Rogers Earnings Beat Expectations But Guidance Weaker for 2025

Rogers Communications Inc. (RCI) reported a strong earnings beat for the third quarter of 2024, with earnings per share (EPS) of $0.98 exceeding analysts' expectations of $0.85 by 15.29%. This marked a significant improvement from the same quarter last year, when EPS was $1.24. The company's revenue also edged higher, totaling $5.5 billion compared to $5.3 billion in the same period last year.

However, Rogers' guidance for 2025 was less rosy. The company anticipates single-digit total service revenue and adjusted EBITDA growth, with a range of 0% to 3% for both metrics. This is a significant slowdown from the 7% service revenue growth and 12% adjusted EBITDA growth the company delivered in 2024.



Several factors may be contributing to Rogers' more conservative outlook for 2025:

1. Media revenue underperformance: Rogers' media revenue in the fourth quarter was softer than expected, affecting its revenue target for the year. This underperformance may indicate a shift in consumer behavior or increased competition in the media landscape, which could impact Rogers' overall growth prospects.
2. Investment in core businesses: Rogers' 2025 outlook reflects continued investment in its core businesses, including network investments and expansion across all regions in Canada. This increased spending may lead to slower revenue growth as the company focuses on long-term strategic initiatives rather than short-term revenue maximization.
3. Market saturation and competition: The wireless and cable markets in Canada may be reaching saturation points, with increased competition from other providers. This could make it more challenging for Rogers to maintain its historical growth rates, as it may face increased pressure on pricing and market share.
4. Economic conditions: Economic conditions, such as inflation, interest rates, or a potential recession, could impact consumer spending on discretionary items like wireless services and cable subscriptions. This could lead to slower growth in Rogers' service revenue and adjusted EBITDA.

In conclusion, Rogers' earnings beat in Q3 2024 was driven by strong wireless service revenue growth, increased wireless equipment revenue, stable cable service revenue, and media revenue growth. However, the company's guidance for 2025 reflects a significant slowdown in growth compared to its historical rates. This change may be driven by a combination of factors, including media revenue underperformance, increased investment in core businesses, market saturation and competition, and potential economic conditions. Investors should closely monitor Rogers' performance and the broader market trends to assess the company's long-term growth prospects.