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AD Q1 Earnings Miss Estimates Despite Site Rental Growth
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Key Takeaways
AD posted Q1 revenue growth of 93%, driven by tower leasing and T-Mobile agreements.
Array closed $1.018B in AT&T spectrum sales, recording a $156.6M book gain.
AD reaffirmed 2026 revenue guidance of $200M-$215M with EBITDA up to $215M.
Array Digital Infrastructure, Inc. (AD - Free Report) reported first-quarter 2026 earnings that missed the Zacks Consensus Estimate despite strong year-over-year revenue growth. Earnings per share from continuing operations came in at $2.08 against the consensus mark of $5.74, reflecting a negative surprise of 63.76%. Revenues of $52 million also missed the consensus estimate of $56 million by 7.23%.
The top line surged roughly 93% year over year, driven by robust growth in site rental revenues following the execution of the T-Mobile master license agreement. Tower tenancy growth and spectrum monetization remained key operational highlights during the quarter.
Array Digital Infrastructure Inc. Price, Consensus and EPS Surprise
Array generated total operating revenues of $52 million in the first quarter compared with $27 million in the prior-year period. Site rental revenues climbed 92% year over year to $51 million, while services revenues rose to nearly $1 million from $0.4 million a year ago.
The growth was primarily supported by the T-Mobile master license agreement, under which T-Mobile leases space on an additional minimum of 2,015 Array-owned towers. The company also benefited from interim tower leasing arrangements and extended license terms on existing colocations.
Array Continues Expanding Tower Operations
As of March 31, 2026, Array owned 4,452 towers across 19 states with 4,290 colocations and a tower tenancy rate of 0.96. The company continued focusing on growing colocations and amendments on existing towers to drive recurring rental income.
Management highlighted continued progress in optimizing tower operations and securing healthy application volumes despite the impact of DISH Wireless payment disputes. Excluding DISH, the company continued to report tenancy growth during the quarter.
AD Gains From Spectrum Monetization Efforts
Net income attributable to Array shareholders from continuing operations surged to $179.8 million from $4.7 million in the year-ago quarter. The improvement was largely driven by gains tied to spectrum license transactions.
During the quarter, Array closed the sale of certain 3.45 GHz and 700 MHz spectrum licenses to AT&T for proceeds of $1.018 billion and recorded a book gain of $156.6 million. The company also closed a separate 700 MHz spectrum transaction with T-Mobile on May 5, 2026, generating proceeds of $74.8 million.
Array also continues working toward completing additional pending spectrum transactions with Verizon and T-Mobile, totaling significant expected proceeds, subject to regulatory approvals and customary closing conditions.
Array's Expenses and Profitability Improve
Total operating expenses declined sharply to negative $108.8 million from positive $56.6 million in the year-ago quarter, primarily reflecting gains on spectrum license sales. Operating income improved to $160.8 million compared with an operating loss of $29.6 million in the prior-year period.
Adjusted EBITDA from continuing operations increased to $62.5 million from $21.2 million a year ago. Adjusted OIBDA improved to $17.8 million from a loss of $17.4 million in the prior-year quarter.
Cost of operations increased 33% year over year due to higher maintenance expenses, additional ground rent and property-related costs following the wireless business sale. However, selling, general and administrative expenses declined 56% because of lower shared overhead and employee-related costs.
AD's Cash Position Strengthens
Array ended the quarter with cash and cash equivalents of $253.6 million compared with $113.4 million at the end of 2025. The improvement was primarily driven by proceeds from spectrum license sales.
Net cash provided by operating activities related to continuing operations was $24.5 million due to net income of $180.0 million adjusted for non-cash items of $245.9 million, distributions received from unconsolidated entities of $18.4 million and changes in working capital items which increased net cash by $72.0 million.
Cash flows from investing activities totaled more than $1 billion during the quarter, mainly reflecting proceeds from the AT&T spectrum transaction. The company also paid a special dividend totaling $885.5 million during the period.
Array had no borrowings outstanding under its revolving credit facility at quarter-end apart from letters of credit. The company maintained compliance with all financial covenants under its debt agreements.
Array Reaffirms 2026 Guidance
Management reaffirmed its full-year 2026 outlook. Array continues to expect operating revenues between $200 million and $215 million. Adjusted EBITDA is projected in the range of $200-$215 million, while adjusted OIBDA is expected between $50 million and $65 million.
Capital expenditures for 2026 are still projected between $25 million and $35 million. Management remains focused on tower tenancy growth, spectrum monetization and improving operational efficiency as the company continues transforming into a standalone digital infrastructure business.
Keysight Technologies, Inc. (KEYS - Free Report) is scheduled to release second-quarter fiscal 2026 earnings on May 19. The Zacks Consensus Estimate for earnings is pegged at $2.33 per share, suggesting growth of 37.06% from the year-ago reported figure.
Keysight has a long-term earnings growth expectation of 17.45%. Keysight delivered an average earnings surprise of 4.58% in the last four reported quarters.
Workday, Inc. (WDAY - Free Report) is set to release first-quarter fiscal 2027 earnings on May 21. The Zacks Consensus Estimate for earnings is pegged at $2.49 per share, implying growth of 11.7% from the year-ago reported figure.
Workday has a long-term earnings growth expectation of 20.16%. Workday delivered an average earnings surprise of 8.53% in the last four reported quarters.
Analog Devices, Inc. (ADI - Free Report) is set to release second-quarter fiscal 2026 earnings on May 20. The Zacks Consensus Estimate for earnings is pegged at $2.88 per share, implying growth of 55.7% from the year-ago reported figure.
Analog Devices has a long-term earnings growth expectation of 21.89%. Analog Devices delivered an average earnings surprise of 6.11% in the last four reported quarters.
