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TELUS (TU) Q2 Earnings Top Estimates, Revenues Increase Y/Y
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TELUS Corporation (TU - Free Report) reported second-quarter 2024 adjusted earnings per share (EPS) of C$0.25 (18 cents per share), which increased 32% year over year. The Zacks Consensus Estimate was pegged at 16 cents.
Quarterly total operating revenues increased 0.6% year over year to C$4,974 million ($3,635.4 million) owing to higher service revenues in the TELUS technology solutions (TTech) segment offset by lower service revenues in the TELUS digital experience segment (TELUS Digital).
The company’s operating revenues (arising from contracts with customers) were C$4,900 million, down 0.7% year over year.
The Zacks Consensus Estimate was pegged at $3,696.6 million.
TELUS International will formally complete its rebranding to TELUS Digital in the third quarter of 2024. In the current quarter, TELUS reported 332,000 net customer additions, marking a 13% year-over-year increase. This includes strong mobile phone net additions of 101,000, 161,000 connected device additions and 70,000 total fixed net additions.
TELUS Corporation Price, Consensus and EPS Surprise
In the second quarter, TTech revenues and other income rose 1% year over year to C$4,268 million. TTech operating revenues (arising from contracts with customers) increased 0.5%.
The improvement was driven by a rise in mobile network revenues, fixed data services revenues, health services and agriculture and consumer goods services, partially offset by a decrease in mobile equipment and other service revenues, fixed voice services revenues and fixed equipment and other service revenues.
Mobile network revenues rose 0.9% year over year to C$1,734 million, largely due to growth in mobile phone and connected device subscriber base, partly offset by lower mobile phone ARPU.
Fixed voice services revenues declined 6.3% year over year to C$178 million as a result of the ongoing fall in legacy voice revenues due to technological substitution and price plan changes. The decrease was partly mitigated by the success of bundled product offerings, the company’s retention efforts and the migration from legacy to IP services offerings.
Health services revenues increased 4% year over year to C$445 million, mainly due to growth from pharmacy management software upgrades.
The segment’s adjusted EBITDA of C$1,631 million increased 5.1% year over year, owing to broad-based cost-reduction efforts, subscriber growth and a rise in health services revenues. Adjusted EBITDA margin was 38.2% compared with 36.7% in the year-ago quarter.
TELUS Digital operating revenues (arising from contracts with customers) fell 7.9% to C$666 million, primarily attributable to lower revenues from a leading social media customer and other technology customers and a reduction in revenue in other industry verticals, notably in communications (excluding the TTech segment), eCommerce and banking, financial services and insurance. The decline was partially offset by growth in services provided to existing clients, including Google, as well as new clients added since the same period in the prior year.
TELUS Digital's operating revenues and other income increased 4.5% to C$936 million.
The segment’s adjusted EBITDA of C$178 million increased 17.6% from the year-ago quarter. Adjusted EBITDA margin was 19% compared with 16.9% in the prior-year quarter.
Other Details
Adjusted EBITDA increased 5.6% year over year to C$1,797 million, driven by higher residential Internet and security subscriber growth, broad-based cost-reduction efforts, synergies between LifeWorks and health business, increased TTech outsourcing to TELUS Digital, coupled with growth in subscribers and health services revenues.
Cash Flow & Liquidity
In the second quarter, TELUS generated C$1,388 million of cash from operating activities compared with C$1,117 million in the year-ago quarter. The free cash flow increased 71.3% to C$478 million.
Capital expenditures (including real estate development) fell 14.4% year over year to C$691 million, primarily driven by the planned slowdown of fiber and wireless network builds and systems development.
As of Jun 30, 2024, the company had C$927 million of net cash and temporary investments with C$24,817 million in long-term debt compared with C$2,164 million and C$24,450 million, respectively, as of Mar 31, 2024.
