating expenses declined to $899 million, down 6% year over year. Consequently, operating income rose to $51 million from $26 million in the year-ago quarter.
Cash Flow & Liquidity
In the March quarter, U.S. Cellular generated $203 million of cash from operating activities compared with $41 million cash generated in the year-ago quarter. As of Mar 31, 2024, the company had $185 million in cash and cash equivalents and $3 billion in long-term debt.
Outlook
For 2024, U.S. Cellular estimated service revenues in the range of $2,950-$3,050 million. Adjusted OIBDA is estimated within the range of $750-$850 million. The company expects adjusted EBITDA guidance at about $920-$1,020 million and capital expenditure is projected in the band of $550-$650 million.
Zacks Rank & Other Stocks to Consider
U.S. Cellular currently sports a Zacks Rank #1 (Strong Buy).
Pinterest (PINS - Free Report) , carrying a Zacks Rank #2 (Buy) at present, delivered a trailing four-quarter average earnings surprise of 38.78%. In the last reported quarter, it delivered an earnings surprise of 42.86%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Pinterest is increasingly establishing a unique value proposition to advertisers that could provide a competitive advantage in the long haul. Through various innovations, it continues to dramatically improve the advertising platform, which appears to be one of the best ad platforms for consumer discretionary brands looking for ways to reach customers and stretch smaller ad budgets.
Arista Networks, Inc. (ANET - Free Report) , carrying a Zacks Rank #2 at present, is likely to benefit from strong momentum and diversification across its top verticals and product lines. The company has a software-driven, data-centric approach to help customers build their cloud architecture and enhance their cloud experience. Arista has a long-term earnings growth expectation of 17.5% and delivered an earnings surprise of 13.3%, on average, in the trailing four quarters.
It holds a leadership position in 100-gigabit Ethernet switching share in port for the high-speed datacenter segment. Arista is increasingly gaining market traction in 200 and 400-gig high-performance switching products and remains well-positioned for healthy growth in data-driven cloud networking business with proactive platforms and predictive operations.
Qualcomm Incorporated (QCOM - Free Report) , carrying a Zacks Rank #2 at present, delivered a trailing four-quarter average earnings surprise of 7.54%. In the last reported quarter, it delivered an earnings surprise of 6.09%.
Qualcomm Incorporated designs, manufactures and markets digital wireless telecom products and services based on the Code Division Multiple Access technology. The products include CDMA-based integrated circuits and system software for wireless voice and data communications, as well as global positioning system products.
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U.S. Cellular's (USM) Q1 Earnings Miss on Lower Revenues
United States Cellular Corporation (USM - Free Report) reported soft first-quarter 2024 results, with both the bottom line and top line falling short of the respective Zacks Consensus Estimate. The company reported a revenue decline year over year, owing to a decrease in postpaid and prepaid retail connections. However, increasing customer growth in fixed wireless businesses partially supported the top line. Cost discipline initiatives enhanced operating margin. Growth in postpaid average revenues per user and lower postpaid churn rate are tailwinds.
Net Income
Net income in the quarter was $18 million or 20 cents per share compared to $13 million or 15 cents per share in the year-ago quarter. The bottom line missed the Zacks Consensus Estimate of 26 cents. The improvement was primarily attributed to lower operating expenses year over year.
United States Cellular Corporation Price, Consensus and EPS Surprise
United States Cellular Corporation price-consensus-eps-surprise-chart | United States Cellular Corporation Quote
Revenues
The company generated $950 million in operating revenues compared with $986 million in the prior-year quarter. Net sales were negatively affected by a decline in postpaid and prepaid retail connections. The top line missed the Zacks Consensus Estimate of $953 million.
Service revenues decreased to $754 million from $767 million in the prior-year quarter. The figure surpassed the Zacks Consensus Estimate of $745 million. Equipment sales registered $196 million in revenues compared with $219 million in the prior-year quarter.
Fixed wireless customers grew 42% year over year to 124,000. Tower business witnessed healthy momentum during the quarter and registered revenues of $25.4 million. Management’s effort to diversify its third-party customer base is a positive factor.
Handset connections were 63,000 compared to 93,000 in the year-ago quarter. Handset churn rate was 1.03% compared to 1.06% a year ago. Connected devices were 43,000, down from 44,000 a year ago, while the churn rate was 2.52%, down from 2.78% in the year-ago quarter. Total postpaid connections declined to 4,051,000 from 4,223,000 in the year-earlier quarter. Total prepaid connections stood at 436,000, down from 470,000 in the year-ago quarter.
Postpaid average revenues per account improved to $132 from $130.77 in the year-ago quarter, with postpaid churn rates of 1.22% and 1.27%, respectively. Postpaid ARPU rose to $51.96 from $50.66 a year ago. Prepaid ARPU was $32.25, down from $33.19 in the prior-year quarter. The prepaid churn rate decreased to 4.06% from 4.63% recorded in the year-ago quarter.
Quarterly Details
Adjusted EBITDA in the quarter stood at $272 million, up from $252 million in the prior-year quarter. The 7.9% year-over-year growth was induced by various cost optimization initiatives. Adjusted OIBDA rose to $228 million from $206 million in the year-earlier quarter.
Total operating expenses declined to $899 million, down 6% year over year. Consequently, operating income rose to $51 million from $26 million in the year-ago quarter.
Cash Flow & Liquidity
In the March quarter, U.S. Cellular generated $203 million of cash from operating activities compared with $41 million cash generated in the year-ago quarter.
As of Mar 31, 2024, the company had $185 million in cash and cash equivalents and $3 billion in long-term debt.
Outlook
For 2024, U.S. Cellular estimated service revenues in the range of $2,950-$3,050 million. Adjusted OIBDA is estimated within the range of $750-$850 million. The company expects adjusted EBITDA guidance at about $920-$1,020 million and capital expenditure is projected in the band of $550-$650 million.
Zacks Rank & Other Stocks to Consider
U.S. Cellular currently sports a Zacks Rank #1 (Strong Buy).
Pinterest (PINS - Free Report) , carrying a Zacks Rank #2 (Buy) at present, delivered a trailing four-quarter average earnings surprise of 38.78%. In the last reported quarter, it delivered an earnings surprise of 42.86%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Pinterest is increasingly establishing a unique value proposition to advertisers that could provide a competitive advantage in the long haul. Through various innovations, it continues to dramatically improve the advertising platform, which appears to be one of the best ad platforms for consumer discretionary brands looking for ways to reach customers and stretch smaller ad budgets.
Arista Networks, Inc. (ANET - Free Report) , carrying a Zacks Rank #2 at present, is likely to benefit from strong momentum and diversification across its top verticals and product lines. The company has a software-driven, data-centric approach to help customers build their cloud architecture and enhance their cloud experience. Arista has a long-term earnings growth expectation of 17.5% and delivered an earnings surprise of 13.3%, on average, in the trailing four quarters.
It holds a leadership position in 100-gigabit Ethernet switching share in port for the high-speed datacenter segment. Arista is increasingly gaining market traction in 200 and 400-gig high-performance switching products and remains well-positioned for healthy growth in data-driven cloud networking business with proactive platforms and predictive operations.
Qualcomm Incorporated (QCOM - Free Report) , carrying a Zacks Rank #2 at present, delivered a trailing four-quarter average earnings surprise of 7.54%. In the last reported quarter, it delivered an earnings surprise of 6.09%.
Qualcomm Incorporated designs, manufactures and markets digital wireless telecom products and services based on the Code Division Multiple Access technology. The products include CDMA-based integrated circuits and system software for wireless voice and data communications, as well as global positioning system products.