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T's Q3 Earnings Beat, Revenues Miss Despite Wireless Traction
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AT&T Inc. (T - Free Report) reported relatively healthy third-quarter 2024 results with adjusted earnings beating the Zacks Consensus Estimate but the top line missing the same.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
The company witnessed solid wireless traction and customer additions, which were partially offset by lower demand for legacy voice and data services. AT&T recorded strong subscriber growth backed by a resilient business model and robust cash flow position, driven by a diligent execution of operational plans. AT&T expects to continue investing in key areas of 5G and fiber and adjust its business according to the evolving market scenario to fuel long-term growth.
Net Income
On a GAAP basis, AT&T reported a loss of $226 million or a loss of 3 cents per share against net income of $3.4 billion or 48 cents per share in the year-ago quarter. The decline was primarily attributable to a $4.4 billion non-cash goodwill impairment charge during the quarter.
Excluding non-recurring items, adjusted earnings from continuing operations were 60 cents per share compared with 64 cents in the year-ago quarter. Adjusted earnings for the third quarter beat the Zacks Consensus Estimate by a penny.
Quarterly GAAP operating revenues decreased marginally by 0.5% year over year to $30.21 billion, largely due to declining Mobility equipment sales and lower Business Wireline revenues, partially offset by higher Mobility Service and Consumer Wireline revenues. The top line fell short of the consensus mark of $30.55 billion.
Adjusted operating income remained flat at $6.5 billion for respective adjusted operating income margins of 21.6% and 21.5%. Adjusted EBITDA improved to $11.6 billion from $11.2 billion.
AT&T witnessed solid subscriber momentum with 429,000 post-paid net additions. This included 403,000 postpaid wireless phone additions. Postpaid churn was 0.78%, while postpaid phone-only average revenue per user (ARPU) increased 1.9% year over year to $57.07 due to improved international roaming, pricing actions and a transition to higher-priced unlimited plans.
Segmental Performance
Communications: Total segment operating revenues were $29.07 billion, down from $29.24 billion, as improvement in the Mobility business (up 1.7% to $21.05 billion) and Consumer Wireline (up 2.6% to $3.42 billion) was more than offset by a decline in Business Wireline (down 11.8% to $4.61 billion). The segment revenues missed our estimates of $29.24 billion.
Service revenues from the Mobility unit improved 4% to $16.54 billion, driven by solid subscriber and postpaid ARPU gains, while equipment revenues decreased 5.7% year over year to $4.51 billion due to lower sales volume. Revenues from the Consumer Wireline business were up due to a gain in fiber broadband. AT&T recorded net fiber additions of 226,000, while Internet Air added 135,000 subscribers during the quarter.
Revenues from Business Wireline were down due to lower demand for legacy voice and data services as customers shifted to more advanced IP-based offerings. Total segment operating income declined 1.6% to $7.2 billion, with operating margins of 24.6% (down 30 bps). Adjusted EBITDA was $11.97 billion compared with $11.62 billion in the year-ago quarter.
Latin America: Total operating revenues were $1.02 billion, up 3% year over year, due to growth in equipment revenues and higher sales. Adjusted EBITDA improved to $168 million from $155 million in the year-ago quarter for respective margins of 16.4% and 15.6%.
Cash Flow & Liquidity
For the first nine months of 2024, AT&T generated $26.87 billion of cash from operations compared with $26.94 billion in the prior-year period. Free cash flow for the quarter was $5.09 billion compared with $5.18 billion in the year-ago quarter. As of Sept. 30, 2024, AT&T had $2.59 billion of cash and cash equivalents with long-term debt of $126.37 billion. Net debt to adjusted EBITDA was about 2.82X.
Guidance
While optimizing operations, AT&T is aiming to increase efficiencies to lower operating costs while focusing on 5G and fiber-based connectivity, along with an expanded reach of software-based entertainment platforms. For fiscal 2024, AT&T has reiterated its previous guidance. Wireless service revenues are likely to improve in the vicinity of 3%, while broadband revenues are anticipated to be up in excess of 7%.
Adjusted earnings are projected to be within $2.15 and $2.25 per share. Free cash flow in 2024 is expected to be within $17-$18 billion due to cost savings. The company is also aiming to reduce its debt burden by monetizing non-core assets. AT&T firmly remains on track to pass more than 30 million fiber locations by the end of 2025.
Arista Networks Inc. (ANET - Free Report) is scheduled to release third-quarter 2024 earnings on Nov. 7. The Zacks Consensus Estimate for earnings is pegged at $2.08 per share, suggesting a growth of 13.7% from the year-ago reported figure.
Arista has a long-term earnings growth expectation of 17.2%. ANET delivered an average earnings surprise of 15% in the last four reported quarters.
Akamai Technologies, Inc. (AKAM - Free Report) is slated to release third-quarter 2024 earnings on Nov. 7. The Zacks Consensus Estimate for earnings is pegged at $1.59 per share, indicating a decline of 2.4% from the year-ago reported figure.
Akamai has a long-term earnings growth expectation of 7.1%. AKAM delivered an average earnings surprise of 4.7% in the last four reported quarters.
Pinterest, Inc. (PINS - Free Report) is set to release third-quarter 2024 earnings on Nov. 7. The Zacks Consensus Estimate for earnings is pegged at 34 cents per share, implying a growth of 21.4% from the year-ago reported figure.
Pinterest has a long-term earnings growth expectation of 33%. PINS delivered an average earnings surprise of 20.9% in the last four reported quarters.
