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Telephone and Data Systems Q3 Earnings Beat Despite Lower Revenues
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Telephone and Data Systems, Inc. (TDS - Free Report) posted modest third-quarter 2024 results, with the bottom line beating the Zacks Consensus Estimate but the top line missing the same. TDS reported a revenue decline year over year, owing to demand softness in the U.S. Cellular vertical.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
However, solid growth in residential broadband connections partially cushioned the top line. TDS Telecom deployed 32,000 marketable fiber addresses in the third quarter of 2024. Management’s focus on cost optimization is driving profitability.
Net Income
On a GAAP basis, the company reported a net loss of $83 million or 73 cents per share compared with a net loss of $17 million or 16 cents in the year-earlier quarter. Top-line decline and license impairment charges affected the net income.
Non-GAAP net income was $1 million or a penny per share against a loss of $18 million or 16 cents per share in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate by 15 cents.
Telephone and Data Systems, Inc. Price, Consensus and EPS Surprise
Net sales in the quarter were $1.22 billion, down from $1.27 billion reported in the year-ago quarter. Declining revenues in the U.S. Cellular segment affected the top line. The figure fell short of the Zacks Consensus Estimate by $14 million.
Revenues from U.S. Cellular were $922 million, down 4% year over year. A reduction in postpaid retail and prepaid connections impeded the top line. However, growth in fixed wireless customers and tower revenues are positive factors. Net sales missed our revenue estimate of $927.8 million. Total cash expenses stood at $707 million, down from $746 million in the prior-year quarter.
The company reported an Operating loss of $90 million against an income of $57 million registered in the year-ago quarter. Postpaid average revenues per user (ARPU) rose to $52.04 from $51.11. Postpaid average revenues per account increased to $131.81 from $130.91 in the year-ago quarter. Prepaid ARPU was $32.01, down from $33.44 in the prior-year quarter.
TDS Telecom contributed $263 million to revenues compared with $256 million reported in the prior-year quarter. The top line fell short of our estimate of $266.6 million. Total residential connections stood at 946,100, down from 949,000 in the year-earlier quarter. Residential revenues per connection were $65.41, up from $62.15 in the prior-year quarter.
Total cash expenses were $182 million, down 4% year over year. Around 20% of customers opted for 1 Gigabit+ speed compared with the prior-year quarter’s tally of 14%. About 49% of users have chosen 100 Mbps or higher speed compared to 52% in the year-earlier quarter. Its broadband expansion rose to 115,300 from 79,400 a year ago. Total connections stood at 1,143,300 compared with 1,166,400 in the year-ago quarter.
Other Details
Total operating expenses stood at $1.3 billion, up 6% from the prior-year quarter’s levels. The company reported an operating loss of $80 million against an operating income of $48 million.
Adjusted EBITDA in TDS Telecom came at $83 million, up 21% year over year, backed by lower cash expenses. Adjusted EBITDA for U.S. Cellular witnessed an increase of 3% to $269 million compared with the prior-year quarter’s figure of $263 million.
Cash Flow & Liquidity
In the third quarter of 2024, Telephone and Data Systems generated $306 million of net cash from operating activities compared with $408 million in the prior-year quarter. As of Sep 30, 2024, the company had $451 million in cash and cash equivalents, with $4.09 billion of long-term debt.
Outlook
For 2024, management expects total operating revenues at TDS Telecom in the range of $1.05-$1.08 billion. Adjusted EBITDA is estimated in the band of $330-360 million. Adjusted OIBDA (non-GAAP) is expected to be $330-360 million. Capital expenditures are expected in the range of $310-340 million.
Service revenues for U.S. Cellular are expected in the range of $2.95-$3 billion. The company expects adjusted EBITDA in the range of $970-$1,045 million. Adjusted OIBDA is projected at $800-$875 million. Capital expenditure is projected in the band of $550-$600 million.
In the last reported quarter, ANET delivered an earnings surprise of 8.25%. It provides cloud networking solutions for data centers and cloud computing environments. The company offers 10/25/40/50/100 gigabit Ethernet switches and routers optimized for next-generation data center networks.
Ubiquiti Inc. (UI - Free Report) currently sports a Zacks Rank of 1. The company offers a comprehensive portfolio of networking products and solutions for service providers and enterprises.
UI’s excellent global business model, which is flexible and adaptable to evolving market changes, helps it overcome challenges and maximize growth. The company’s effective management of its strong global network of more than 100 distributors and master resellers improved UI’s visibility for future demand and inventory management techniques.
Workday Inc. (WDAY - Free Report) carries a Zacks Rank #2 at present. In the last reported quarter, the company delivered an earnings surprise of 7.36%.
WDAY is a leading provider of enterprise-level software solutions for financial management and human resource domains. The company’s cloud-based platform combines finance and HR in a single system, making it easier for organizations to provide analytical insights and decision support.
