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TMUS Q3 Earnings Beat Estimates on Strong Service Revenue Growth
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Key Takeaways
T-Mobile's Q3 earnings rose 33.6% year over year to $3.22 per share, beating estimates by 12.59%.
Service revenues grew 6.2%, while postpaid ARPA rose 4.2% to $155.73, supporting higher profitability.
TMUS raised 2026 EBITDA and free cash flow outlooks, while increasing its postpaid ARPA growth target to 3.5%.
T-Mobile US, Inc. (TMUS - Free Report) reported third-quarter 2026 earnings of $3.22 per share, which beat the Zacks Consensus Estimate of $2.86 by 12.59%. Earnings increased 33.6% year over year. Total revenues of $23.58 billion surpassed the consensus mark of $23.31 billion by 1.17% and rose 7.4% year over year.
The strong performance reflected continued service revenue growth, higher postpaid average revenue per account (ARPA) and solid customer additions. Postpaid ARPA increased 4.2% year over year to $155.73, highlighting improved customer monetization and growing adoption of premium rate plans.
TMUS Benefits From Strong Service Revenue Growth
T-Mobile generated total service revenues of $19.38 billion in the third quarter, up 6.2% from the year-ago period. Postpaid service revenues climbed 9.3% year over year to $16.27 billion, supported by higher average postpaid accounts following the UScellular and Metronet acquisitions and improved ARPA.
Equipment revenues increased 13.4% year over year to $3.93 billion, driven by higher average revenue per device sold, a richer mix of premium smartphones and increased manufacturer pricing. Higher device liquidation revenues also contributed to growth, partially offset by lower device sales volumes.
T-Mobile US, Inc. Price, Consensus and EPS Surprise
TMUS reported postpaid net account additions of 274,000 during the quarter compared with 396,000 a year ago. Total postpaid accounts increased to 34.97 million from 33.98 million in the prior-year quarter, reflecting continued customer base expansion despite slower net additions.
Postpaid account churn increased to 1.09% from 0.97% a year earlier, primarily due to a higher proportion of broadband-only accounts and the temporary impact of rate plan modernization. Meanwhile, ARPA benefited from higher fee revenues, increased customers per account and broader adoption of tax- and fee-exclusive plans.
TMUS Faces Higher Operating Expenses
T-Mobile's total operating expenses increased 2.8% year over year to $17.92 billion. Cost of services rose 4.7% to $3.01 billion, primarily reflecting higher wholesale network access costs, customer installation fee amortization and increased network maintenance expenses.
Cost of equipment sales increased 12.2% to $5.44 billion, reflecting higher device costs and a greater proportion of premium smartphones. Selling, general and administrative expenses remained relatively flat at $6.02 billion. Despite these pressures, operating income increased 25% year over year to $5.66 billion, supported by higher revenues and improved operating leverage.
T-Mobile Delivers Strong Profitability and Cash Flow
Core adjusted EBITDA increased 10.8% year over year to $9.62 billion, primarily driven by higher service revenues and equipment revenues, partially offset by increased equipment and service costs. Net income rose 27.3% to $3.46 billion, benefiting from improved operating performance.
Net cash provided by operating activities declined 1.6% year over year to $7.34 billion, reflecting higher working capital outflows. However, adjusted free cash flow increased 5.3% to $5.07 billion as cash capital expenditures declined 14% to $2.27 billion. During the quarter, T-Mobile returned approximately $3.5 billion to shareholders through $2.4 billion in share repurchases and $1.1 billion in dividends.
TMUS Strengthens Its Balance Sheet Position
T-Mobile ended the third quarter with total assets of $213.10 billion and cash and cash equivalents of $5.62 billion. Long-term debt declined to $77.32 billion from $79.65 billion at the end of 2025, reflecting debt reduction alongside continued investments in network infrastructure and spectrum.