2024 Outlook
TELUS TTech expects operating revenue growth of 2-4%. TELUS expects TTech adjusted EBITDA to grow in the range of 5.5-7.5%. However, the company added that the segment’s operating revenues and adjusted EBITDA were “trending to the lower end of their respective original target growth ranges,” due to the competitive environment in both mobility and fixed businesses.
The free cash flow is now anticipated to be approximately $2.1 billion, updated entirely due to the flow through from TELUS Digital Experience’s revised EBITDA outlook.
Capital expenditures are expected to be $2.6 billion.
The Zacks Consensus Estimate for Badger Meter’s 2024 EPS has increased 4.37% in the past 60 days to $4.06. The company recently reported results for second-quarter 2024, wherein EPS of $1.12 topped the Zacks Consensus Estimate by 14.3%. Quarterly net sales were $216.7 million, up 23% from $175.9 million in the year-ago quarter and surpassed the consensus mark by 7.86%.
The Zacks Consensus Estimate for Arista Network’s 2024 EPS has increased 4.04% in the past 60 days to $8.24. The company recently reported results for second-quarter 2024, wherein EPS of $2.10 beat the Zacks Consensus Estimate by 16 cents. Quarterly revenues were $1.69 billion, up 15.8% from $1.46 billion in the year-ago quarter and surpassed the consensus mark by $1.64 billion.
The Zacks Consensus Estimate for SAP’s 2024 EPS has increased 4.16% in the past 60 days to $4.75. The company recently reported results for second quarter of 2024 wherein non-IFRS earnings came in at €1.10 ($1.18) per share, climbing 59% from the year-ago quarter’s levels. The Zacks Consensus Estimate was pegged at $1.01. Total revenues on a non-IFRS basis of €8.288 billion ($8,921.3 million), rose 10% year over year both at nominal and constant currencies (cc) basis. The Zacks Consensus Estimate was pegged at $8,864.7 million.
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TELUS (TU) Q2 Earnings Top Estimates, Revenues Increase Y/Y
TELUS Corporation (TU - Free Report) reported second-quarter 2024 adjusted earnings per share (EPS) of C$0.25 (18 cents per share), which increased 32% year over year. The Zacks Consensus Estimate was pegged at 16 cents.
Quarterly total operating revenues increased 0.6% year over year to C$4,974 million ($3,635.4 million) owing to higher service revenues in the TELUS technology solutions (TTech) segment offset by lower service revenues in the TELUS digital experience segment (TELUS Digital).
The company’s operating revenues (arising from contracts with customers) were C$4,900 million, down 0.7% year over year.
The Zacks Consensus Estimate was pegged at $3,696.6 million.
TELUS International will formally complete its rebranding to TELUS Digital in the third quarter of 2024. In the current quarter, TELUS reported 332,000 net customer additions, marking a 13% year-over-year increase. This includes strong mobile phone net additions of 101,000, 161,000 connected device additions and 70,000 total fixed net additions.
TELUS Corporation Price, Consensus and EPS Surprise
TELUS Corporation price-consensus-eps-surprise-chart | TELUS Corporation Quote
Quarterly Segmental Results
In the second quarter, TTech revenues and other income rose 1% year over year to C$4,268 million. TTech operating revenues (arising from contracts with customers) increased 0.5%.
The improvement was driven by a rise in mobile network revenues, fixed data services revenues, health services and agriculture and consumer goods services, partially offset by a decrease in mobile equipment and other service revenues, fixed voice services revenues and fixed equipment and other service revenues.
Mobile network revenues rose 0.9% year over year to C$1,734 million, largely due to growth in mobile phone and connected device subscriber base, partly offset by lower mobile phone ARPU.
Fixed voice services revenues declined 6.3% year over year to C$178 million as a result of the ongoing fall in legacy voice revenues due to technological substitution and price plan changes. The decrease was partly mitigated by the success of bundled product offerings, the company’s retention efforts and the migration from legacy to IP services offerings.
Health services revenues increased 4% year over year to C$445 million, mainly due to growth from pharmacy management software upgrades.
