AT&T Earnings: What Happened with T

Key Takeaways

Postpaid phone net additions were the highest for a second quarter in more than a decade.Postpaid 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 phone net additions reached the highest levels for a Q2 period in over a decade.

Adjusted EPS, or earnings per diluted common share from continuing operations, fell to $0.65, down from the year-ago quarter.

AT&T (T) Additional Postpaid Phone Subscribers

AT&T reported that additional postpaid phone subscribers, which AT&T refers to as “postpaid phone net additions,” reached 813,000. The company said that the company “continues to see record levels of customer additions,” including the best Q2 postpaid phone net additions in over a decade. AT&T said it saw more than 6.1 million postpaid phone net adds over the past two 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 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.