Net debt, excluding tower obligations, stood at $80.3 billion at quarter-end. The net debt to trailing 12-month core adjusted EBITDA ratio improved to 2.2 times from 2.5 times in the year-ago quarter. Management continues to prioritize network investments, spectrum opportunities and shareholder returns in its capital allocation strategy.
T-Mobile Raises Profitability Outlook for 2026
Management now expects approximately one million postpaid net account additions for 2026. Core adjusted EBITDA guidance was narrowed and raised at the midpoint to $37.35-$37.45 billion from the previous range of $37.1-$37.5 billion, reflecting sustained service revenue growth and operating efficiency.
T-Mobile also raised its outlook for net cash provided by operating activities to $28.7-$28.8 billion from $28.4-$28.8 billion. Adjusted free cash flow guidance increased to $18.7-$18.8 billion from $18.4-$18.8 billion. Capital expenditure expectations remained unchanged at approximately $10 billion, while management increased its full-year postpaid ARPA growth expectation to approximately 3.5% from 2.5-3%.
Arista Networks Inc. (ANET - Free Report) is scheduled to release third-quarter 2026 earnings on Nov. 3. The Zacks Consensus Estimate for earnings is pegged at $1.08 per share, suggesting growth of 44% from the year-ago reported figure.
Arista has a long-term earnings growth expectation of 22.75%. The company delivered an average earnings surprise of 8.88% in the last four reported quarters.
Motorola Solutions, Inc. (MSI - Free Report) is set to release third-quarter 2026 earnings Nov. 4. The Zacks Consensus Estimate for earnings is pegged at $4.41 per share, implying growth of 8.62% from the year-ago reported figure.
Motorola has a long-term earnings growth expectation of 10.55%. The company delivered an average earnings surprise of 7.17% in the last four reported quarters.
HubSpot, Inc. (HUBS - Free Report) is scheduled to release third-quarter 2026 earnings on Nov. 4. The Zacks Consensus Estimate for earnings is pegged at $3.28 per share, suggesting growth of 23.31% from the year-ago reported figure.
HubSpot has a long-term earnings growth expectation of 21.25%. The company delivered an average earnings surprise of 6.13% in the last four reported quarters.
View the Zacks #1 Rank List
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TMUS Q3 Earnings Beat Estimates on Strong Service Revenue Growth
Key Takeaways
T-Mobile US, Inc. (TMUS - Free Report) reported third-quarter 2026 earnings of $3.22 per share, which beat the Zacks Consensus Estimate of $2.86 by 12.59%. Earnings increased 33.6% year over year. Total revenues of $23.58 billion surpassed the consensus mark of $23.31 billion by 1.17% and rose 7.4% year over year.
The strong performance reflected continued service revenue growth, higher postpaid average revenue per account (ARPA) and solid customer additions. Postpaid ARPA increased 4.2% year over year to $155.73, highlighting improved customer monetization and growing adoption of premium rate plans.
TMUS Benefits From Strong Service Revenue Growth
T-Mobile generated total service revenues of $19.38 billion in the third quarter, up 6.2% from the year-ago period. Postpaid service revenues climbed 9.3% year over year to $16.27 billion, supported by higher average postpaid accounts following the UScellular and Metronet acquisitions and improved ARPA.
Equipment revenues increased 13.4% year over year to $3.93 billion, driven by higher average revenue per device sold, a richer mix of premium smartphones and increased manufacturer pricing. Higher device liquidation revenues also contributed to growth, partially offset by lower device sales volumes.
T-Mobile US, Inc. Price, Consensus and EPS Surprise
T-Mobile US, Inc. price-consensus-eps-surprise-chart | T-Mobile US, Inc. Quote
T-Mobile Expands Postpaid Accounts Amid Higher Churn
TMUS reported postpaid net account additions of 274,000 during the quarter compared with 396,000 a year ago. Total postpaid accounts increased to 34.97 million from 33.98 million in the prior-year quarter, reflecting continued customer base expansion despite slower net additions.
