AT&T Exceeds Expectations in Q2 2025 with Revenue and Net Income Growth

AT&T's Q2 2025 earnings beat expectations with a 3.5% revenue increase to $30.8 billion, a 26% net income increase to $4.46 billion, and a 14% profit margin. EPS rose to $0.62, surpassing estimates by 17%. The company's share price remains unchanged from a week ago. Revenue is forecast to grow 1.8% p.a. over the next 3 years, compared to a 4.4% growth forecast for the US Telecom industry.

AT&T (NYSE: T) reported its second-quarter 2025 earnings, with revenues of $30.8 billion, a 3.5% increase year-over-year (YoY), and net income of $4.46 billion, a 26% increase YoY. The company's earnings per share (EPS) rose to $0.62, surpassing analysts' estimates by 17%. The company's profit margin improved to 14%, up from 12% in the same quarter last year. The share price remained unchanged from a week ago [1].

AT&T's mobility service revenue grew by 6.7% to $16.9 billion, reflecting strong demand for devices and bundled wireless offerings. The company added 401,000 net postpaid phone subscribers, easily topping analysts' expectations of 296,000 and outshining Verizon, which lost 9,000 subscribers during the same period [1]. However, postpaid phone churn increased to 0.87%, up 17 basis points year-over-year, due to customers coming off device financing contracts [1].

On the broadband side, AT&T reported 243,000 net fiber adds, slightly below the projected 250,600 and down from 261,000 in Q1. The company reaffirmed its aggressive fiber expansion goals, stating it will allocate $3.5 billion to reach 4 million new locations per year. By 2030, AT&T aims to pass 50 million customer locations with in-region fiber and more than 60 million including Lumen’s Mass Markets assets [1].

Consumer fiber broadband revenues grew an impressive 18.9% to $2.1 billion from the prior year. The company also divested its remaining 70% stake in DirecTV during the quarter [2]. AT&T's free cash flow increased from $4 billion to $4.4 billion, with higher cash from operations up $700 million to $9.8 billion [2].

Despite beating earnings and revenue estimates, the modest fiber miss and comparisons to Verizon's upward earnings revision appeared to weigh on AT&T's stock. However, with wireless momentum strong and long-term infrastructure plans in motion, AT&T enters the second half of the year with a solid foundation and higher investor expectations to match [1].

AT&T's balance sheet continued to improve, with net debt standing at $120.3 billion and total debt at $132.3 billion. The company plans to repurchase $4 billion worth of shares in 2025 [2]. AT&T's free cash flow payout ratio sits at 54.6%, providing ample room for further buyback implementations and dividend increases [2].

Looking ahead, AT&T expects strong consumer fiber broadband revenue growth of double-digits. The company's outlook for the year remains solid, with EPS and free cash flow expected to decline in 2025 but accelerate growth beyond that [2].

References:
[1] https://www.rcrwireless.com/20250723/business/att-beats-q2-estimates
[2] https://seekingalpha.com/article/4803746-att-solid-second-quarter-upside-likely-long-term