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AD Q1 Earnings Miss Estimates Despite Site Rental Growth
Key Takeaways
Array Digital Infrastructure, Inc. (AD - Free Report) reported first-quarter 2026 earnings that missed the Zacks Consensus Estimate despite strong year-over-year revenue growth. Earnings per share from continuing operations came in at $2.08 against the consensus mark of $5.74, reflecting a negative surprise of 63.76%. Revenues of $52 million also missed the consensus estimate of $56 million by 7.23%.
The top line surged roughly 93% year over year, driven by robust growth in site rental revenues following the execution of the T-Mobile master license agreement. Tower tenancy growth and spectrum monetization remained key operational highlights during the quarter.
Array Digital Infrastructure Inc. Price, Consensus and EPS Surprise
Array Digital Infrastructure Inc. price-consensus-eps-surprise-chart | Array Digital Infrastructure Inc. Quote
AD's Revenue Rises on Tower Leasing Strength
Array generated total operating revenues of $52 million in the first quarter compared with $27 million in the prior-year period. Site rental revenues climbed 92% year over year to $51 million, while services revenues rose to nearly $1 million from $0.4 million a year ago.
The growth was primarily supported by the T-Mobile master license agreement, under which T-Mobile leases space on an additional minimum of 2,015 Array-owned towers. The company also benefited from interim tower leasing arrangements and extended license terms on existing colocations.
Array Continues Expanding Tower Operations
As of March 31, 2026, Array owned 4,452 towers across 19 states with 4,290 colocations and a tower tenancy rate of 0.96. The company continued focusing on growing colocations and amendments on existing towers to drive recurring rental income.
Management highlighted continued progress in optimizing tower operations and securing healthy application volumes despite the impact of DISH Wireless payment disputes. Excluding DISH, the company continued to report tenancy growth during the quarter.
AD Gains From Spectrum Monetization Efforts
Net income attributable to Array shareholders from continuing operations surged to $179.8 million from $4.7 million in the year-ago quarter. The improvement was largely driven by gains tied to spectrum license transactions.
During the quarter, Array closed the sale of certain 3.45 GHz and 700 MHz spectrum licenses to AT&T for proceeds of $1.018 billion and recorded a book gain of $156.6 million. The company also closed a separate 700 MHz spectrum transaction with T-Mobile on May 5, 2026, generating proceeds of $74.8 million.
Array also continues working toward completing additional pending spectrum transactions with Verizon and T-Mobile, totaling significant expected proceeds, subject to regulatory approvals and customary closing conditions.
Array's Expenses and Profitability Improve
Total operating expenses declined sharply to negative $108.8 million from positive $56.6 million in the year-ago quarter, primarily reflecting gains on spectrum license sales. Operating income improved to $160.8 million compared with an operating loss of $29.6 million in the prior-year period.
Adjusted EBITDA from continuing operations increased to $62.5 million from $21.2 million a year ago. Adjusted OIBDA improved to $17.8 million from a loss of $17.4 million in the prior-year quarter.
Cost of operations increased 33% year over year due to higher maintenance expenses, additional ground rent and property-related costs following the wireless business sale. However, selling, general and administrative expenses declined 56% because of lower shared overhead and employee-related costs.
AD's Cash Position Strengthens
Array ended the quarter with cash and cash equivalents of $253.6 million compared with $113.4 million at the end of 2025. The improvement was primarily driven by proceeds from spectrum license sales.
Net cash provided by operating activities related to continuing operations was $24.5 million due to net income of $180.0 million adjusted for non-cash items of $245.9 million, distributions received from unconsolidated entities of $18.4 million and changes in working capital items which increased net cash by $72.0 million.
Cash flows from investing activities totaled more than $1 billion during the quarter, mainly reflecting proceeds from the AT&T spectrum transaction. The company also paid a special dividend totaling $885.5 million during the period.
Array had no borrowings outstanding under its revolving credit facility at quarter-end apart from letters of credit. The company maintained compliance with all financial covenants under its debt agreements.
Array Reaffirms 2026 Guidance
Management reaffirmed its full-year 2026 outlook. Array continues to expect operating revenues between $200 million and $215 million. Adjusted EBITDA is projected in the range of $200-$215 million, while adjusted OIBDA is expected between $50 million and $65 million.
Capital expenditures for 2026 are still projected between $25 million and $35 million. Management remains focused on tower tenancy growth, spectrum monetization and improving operational efficiency as the company continues transforming into a standalone digital infrastructure business.
Zacks Rank
AD carries a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Upcoming Releases
Keysight Technologies, Inc. (KEYS - Free Report) is scheduled to release second-quarter fiscal 2026 earnings on May 19. The Zacks Consensus Estimate for earnings is pegged at $2.33 per share, suggesting growth of 37.06% from the year-ago reported figure.
Keysight has a long-term earnings growth expectation of 17.45%. Keysight delivered an average earnings surprise of 4.58% in the last four reported quarters.
Workday, Inc. (WDAY - Free Report) is set to release first-quarter fiscal 2027 earnings on May 21. The Zacks Consensus Estimate for earnings is pegged at $2.49 per share, implying growth of 11.7% from the year-ago reported figure.
Workday has a long-term earnings growth expectation of 20.16%. Workday delivered an average earnings surprise of 8.53% in the last four reported quarters.
Analog Devices, Inc. (ADI - Free Report) is set to release second-quarter fiscal 2026 earnings on May 20. The Zacks Consensus Estimate for earnings is pegged at $2.88 per share, implying growth of 55.7% from the year-ago reported figure.
Analog Devices has a long-term earnings growth expectation of 21.89%. Analog Devices delivered an average earnings surprise of 6.11% in the last four reported quarters.