Postpaid account churn increased to 1.09% from 0.97% a year earlier, primarily due to a higher proportion of broadband-only accounts and the temporary impact of rate plan modernization. Meanwhile, ARPA benefited from higher fee revenues, increased customers per account and broader adoption of tax- and fee-exclusive plans.
TMUS Faces Higher Operating Expenses
T-Mobile's total operating expenses increased 2.8% year over year to $17.92 billion. Cost of services rose 4.7% to $3.01 billion, primarily reflecting higher wholesale network access costs, customer installation fee amortization and increased network maintenance expenses.
Cost of equipment sales increased 12.2% to $5.44 billion, reflecting higher device costs and a greater proportion of premium smartphones. Selling, general and administrative expenses remained relatively flat at $6.02 billion. Despite these pressures, operating income increased 25% year over year to $5.66 billion, supported by higher revenues and improved operating leverage.
T-Mobile Delivers Strong Profitability and Cash Flow
Core adjusted EBITDA increased 10.8% year over year to $9.62 billion, primarily driven by higher service revenues and equipment revenues, partially offset by increased equipment and service costs. Net income rose 27.3% to $3.46 billion, benefiting from improved operating performance.
Net cash provided by operating activities declined 1.6% year over year to $7.34 billion, reflecting higher working capital outflows. However, adjusted free cash flow increased 5.3% to $5.07 billion as cash capital expenditures declined 14% to $2.27 billion. During the quarter, T-Mobile returned approximately $3.5 billion to shareholders through $2.4 billion in share repurchases and $1.1 billion in dividends.
TMUS Strengthens Its Balance Sheet Position
T-Mobile ended the third quarter with total assets of $213.10 billion and cash and cash equivalents of $5.62 billion. Long-term debt declined to $77.32 billion from $79.65 billion at the end of 2025, reflecting debt reduction alongside continued investments in network infrastructure and spectrum.
Net debt, excluding tower obligations, stood at $80.3 billion at quarter-end. The net debt to trailing 12-month core adjusted EBITDA ratio improved to 2.2 times from 2.5 times in the year-ago quarter. Management continues to prioritize network investments, spectrum opportunities and shareholder returns in its capital allocation strategy.
T-Mobile Raises Profitability Outlook for 2026
Management now expects approximately one million postpaid net account additions for 2026. Core adjusted EBITDA guidance was narrowed and raised at the midpoint to $37.35-$37.45 billion from the previous range of $37.1-$37.5 billion, reflecting sustained service revenue growth and operating efficiency.
T-Mobile also raised its outlook for net cash provided by operating activities to $28.7-$28.8 billion from $28.4-$28.8 billion. Adjusted free cash flow guidance increased to $18.7-$18.8 billion from $18.4-$18.8 billion. Capital expenditure expectations remained unchanged at approximately $10 billion, while management increased its full-year postpaid ARPA growth expectation to approximately 3.5% from 2.5-3%.
Zacks Rank
T-Mobile currently carries 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 2026 earnings on Nov. 3. The Zacks Consensus Estimate for earnings is pegged at $1.08 per share, suggesting growth of 44% from the year-ago reported figure.
Arista has a long-term earnings growth expectation of 22.75%. The company delivered an average earnings surprise of 8.88% in the last four reported quarters.
Motorola Solutions, Inc. (MSI - Free Report) is set to release third-quarter 2026 earnings Nov. 4. The Zacks Consensus Estimate for earnings is pegged at $4.41 per share, implying growth of 8.62% from the year-ago reported figure.
Motorola has a long-term earnings growth expectation of 10.55%. The company delivered an average earnings surprise of 7.17% in the last four reported quarters.
HubSpot, Inc. (HUBS - Free Report) is scheduled to release third-quarter 2026 earnings on Nov. 4. The Zacks Consensus Estimate for earnings is pegged at $3.28 per share, suggesting growth of 23.31% from the year-ago reported figure.
HubSpot has a long-term earnings growth expectation of 21.25%. The company delivered an average earnings surprise of 6.13% in the last four reported quarters.