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T's Q3 Earnings Beat, Revenues Miss Despite Wireless Traction
AT&T Inc. (T - Free Report) reported relatively healthy third-quarter 2024 results with adjusted earnings beating the Zacks Consensus Estimate but the top line missing the same.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
The company witnessed solid wireless traction and customer additions, which were partially offset by lower demand for legacy voice and data services. AT&T recorded strong subscriber growth backed by a resilient business model and robust cash flow position, driven by a diligent execution of operational plans. AT&T expects to continue investing in key areas of 5G and fiber and adjust its business according to the evolving market scenario to fuel long-term growth.
Net Income
On a GAAP basis, AT&T reported a loss of $226 million or a loss of 3 cents per share against net income of $3.4 billion or 48 cents per share in the year-ago quarter. The decline was primarily attributable to a $4.4 billion non-cash goodwill impairment charge during the quarter.
Excluding non-recurring items, adjusted earnings from continuing operations were 60 cents per share compared with 64 cents in the year-ago quarter. Adjusted earnings for the third quarter beat the Zacks Consensus Estimate by a penny.
AT&T Inc. Price, Consensus and EPS Surprise
AT&T Inc. price-consensus-eps-surprise-chart | AT&T Inc. Quote
Quarter Details
Quarterly GAAP operating revenues decreased marginally by 0.5% year over year to $30.21 billion, largely due to declining Mobility equipment sales and lower Business Wireline revenues, partially offset by higher Mobility Service and Consumer Wireline revenues. The top line fell short of the consensus mark of $30.55 billion.
Adjusted operating income remained flat at $6.5 billion for respective adjusted operating income margins of 21.6% and 21.5%. Adjusted EBITDA improved to $11.6 billion from $11.2 billion.
AT&T witnessed solid subscriber momentum with 429,000 post-paid net additions. This included 403,000 postpaid wireless phone additions. Postpaid churn was 0.78%, while postpaid phone-only average revenue per user (ARPU) increased 1.9% year over year to $57.07 due to improved international roaming, pricing actions and a transition to higher-priced unlimited plans.
Segmental Performance
Communications: Total segment operating revenues were $29.07 billion, down from $29.24 billion, as improvement in the Mobility business (up 1.7% to $21.05 billion) and Consumer Wireline (up 2.6% to $3.42 billion) was more than offset by a decline in Business Wireline (down 11.8% to $4.61 billion). The segment revenues missed our estimates of $29.24 billion.
Service revenues from the Mobility unit improved 4% to $16.54 billion, driven by solid subscriber and postpaid ARPU gains, while equipment revenues decreased 5.7% year over year to $4.51 billion due to lower sales volume. Revenues from the Consumer Wireline business were up due to a gain in fiber broadband. AT&T recorded net fiber additions of 226,000, while Internet Air added 135,000 subscribers during the quarter.
Revenues from Business Wireline were down due to lower demand for legacy voice and data services as customers shifted to more advanced IP-based offerings. Total segment operating income declined 1.6% to $7.2 billion, with operating margins of 24.6% (down 30 bps). Adjusted EBITDA was $11.97 billion compared with $11.62 billion in the year-ago quarter.
Latin America: Total operating revenues were $1.02 billion, up 3% year over year, due to growth in equipment revenues and higher sales. Adjusted EBITDA improved to $168 million from $155 million in the year-ago quarter for respective margins of 16.4% and 15.6%.
Cash Flow & Liquidity
For the first nine months of 2024, AT&T generated $26.87 billion of cash from operations compared with $26.94 billion in the prior-year period. Free cash flow for the quarter was $5.09 billion compared with $5.18 billion in the year-ago quarter. As of Sept. 30, 2024, AT&T had $2.59 billion of cash and cash equivalents with long-term debt of $126.37 billion. Net debt to adjusted EBITDA was about 2.82X.
Guidance
While optimizing operations, AT&T is aiming to increase efficiencies to lower operating costs while focusing on 5G and fiber-based connectivity, along with an expanded reach of software-based entertainment platforms. For fiscal 2024, AT&T has reiterated its previous guidance. Wireless service revenues are likely to improve in the vicinity of 3%, while broadband revenues are anticipated to be up in excess of 7%.
Adjusted earnings are projected to be within $2.15 and $2.25 per share. Free cash flow in 2024 is expected to be within $17-$18 billion due to cost savings. The company is also aiming to reduce its debt burden by monetizing non-core assets. AT&T firmly remains on track to pass more than 30 million fiber locations by the end of 2025.
Zacks Rank
AT&T currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Upcoming Releases
Arista Networks Inc. (ANET - Free Report) is scheduled to release third-quarter 2024 earnings on Nov. 7. The Zacks Consensus Estimate for earnings is pegged at $2.08 per share, suggesting a growth of 13.7% from the year-ago reported figure.
Arista has a long-term earnings growth expectation of 17.2%. ANET delivered an average earnings surprise of 15% in the last four reported quarters.
Akamai Technologies, Inc. (AKAM - Free Report) is slated to release third-quarter 2024 earnings on Nov. 7. The Zacks Consensus Estimate for earnings is pegged at $1.59 per share, indicating a decline of 2.4% from the year-ago reported figure.
Akamai has a long-term earnings growth expectation of 7.1%. AKAM delivered an average earnings surprise of 4.7% in the last four reported quarters.
Pinterest, Inc. (PINS - Free Report) is set to release third-quarter 2024 earnings on Nov. 7. The Zacks Consensus Estimate for earnings is pegged at 34 cents per share, implying a growth of 21.4% from the year-ago reported figure.
Pinterest has a long-term earnings growth expectation of 33%. PINS delivered an average earnings surprise of 20.9% in the last four reported quarters.