AT&T Earnings: What Happened with T

AT&T Earnings: What Happened with T

AT&T Earnings: What Happened with T

Key Takeaways

  • Additional postpaid phone subscribers came in more than three times above analyst expectations.
  • 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 revenue to grow between 2% and 3% in 2021.
AT&T Earnings Results
Metric Beat/Miss/Match Reported Value Analysts’ Prediction
Adjusted EPS Beat $0.89 $0.80
Revenue Beat $44.0B $42.7B
Additional Postpaid Phone Subscribers Beat 789.0K 258.3K

Source: Predictions based on analysts’ consensus from Visible Alpha

AT&T (T) Financial Results: Analysis

AT&T Inc. (T) reported Q1 FY 2021 earnings results that beat analyst expectations. Adjusted EPS rose 7.2%, coming in above estimates. Revenue surpassed forecasts, up 7.6% from the year-ago quarter. Additional postpaid phone subscribers, which AT&T refers to as “postpaid phone net additions,” crushed analyst estimates, coming in more than three times higher than estimated. The company’s shares rose more than 1% in pre-market trading. Over the past year, AT&T’s shares have provided a total return of -1.0%, well below the S&P 500’s total return of 33.8%.

AT&T (T) Additional Postpaid Phone Subscribers

AT&T added 789,000 net new postpaid phone subscribers in the second quarter, a major turnaround from the 151,000 subscribers it shed in the year-ago quarter. 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 company announced in May that it was spinning off its WarnerMedia division and combining it with Discovery, Inc. (DISCA) in a merger deal that, if approved, could be worth $43 billion. WarnerMedia revenues rose 30.7% compared to the year-ago quarter, accounting for about 20% of AT&T’s total revenue in the second quarter. If it is spun off, other parts of the business like postpaid phone subscriptions will become ever more critical for driving revenue.

AT&T expects its consolidated revenue to grow in a range of 2% to 3% and for adjusted EPS to grow in the low- to mid-single digits for 2021. AT&T’s next earnings report (Q3 FY 2021) is estimated to be released on Oct. 20, 2021.