AT&T Q2 Earnings: Revenue and EPS Beat, Margin Growth, Confidence in FY23 Outlook and More

AT&T Inc T stock is trading higher after upbeat second-quarter results. The company reported second-quarter FY23 operating revenues of $29.9 billion, up 0.9% year-over-year, marginally beating the consensus of $29.9 billion. Adjusted EPS of $0.63 beat the consensus of $0.60.

The results reflected higher Mobility, Mexico, and Consumer Wireline revenues, partly offset by lower Business Wireline revenues.

In the Mobility segment, AT&T clocked 0.464 million postpaid net adds, which included 326 thousand postpaid phone net adds, and 123 thousand prepaid phone net adds. 

The Mobility segment saw a Postpaid churn of 0.95%, which increased from 0.93% last year. The Consumer Wireline segment had 251 thousand of AT&T Fiber net adds.

AT&T's adjusted EBITDA of $11.05 billion was up from $10.33 billion a year ago. The company generated $4.2 billion in free cash flow. It spent $4.3 billion on Capex.

Prepaid churn was 2.50% versus 2.59% in the year-ago quarter. Postpaid phone-only ARPU was $55.63, up 1.5% versus the year-ago quarter, due to pricing actions, higher international roaming, and a mix shift to higher-priced unlimited plans.

Operating Income: Operating income was $6.4 billion, up by 29% Y/Y. 

Mobility segment operating income was up 9.3% Y/Y to $6.6 billion with a margin of 32.6% compared to 30.4% in the year-ago quarter. The Business Wireline segment operating margin was 7.5% compared to 8.8% in the year-ago quarter.

John Stankey, AT&T CEO. "We're focused on growing the right way, adding profitable 5G and fiber customers. We are also committing to an incremental $2 billion-plus in cost savings beyond the $6 billion we have accomplished over this period, reflecting our continued march to operating the company in a more focused and streamlined fashion."

FY23 Outlook: AT&T remains confident of its FY23 guidance. It expects to grow wireless service revenue by 4% or higher. It expects Broadband revenue growth by 5% or higher. 

"We are also committing to an incremental $2 billion-plus in cost savings beyond the $6 billion we have accomplished over this period, reflecting our continued march to operating the company in a more focused and streamlined fashion. Our results give us full confidence in delivering our full-year financial guidance," said CEO John Stankey.

AT&T's unchanged outlook given in Q1 was an adjusted EPS of $2.35 - $2.45, versus the consensus of $2.43.

Price Action: T shares traded higher by 2.36% at $15.15 in the premarket on the last check Wednesday.

Photo via Wikimedia Commons