The segment’s adjusted EBITDA of C$1,631 million increased 5.1% year over year, owing to broad-based cost-reduction efforts, subscriber growth and a rise in health services revenues. Adjusted EBITDA margin was 38.2% compared with 36.7% in the year-ago quarter.
TELUS Digital operating revenues (arising from contracts with customers) fell 7.9% to C$666 million, primarily attributable to lower revenues from a leading social media customer and other technology customers and a reduction in revenue in other industry verticals, notably in communications (excluding the TTech segment), eCommerce and banking, financial services and insurance. The decline was partially offset by growth in services provided to existing clients, including Google, as well as new clients added since the same period in the prior year.
TELUS Digital's operating revenues and other income increased 4.5% to C$936 million.
The segment’s adjusted EBITDA of C$178 million increased 17.6% from the year-ago quarter. Adjusted EBITDA margin was 19% compared with 16.9% in the prior-year quarter.
Other Details
Adjusted EBITDA increased 5.6% year over year to C$1,797 million, driven by higher residential Internet and security subscriber growth, broad-based cost-reduction efforts, synergies between LifeWorks and health business, increased TTech outsourcing to TELUS Digital, coupled with growth in subscribers and health services revenues.
Cash Flow & Liquidity
In the second quarter, TELUS generated C$1,388 million of cash from operating activities compared with C$1,117 million in the year-ago quarter. The free cash flow increased 71.3% to C$478 million.
Capital expenditures (including real estate development) fell 14.4% year over year to C$691 million, primarily driven by the planned slowdown of fiber and wireless network builds and systems development.
As of Jun 30, 2024, the company had C$927 million of net cash and temporary investments with C$24,817 million in long-term debt compared with C$2,164 million and C$24,450 million, respectively, as of Mar 31, 2024.
2024 Outlook
TELUS TTech expects operating revenue growth of 2-4%. TELUS expects TTech adjusted EBITDA to grow in the range of 5.5-7.5%. However, the company added that the segment’s operating revenues and adjusted EBITDA were “trending to the lower end of their respective original target growth ranges,” due to the competitive environment in both mobility and fixed businesses.
The free cash flow is now anticipated to be approximately $2.1 billion, updated entirely due to the flow through from TELUS Digital Experience’s revised EBITDA outlook.
Capital expenditures are expected to be $2.6 billion.
Zacks Rank & Stocks to Consider
TELUS currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks from the broader technology space are Badger Meter, Inc. (BMI - Free Report) , SAP SE (SAP - Free Report) and Arista Networks, Inc. (ANET - Free Report) . SAP presently carries a Zacks Rank #2 (Buy), whereas BMI & ANET both sport a Zacks Rank #1(Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Badger Meter’s 2024 EPS has increased 4.37% in the past 60 days to $4.06. The company recently reported results for second-quarter 2024, wherein EPS of $1.12 topped the Zacks Consensus Estimate by 14.3%. Quarterly net sales were $216.7 million, up 23% from $175.9 million in the year-ago quarter and surpassed the consensus mark by 7.86%.
The Zacks Consensus Estimate for Arista Network’s 2024 EPS has increased 4.04% in the past 60 days to $8.24. The company recently reported results for second-quarter 2024, wherein EPS of $2.10 beat the Zacks Consensus Estimate by 16 cents. Quarterly revenues were $1.69 billion, up 15.8% from $1.46 billion in the year-ago quarter and surpassed the consensus mark by $1.64 billion.
The Zacks Consensus Estimate for SAP’s 2024 EPS has increased 4.16% in the past 60 days to $4.75. The company recently reported results for second quarter of 2024 wherein non-IFRS earnings came in at €1.10 ($1.18) per share, climbing 59% from the year-ago quarter’s levels. The Zacks Consensus Estimate was pegged at $1.01. Total revenues on a non-IFRS basis of €8.288 billion ($8,921.3 million), rose 10% year over year both at nominal and constant currencies (cc) basis. The Zacks Consensus Estimate was pegged at $8,864.7 million.