Yahoo Finance T-Mobile's (TMUS) Q1 Earnings Top on Industry-Leading Growth
T-Mobile US, Inc. TMUS reported mixed first-quarter 2024 results, with the bottom line beating the Zacks Consensus Estimate but the top line missing the same.
The Bellevue, WA-based wireless service provider reported industry-leading postpaid customer growth with a record low churn rate. T-Mobile follows a multi-layer approach to 5G with dedicated standalone 5G deployed nationwide across 600MHz, 1.9GHz, and 2.5GHz bands.
Net Income
Net income in the first quarter was $2,374 million or $2.00 per share, up from $1,940 million or $1.58 per share in the year-ago quarter. The 22.4% year-over-year growth was primarily driven by lower operating expenses. The bottom line exceeded the Zacks Consensus Estimate of $1.83.
T-Mobile US, Inc. Price, Consensus and EPS Surprise
T-Mobile US, Inc. price-consensus-eps-surprise-chart | T-Mobile US, Inc. Quote
Revenues
Net sales during the quarter were $19,594 million, marginally down from $19,632 million in the year-ago quarter, as solid growth in service revenue was more than offset by declining equipment sales. The top line missed the consensus estimate of $19,637 million.
Segment Results
Total Service revenues were $16,096 million, up from $15,546 million in the year-ago quarter. The segment sales missed our revenue estimate of $16,203.5 million. The 3.5% year-over-year growth was primarily driven by solid demand for postpaid services. Net sales from Postpaid Services contributed $12,631 million in revenues, up 6.5% year over year.
During the quarter, T-Mobile added 1.2 million postpaid net customers, while postpaid net account additions were 218,000 – both metrics being the best in the industry. Postpaid phone net customer additions were 532,000, the best in the industry. Postpaid phone churn rate was 0.86%, equaling the lowest for the quarter in the company’s history. High-speed Internet net customer additions were 405,000. Postpaid average revenues per account rose to $140.88 from $138.04 in the year-ago quarter.
Net sales from Prepaid services were $2,403 million, marginally down from $2,417 million in the year-earlier quarter. Prepaid net customer losses were 48,000 with a churn rate of 2.75%. Wholesale and other service revenues decreased to $1,062 million from $1,267 million in the year-earlier quarter. Prepaid ARPU (average revenues per user) declined to $37.18 from $37.98 in the year-ago quarter.
Equipment revenues were $3,251 million, down from $3,719 million in the prior year. The segment revenues beat our estimate of $3,140 million. Lower postpaid upgrades, driven by longer device lifecycles, led to a lower number of devices and accessories sold. Lower sales of prepaid and Assurance Wireless devices also adversely impacted the top line in this vertical.
Other revenues were $247 million, down from the prior-year quarter’s tally of $367 million.
Other Details
Total operating expenses declined to $15,596 million from $16,235 million in the year-ago quarter. Consequently, operating income rose to $3,998 million from $3,397 million. T-Mobile recorded core adjusted EBITDA of $7,617 million compared with $7,052 million a year ago, backed by solid growth in service revenues.
Cash Flow & Liquidity
In the March quarter, T-Mobile generated $5,084 million of cash from operating activities compared with $4,051 million in the prior-year quarter. Adjusted free cash flow was $3,347 million, up from $2,401 million in the year-earlier quarter. The growth was driven by improvement in operating cash flow and lower cash purchases of property and equipment.
As of Mar 31, 2024, the company had $6,708 million in cash and cash equivalents, with $71,361 million of long-term debt. During the quarter, it repurchased 21.9 million shares for $3.6 billion.
Guidance Up
With improved operating metrics, the company presently expects postpaid net customer additions to be between 5.2 million and 5.6 million, up from 5 million and 5.5 million expected earlier. Core adjusted EBITDA is estimated to be $31.4-$31.9 billion. It anticipates cash from operating activities within $21.6-$22.3 billion. TMUS expects adjusted free cash flow in the band of $16.4-$16.9 billion. Capital expenditure is projected to be in the range of $8.6-$9.4 billion.
Zacks Rank
T-Mobile currently has a Zacks Rank #3 (Hold).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Upcoming Releases
Qualcomm Incorporated QCOM is scheduled to release second-quarter fiscal 2024 earnings on May 1. The Zacks Consensus Estimate for earnings is pegged at $2.30 per share, suggesting growth of 7% from the year-ago reported figure.
Qualcomm has a long-term earnings growth expectation of 9.5%. QCOM delivered an average earnings surprise of 5.9% in the last four reported quarters.
Qorvo Inc. QRVO is slated to release fourth-quarter fiscal 2024 earnings on May 1. The Zacks Consensus Estimate for earnings is pegged at $1.21 per share, indicating stellar growth of 365.4% from the year-ago reported figure.
Qorvo has a long-term earnings growth expectation of 19.4%. QRVO delivered an average earnings surprise of 76.4% in the last four reported quarters.
Motorola Solutions Inc. MSI is due to release first-quarter 2024 earnings on May 2. The Zacks Consensus Estimate for earnings is pegged at $2.52 per share, implying a rise of 13.5% from the year-ago reported figure.
Motorola has a long-term earnings growth expectation of 9.2%. MSI delivered an average earnings surprise of 6.6% in the last four reported quarters.
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