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AT&T Beats Q1 Earnings Estimates on Wireless and Fiber Demand
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Key Takeaways
T beats Q1 estimates: EPS 57 cents ( 11.8% Y/Y) and revenue $31.51B ( 2.9% Y/Y).
Advanced home Internet revenue jumped 27.3% to $2.80B; 584k net adds split between fiber and fixed wireless.
FCF was $2.51B as capex rose 14%; shareholder returns were $4.3B, and 2026-2028 targets were reaffirmed.
AT&T Inc. (T - Free Report) reported solid first-quarter fiscal 2026 results, with earnings and revenues beating the Zacks Consensus Estimate. Earnings were 57 cents per share, up 11.8% from the year-ago quarter and ahead of the consensus mark of 55 cents by 3.6%.
Revenues rose 2.9% year over year to $31.51 billion, topping the consensus estimate of $31.19 billion by 1.0%. Momentum in advanced connectivity, supported by robust customer net additions, buoyed the quarterly results. Adjusted operating income increased to $6.89 billion from $6.35 billion for respective adjusted operating income margins of 21.9% and 20.7%. Adjusted EBITDA improved to $11.79 billion from $11.53 billion. Free cash flow came in at $2.5 billion, which was at the high end of the guided range of $2.0 billion-$2.5 billion.
AT&T’s first-quarter narrative was shaped by its newer segment reporting structure, which centers on Advanced Connectivity, Legacy and Latin America. The Advanced Connectivity segment delivered operating revenues of $28.47 billion, up 4.7% year over year, as service revenues increased 3.6% to $22.86 billion and equipment revenues improved 9.3% to $5.61 billion.
Within the segment, advanced home Internet stood out. Advanced home Internet revenues jumped 27.3% year over year to $2.80 billion. Wireless service revenues were $16.94 billion, up 1.7%, while business fiber and advanced connectivity revenues rose 7.2% to $1.88 billion.
Operational metrics reinforced the demand backdrop. AT&T reported 584,000 Internet net additions, with 292,000 fiber net additions and 292,000 fixed wireless net additions. Postpaid phone net additions were 294,000, while postpaid phone churn was 0.89% in the quarter.
AT&T Balances Legacy Runoff With Mexico Growth
The Legacy segment remained a drag as customers continue to migrate away from copper-based voice and data services. Legacy segment operating revenues fell 25.3% year over year to $1.77 billion. Operating income declined 39.9% to $612 million, and the operating margin narrowed to 34.6% from 43.0% a year ago.
AT&T also highlighted progress in its legacy transition, noting that 85% of wire centers have been approved to stop offering legacy services, and more than 30% of wire centers have been approved to discontinue providing legacy services by late 2026.
Latin America provided growth but with pressure on profitability. The Latin America segment (Mexico wireless) generated operating revenues of $1.17 billion, up 20.8% year over year. Wireless service revenues increased 22.4% to $753 million and equipment revenues rose 18.0% to $420 million. However, operating income declined to $20 million from $43 million, reflecting higher expenses.
T Highlights Cash Returns Despite Heavier Investment
Cash generation remained a key investor focus given AT&T’s capital intensity. Cash from operating activities from continuing operations was $7.6 billion in the reported quarter compared with $9 billion in the year-ago quarter. Free cash flow was $2.51 billion in the first quarter of 2026, down from $3.15 billion in the year-ago period. Dividends paid were $2.00 billion, leaving free cash flow after dividends of $509 million.
Capital spending and deal activity were meaningful during the quarter. Capital expenditures were $4.88 billion, up 14.0% year over year, and cash paid for capital investment (including vendor financing payments) totaled $5.09 billion. AT&T also reported $2.67 billion of acquisitions, net of cash acquired, including $1.66 billion of business acquisitions and $1.02 billion of spectrum acquisitions.
Balance sheet leverage moved higher sequentially. AT&T ended the quarter with $11.96 billion of cash and cash equivalents and total debt of $138.41 billion. Net debt was $126.44 billion, translating to a net debt-to-adjusted EBITDA ratio of 2.71x. Shareholder returns in the quarter totaled $4.3 billion, supported by $2.3 billion of share repurchases and $2.0 billion of dividends.
