AT&T Q2 2022 Earnings Summary: Strong Subscriber Growth Amid Mixed Financial Results

AT&T’s postpaid net additions significantly surpassed market expectations in Q2 2022.

Highlights

• Postpaid net additions exceeded forecasts by a wide margin.
• Growth in postpaid mobile phone subscriptions is pivotal as AT&T refocuses after divesting other business units.
• Revenue increased by 5.2% year-over-year, driven by higher service and equipment sales.

Source: Projections derived from analyst consensus via Visible Alpha

In-Depth Analysis of AT&T's Q2 2022 Financial Results

AT&T Inc. (Ticker: T) delivered mixed results for Q2 FY 2022. While adjusted earnings per share (EPS) declined compared to the previous year, total revenue rose by 5.2% to reach $29.6 billion. This revenue growth was fueled by gains in both service and equipment segments. The company’s postpaid net additions notably outpaced analyst estimates. Adjusted EPS from continuing operations dropped to $0.65, down from the same quarter last year.

Postpaid Net Additions Performance

AT&T reported 1,058,000 postpaid net additions, surpassing the anticipated 816,900. Although slightly below Q2 of the previous year, this metric remains a critical indicator of growth, reflecting the net increase in mobile phone subscribers after accounting for churn. With legacy business segments contracting, expanding the postpaid subscriber base has become increasingly vital. This focus intensified following AT&T’s spinoff of WarnerMedia to Discovery Inc. in Q2, marking a strategic pivot toward its core telecommunications operations.

Outlook and Stock Market Reaction

Based on stronger-than-expected customer growth in its Mobility segment, AT&T raised its full-year Mobility service revenue forecast to a 4.5%-5% increase for FY 2022. However, full-year free cash flow guidance was revised downward to approximately $14 billion due to substantial investments aimed at future growth.

Following the earnings announcement, AT&T’s stock price declined approximately 4.7% during pre-market trading. Despite this, the stock has outperformed the broader market over the past year, delivering a 3.9% total return compared to the S&P 500’s -8.4% as of July 21.

AT&T’s upcoming earnings report for Q3 FY 2022 is scheduled for release on October 26, 2022.

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