AT&T Q3 2021 Earnings Report Recap

T beat on earnings but missed on revenue

Key Takeaways

  • Additional postpaid phone subscribers came in nearly double analyst predictions and at the highest rate in nearly 10 years.
  • When additional postpaid phone subscribers are positive for a period, it means that AT&T is adding more postpaid phone subscriptions than are being terminated.
  • AT&T expects full-year adjusted EPS to be at the high end of the low- to mid-single-digit growth range.
AT&T Earnings Results
Metric Beat/Miss/Match Reported Value Analysts' Prediction
Adjusted EPS Beat $0.87 $0.79
Revenue Miss $39.9B $41.2B
Additional Postpaid Phone Subscribers Beat 928K 521.1K

Source: Predictions based on analysts' consensus from Visible Alpha

AT&T (T) Financial Results: Analysis

AT&T Inc. (T) reported Q3 FY 2021 results that were mixed relative to analyst expectations. Adjusted earnings per share (EPS) climbed by 14.5%, coming in well above consensus estimates. On the other hand, revenue declined by 5.7% year over year (YOY) and fell short of analyst expectations. The company attributed the revenue performance to the July separation of the U.S. video business and other divested businesses, offset by higher revenues in AT&T's Mobility and WarnerMedia businesses. The fact that WarnerMedia revenue growth helped to mitigate revenue declines overall suggests that AT&T will have an uphill battle to maintain consolidated revenue performance when the company completes the spinoff of WarnerMedia in mid-2022.

AT&T (T) Additional Postpaid Phone Subscribers

AT&T crushed analyst predictions for postpaid phone subscribers net adds, reporting 928,000 compared with estimates of 521,100. CEO John Stankey said that it was the best quarter in this area in more than 10 years. Additional postpaid phone subscribers represent a key metric indicating the net difference between the number of new postpaid phone subscriptions added during the quarter and the number of subscriptions that were terminated. As long as this metric is positive, it means that AT&T is adding to the total number of postpaid phone subscriptions.

Adding new phone subscriptions has become increasingly important recently, as AT&T has been divesting of certain businesses in order to focus on its core wireless and broadband communications operations. The previously mentioned divestment of WarnerMedia, announced in May, will involve combining that business with Discovery, Inc. (DISCA) in a merger deal that, if approved, could be worth $43 billion.

AT&T (T) Outlook and Stock Performance

AT&T said that it expects full-year adjusted EPS to come in at the high end of the low- to mid-single-digit growth range. It expects to be on track to achieve its free cash flow target of roughly $26 billion. The company also anticipates meeting the higher end of its end-of-year HBO Max/HBO global target of between 70 million and 73 million subscribers.

AT&T shares were up roughly 1.5% in pre-market trading following the earnings release. Overall, the company's stock has significantly lagged the broader market, providing one-year trailing total returns of 4.0% as compared with 31.8% for the S&P 500.

AT&T's next earnings report (for Q4 FY 2021) is estimated to be released on Jan. 25, 2022.

Article Sources
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