AT&T Reaffirms Multi-Year Targets for 2026-2028
Looking ahead, AT&T reiterated its longer-term framework for 2026 through 2028 centered on steady service revenue growth and expanding advanced connectivity. The company continues to target service revenue growth in the low single-digit range annually, with Advanced Connectivity expected to grow in the mid-single-digit range annually, including expected growth of more than 5% in 2026.
Profit and cash goals remain tied to that mix shift. AT&T is targeting adjusted EBITDA growth of 3% to 4% in 2026, improving to more than 5% in 2028, while maintaining capital investment in the $23 billion-$24 billion annual range. Free cash flow is targeted at more than $18 billion in 2026, in excess of $19 billion in 2027, and in excess of $21 billion in 2028, alongside an adjusted earnings outlook of $2.25 to $2.35 per share for 2026.
Arista Networks Inc. (ANET - Free Report) is scheduled to release first-quarter 2026 earnings on May 5. The Zacks Consensus Estimate for earnings is pegged at 81 cents per share, suggesting a growth of 24.6% from the year-ago reported figure.
Arista has a long-term earnings growth expectation of 17.9%. Arista delivered an average earnings surprise of 9% in the last four reported quarters.
Akamai Technologies, Inc. (AKAM - Free Report) is slated to release first-quarter 2026 earnings on May 7. The Zacks Consensus Estimate for earnings is pegged at $1.61 per share, indicating a 5.3% decline from the year-ago reported figure.
Akamai has a long-term earnings growth expectation of 7%. Akamai delivered an average earnings surprise of 9.4% in the last four reported quarters.
Pinterest, Inc. (PINS - Free Report) is set to release first-quarter 2026 earnings on May 4. The Zacks Consensus Estimate for earnings is pegged at 22 cents per share, implying a fall of 4.3% from the year-ago reported figure.
Pinterest has a long-term earnings growth expectation of 24.5%. Pinterest delivered an average negative earnings surprise of 3.6% in the last four reported quarters.
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AT&T Beats Q1 Earnings Estimates on Wireless and Fiber Demand
Key Takeaways
AT&T Inc. (T - Free Report) reported solid first-quarter fiscal 2026 results, with earnings and revenues beating the Zacks Consensus Estimate. Earnings were 57 cents per share, up 11.8% from the year-ago quarter and ahead of the consensus mark of 55 cents by 3.6%.
Revenues rose 2.9% year over year to $31.51 billion, topping the consensus estimate of $31.19 billion by 1.0%. Momentum in advanced connectivity, supported by robust customer net additions, buoyed the quarterly results. Adjusted operating income increased to $6.89 billion from $6.35 billion for respective adjusted operating income margins of 21.9% and 20.7%. Adjusted EBITDA improved to $11.79 billion from $11.53 billion. Free cash flow came in at $2.5 billion, which was at the high end of the guided range of $2.0 billion-$2.5 billion.
AT&T Inc. Price, Consensus and EPS Surprise
AT&T Inc. price-consensus-eps-surprise-chart | AT&T Inc. Quote
T Leans on Advanced Connectivity for Growth
AT&T’s first-quarter narrative was shaped by its newer segment reporting structure, which centers on Advanced Connectivity, Legacy and Latin America. The Advanced Connectivity segment delivered operating revenues of $28.47 billion, up 4.7% year over year, as service revenues increased 3.6% to $22.86 billion and equipment revenues improved 9.3% to $5.61 billion.
Within the segment, advanced home Internet stood out. Advanced home Internet revenues jumped 27.3% year over year to $2.80 billion. Wireless service revenues were $16.94 billion, up 1.7%, while business fiber and advanced connectivity revenues rose 7.2% to $1.88 billion.
Operational metrics reinforced the demand backdrop. AT&T reported 584,000 Internet net additions, with 292,000 fiber net additions and 292,000 fixed wireless net additions. Postpaid phone net additions were 294,000, while postpaid phone churn was 0.89% in the quarter.
