AT&T Inc. T reported relatively healthy fourth-quarter 2024 results with adjusted earnings and revenues beating the respective Zacks Consensus Estimate.

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The company witnessed solid wireless traction and customer additions, which were partially offset by lower demand for legacy voice and data services. AT&T recorded strong subscriber growth backed by a resilient business model and robust cash flow position, driven by a diligent execution of operational plans. AT&T expects to continue investing in key areas of 5G and fiber and adjust its business according to the evolving market scenario to fuel long-term growth.

Net Income

On a GAAP basis, AT&T reported a net income of $4.03 billion or 56 cents per share compared with $2.13 billion or 30 cents per share in the year-ago quarter. The significant improvement was primarily attributable to higher contributions from the DIRECTV investments during the quarter.

Excluding non-recurring items, adjusted earnings from continuing operations remained flat at 54 cents per share. Adjusted earnings for the fourth quarter beat the Zacks Consensus Estimate by 6 cents.

For 2024, AT&T reported a net income of $10.75 billion or $1.49 per share compared with $14.19 billion or $1.97 per share in 2023 owing to higher asset impairment and restructuring charges. Excluding non-recurring items, adjusted earnings for 2024 declined to $2.26 per share from $2.41 in 2023.

Quarter Details

Quarterly GAAP operating revenues increased 0.9% year over year to $32.3 billion, largely due to higher Mobility service and equipment sales and Consumer Wireline revenues partially offset by lower Business Wireline and Mexico revenues. The top line beat the consensus mark of $32.29 billion. For 2024, GAAP operating revenues remained relatively flat at $122.34 billion.

Adjusted operating income decreased to $5.4 billion from $5.8 billion for respective adjusted operating income margins of 16.8% and 18.1%. Adjusted EBITDA improved to $10.8 billion from $10.6 billion.

AT&T witnessed solid subscriber momentum with 839,000 post-paid net additions. This included 482,000 postpaid wireless phone additions. Postpaid churn was 0.85%, while postpaid phone-only average revenue per user (ARPU) increased 1.9% year over year to $56.72 due to improved international roaming, pricing actions and a transition to higher-priced unlimited plans.

Segmental Performance

Communications: Total segment operating revenues were $31.14 billion, up from $30.8 billion, as improvement in the Mobility business (up 3.3% to $23.13 billion) and Consumer Wireline (up 3.4% to $3.46 billion) was partially offset by a decline in Business Wireline (down 10% to $4.54 billion). The segment revenues surpassed our estimates of $30.77 billion.

Service revenues from the Mobility unit improved 3.3% to $23.13 billion, driven by solid subscriber and postpaid ARPU gains, while equipment revenues were up 3.3% year over year to $6.57 billion due to higher volumes of non-phone sales and higher-priced phone sales. Revenues from the Consumer Wireline business were up due to a gain in fiber broadband. AT&T recorded net fiber additions of 307,000, while Internet Air added 158,000 subscribers during the quarter.

Revenues from Business Wireline were down due to lower demand for legacy voice and data services as customers shifted to more advanced IP-based offerings. Total segment operating income declined 6.3% to $6.19 billion, with operating margins of 19.9% (down 160 bps). Adjusted EBITDA was $11.3 billion compared with $11 billion in the year-ago quarter.

Latin America: Total operating revenues were $1.04 billion, down 4.2% year over year, due to lower equipment sales and service revenues. Adjusted EBITDA improved to $171 million from $137 million in the year-ago quarter for respective margins of 16.4% and 12.6%.

Cash Flow & Liquidity

For 2024, AT&T generated $38.77 billion of cash from operations compared with $38.31 billion in 2023. Free cash flow for the quarter was $4.8 billion compared with $6.4 billion in the year-ago quarter. As of Dec. 31, 2024, AT&T had $3.3 billion of cash and cash equivalents with long-term debt of $118.4 billion compared with the respective tallies of $6.7 billion and $127.8 billion in the year-ago period. Net debt to adjusted EBITDA was about 2.68X.

Guidance

While optimizing operations, AT&T is aiming to increase efficiencies to lower operating costs while focusing on 5G and fiber-based connectivity, along with an expanded reach of software-based entertainment platforms. For 2025, AT&T expects wireless service revenues to improve in the range of 2-3%, while broadband revenues are anticipated to grow in the mid-teens.

Adjusted earnings are projected to be between $1.97 and $2.07 per share. Free cash flow in 2025 is expected to be more than $16 billion due to cost savings. The company is also aiming to reduce its debt burden by monetizing non-core assets. AT&T firmly remains on track to pass more than 30 million fiber locations by the end of 2025, with 28.9 million consumer and business locations passed by the end of 2024.

Zacks Rank

AT&T currently has a Zacks Rank #5 (Strong Sell). 

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Upcoming Releases

Arista Networks Inc. ANET is scheduled to release fourth-quarter 2024 earnings on Feb. 18. The Zacks Consensus Estimate for earnings is pegged at 57 cents per share, suggesting a growth of 9.6% from the year-ago reported figure.

Arista has a long-term earnings growth expectation of 17.1%. ANET delivered an average earnings surprise of 14.8% in the last four reported quarters.

Akamai Technologies, Inc. AKAM is slated to release fourth-quarter 2024 earnings on Feb. 20. The Zacks Consensus Estimate for earnings is pegged at $1.52 per share, indicating a decline of 10.1% from the year-ago reported figure.

Akamai has a long-term earnings growth expectation of 6.1%. AKAM delivered an average earnings surprise of 2.7% in the last four reported quarters.

Pinterest, Inc. PINS is set to release fourth-quarter 2024 earnings on Feb. 6. The Zacks Consensus Estimate for earnings is pegged at 63 cents per share, implying a growth of 18.9% from the year-ago reported figure.

Pinterest has a long-term earnings growth expectation of 33%. PINS delivered an average earnings surprise of 17% in the last four reported quarters.

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