- Postpaid net adds soundly beat estimates.
- Postpaid mobile phone subscriptions are a key area of growth as AT&T has spun off some of its other business.
- Revenue grew by 5.2% YOY thanks to higher service and equipment revenues.
Source: Predictions based on analysts' consensus from Visible Alpha
AT&T (T) Financial Results: Analysis
AT&T Inc. (T) reported Q2 FY 2022 earnings that were mixed. Adjusted earnings per share fell year-over-year (YOY as revenue rose 5.2% to $29.6 billion. The company said that revenue grew thanks to increases in service and equipment revenues. Postpaid net adds were well above estimates. Adjusted EPS, or earnings per diluted common share from continuing operations, fell to $0.65, down from the year-ago quarter.
AT&T (T) Postpaid Net Adds
AT&T reported postpaid net adds of 1,058,000, higher than the estimate of 816,900. The Q2 number was slightly lower than the same quarter a year earlier. Additional postpaid net adds represent a key metric indicating the net difference between the number of new mobile phone subscriptions added during the quarter and the number of subscriptions that were terminated. Adding new mobile phone subscriptions has become increasingly important recently as some of the company's other legacy businesses decline. This metric is especially important now, after AT&T completed the spinoff of its WarnerMedia business with Discovery Inc. in Q2, as the company shifts its focus toward its core telecom business.
AT&T (T) Outlook and Stock Performance
AT&T said it was increasing Mobility service revenue guidance to 4.5%-5% for FY 2022 based on higher-than-forecasted customer growth in its Mobility business. At the same time, full-year free cash flow guidance is lowering to about $14 billion as a result of the company's significant investments in growth.
AT&T shares fell by about 4.7% in pre-market trading hour immediately following the earnings release. The company's stock has outperformed the market in the past year. AT&T stock has provided a 1-year trailing total return of 3.9%, ahead of the S&P 500's total return of -8.4%, as of July 21.
AT&T's next earnings report (for Q3 FY 2022) is estimated to be released on Oct. 26, 2022.