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Telephone and Data Systems Q3 Earnings Beat Despite Lower Revenues
Telephone and Data Systems, Inc. (TDS - Free Report) posted modest third-quarter 2024 results, with the bottom line beating the Zacks Consensus Estimate but the top line missing the same. TDS reported a revenue decline year over year, owing to demand softness in the U.S. Cellular vertical.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
However, solid growth in residential broadband connections partially cushioned the top line. TDS Telecom deployed 32,000 marketable fiber addresses in the third quarter of 2024. Management’s focus on cost optimization is driving profitability.
Net Income
On a GAAP basis, the company reported a net loss of $83 million or 73 cents per share compared with a net loss of $17 million or 16 cents in the year-earlier quarter. Top-line decline and license impairment charges affected the net income.
Non-GAAP net income was $1 million or a penny per share against a loss of $18 million or 16 cents per share in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate by 15 cents.
Telephone and Data Systems, Inc. Price, Consensus and EPS Surprise
Telephone and Data Systems, Inc. price-consensus-eps-surprise-chart | Telephone and Data Systems, Inc. Quote
Revenues
Net sales in the quarter were $1.22 billion, down from $1.27 billion reported in the year-ago quarter. Declining revenues in the U.S. Cellular segment affected the top line. The figure fell short of the Zacks Consensus Estimate by $14 million.
Revenues from U.S. Cellular were $922 million, down 4% year over year. A reduction in postpaid retail and prepaid connections impeded the top line. However, growth in fixed wireless customers and tower revenues are positive factors. Net sales missed our revenue estimate of $927.8 million. Total cash expenses stood at $707 million, down from $746 million in the prior-year quarter.
The company reported an Operating loss of $90 million against an income of $57 million registered in the year-ago quarter. Postpaid average revenues per user (ARPU) rose to $52.04 from $51.11. Postpaid average revenues per account increased to $131.81 from $130.91 in the year-ago quarter. Prepaid ARPU was $32.01, down from $33.44 in the prior-year quarter.
TDS Telecom contributed $263 million to revenues compared with $256 million reported in the prior-year quarter. The top line fell short of our estimate of $266.6 million. Total residential connections stood at 946,100, down from 949,000 in the year-earlier quarter. Residential revenues per connection were $65.41, up from $62.15 in the prior-year quarter.
Total cash expenses were $182 million, down 4% year over year. Around 20% of customers opted for 1 Gigabit+ speed compared with the prior-year quarter’s tally of 14%. About 49% of users have chosen 100 Mbps or higher speed compared to 52% in the year-earlier quarter. Its broadband expansion rose to 115,300 from 79,400 a year ago. Total connections stood at 1,143,300 compared with 1,166,400 in the year-ago quarter.
Other Details
Total operating expenses stood at $1.3 billion, up 6% from the prior-year quarter’s levels. The company reported an operating loss of $80 million against an operating income of $48 million.
Adjusted EBITDA in TDS Telecom came at $83 million, up 21% year over year, backed by lower cash expenses. Adjusted EBITDA for U.S. Cellular witnessed an increase of 3% to $269 million compared with the prior-year quarter’s figure of $263 million.
Cash Flow & Liquidity
In the third quarter of 2024, Telephone and Data Systems generated $306 million of net cash from operating activities compared with $408 million in the prior-year quarter. As of Sep 30, 2024, the company had $451 million in cash and cash equivalents, with $4.09 billion of long-term debt.
Outlook
For 2024, management expects total operating revenues at TDS Telecom in the range of $1.05-$1.08 billion. Adjusted EBITDA is estimated in the band of $330-360 million. Adjusted OIBDA (non-GAAP) is expected to be $330-360 million. Capital expenditures are expected in the range of $310-340 million.
Service revenues for U.S. Cellular are expected in the range of $2.95-$3 billion. The company expects adjusted EBITDA in the range of $970-$1,045 million. Adjusted OIBDA is projected at $800-$875 million. Capital expenditure is projected in the band of $550-$600 million.
Zacks Rank & Other Stocks to Consider
TDS currently carries a Zacks Rank #3 (Hold).
Arista Networks, Inc. (ANET - Free Report) carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
In the last reported quarter, ANET delivered an earnings surprise of 8.25%. It provides cloud networking solutions for data centers and cloud computing environments. The company offers 10/25/40/50/100 gigabit Ethernet switches and routers optimized for next-generation data center networks.
Ubiquiti Inc. (UI - Free Report) currently sports a Zacks Rank of 1. The company offers a comprehensive portfolio of networking products and solutions for service providers and enterprises.
UI’s excellent global business model, which is flexible and adaptable to evolving market changes, helps it overcome challenges and maximize growth. The company’s effective management of its strong global network of more than 100 distributors and master resellers improved UI’s visibility for future demand and inventory management techniques.
Workday Inc. (WDAY - Free Report) carries a Zacks Rank #2 at present. In the last reported quarter, the company delivered an earnings surprise of 7.36%.
WDAY is a leading provider of enterprise-level software solutions for financial management and human resource domains. The company’s cloud-based platform combines finance and HR in a single system, making it easier for organizations to provide analytical insights and decision support.