AT&T Balances Legacy Runoff With Mexico Growth
The Legacy segment remained a drag as customers continue to migrate away from copper-based voice and data services. Legacy segment operating revenues fell 25.3% year over year to $1.77 billion. Operating income declined 39.9% to $612 million, and the operating margin narrowed to 34.6% from 43.0% a year ago.
AT&T also highlighted progress in its legacy transition, noting that 85% of wire centers have been approved to stop offering legacy services, and more than 30% of wire centers have been approved to discontinue providing legacy services by late 2026.
Latin America provided growth but with pressure on profitability. The Latin America segment (Mexico wireless) generated operating revenues of $1.17 billion, up 20.8% year over year. Wireless service revenues increased 22.4% to $753 million and equipment revenues rose 18.0% to $420 million. However, operating income declined to $20 million from $43 million, reflecting higher expenses.
T Highlights Cash Returns Despite Heavier Investment
Cash generation remained a key investor focus given AT&T’s capital intensity. Cash from operating activities from continuing operations was $7.6 billion in the reported quarter compared with $9 billion in the year-ago quarter. Free cash flow was $2.51 billion in the first quarter of 2026, down from $3.15 billion in the year-ago period. Dividends paid were $2.00 billion, leaving free cash flow after dividends of $509 million.
Capital spending and deal activity were meaningful during the quarter. Capital expenditures were $4.88 billion, up 14.0% year over year, and cash paid for capital investment (including vendor financing payments) totaled $5.09 billion. AT&T also reported $2.67 billion of acquisitions, net of cash acquired, including $1.66 billion of business acquisitions and $1.02 billion of spectrum acquisitions.
Balance sheet leverage moved higher sequentially. AT&T ended the quarter with $11.96 billion of cash and cash equivalents and total debt of $138.41 billion. Net debt was $126.44 billion, translating to a net debt-to-adjusted EBITDA ratio of 2.71x. Shareholder returns in the quarter totaled $4.3 billion, supported by $2.3 billion of share repurchases and $2.0 billion of dividends.
AT&T Reaffirms Multi-Year Targets for 2026-2028
Looking ahead, AT&T reiterated its longer-term framework for 2026 through 2028 centered on steady service revenue growth and expanding advanced connectivity. The company continues to target service revenue growth in the low single-digit range annually, with Advanced Connectivity expected to grow in the mid-single-digit range annually, including expected growth of more than 5% in 2026.
Profit and cash goals remain tied to that mix shift. AT&T is targeting adjusted EBITDA growth of 3% to 4% in 2026, improving to more than 5% in 2028, while maintaining capital investment in the $23 billion-$24 billion annual range. Free cash flow is targeted at more than $18 billion in 2026, in excess of $19 billion in 2027, and in excess of $21 billion in 2028, alongside an adjusted earnings outlook of $2.25 to $2.35 per share for 2026.
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 first-quarter 2026 earnings on May 5. The Zacks Consensus Estimate for earnings is pegged at 81 cents per share, suggesting a growth of 24.6% from the year-ago reported figure.
Arista has a long-term earnings growth expectation of 17.9%. Arista delivered an average earnings surprise of 9% in the last four reported quarters.
Akamai Technologies, Inc. (AKAM - Free Report) is slated to release first-quarter 2026 earnings on May 7. The Zacks Consensus Estimate for earnings is pegged at $1.61 per share, indicating a 5.3% decline from the year-ago reported figure.
Akamai has a long-term earnings growth expectation of 7%. Akamai delivered an average earnings surprise of 9.4% in the last four reported quarters.
Pinterest, Inc. (PINS - Free Report) is set to release first-quarter 2026 earnings on May 4. The Zacks Consensus Estimate for earnings is pegged at 22 cents per share, implying a fall of 4.3% from the year-ago reported figure.
Pinterest has a long-term earnings growth expectation of 24.5%. Pinterest delivered an average negative earnings surprise of 3.6% in the last four reported quarters.