USM's Q2 Earnings Beat Estimates Despite Lower Revenues

Array Digital Infrastructure, Inc. USM reported strong second-quarter 2025 results, with both top and bottom lines surpassing the respective Zacks Consensus Estimate. However, the company reported a revenue decline year over year, owing to a decrease in postpaid and prepaid retail connections. However, strong momentum in the tower businesses partially supported the top line. U.S. Cellular changed its name to Array Digital Infrastructure in July 2025.

USM’s Net Income

The company reported a net income of $31 million or 36 cents per share compared with $17 million or 20 cents in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate by 3 cents.

USM's Revenues

The company generated $916 million in operating revenues compared with $927 million in the prior-year quarter. Net sales were negatively affected by a decline in postpaid and prepaid retail connections. However, the top line also beat the Zacks Consensus Estimate of $904 million.

Service revenues decreased to $736 million from $743 million, while Equipment sales registered $180 million in revenues compared with $184 million in the prior-year quarter.

Tower business witnessed healthy momentum during the quarter and registered revenues of $62 million, up 7% year over year. Management’s effort to diversify its third-party customer base is a positive factor. Wireless revenue was $888 million down 1% year over year. 

Handset connections were 70,000, down from the prior-year quarter’s figure of 73,000. Handset churn rate was 1.12%, compared to the prior-year quarter’s figure of 0.97%. Connected devices decreased to 39,000 from 44,000, while the churn rate was 2.36%, down from 2.47% in the year-ago quarter. Total postpaid connections declined to 3,904,000 from 4,027,000 in the year-earlier quarter. Total prepaid connections were 429,000, down from 439,000 in the year-ago quarter.

Postpaid average revenues per account improved to $131.89 from $130.41 in the year-ago quarter. Postpaid ARPU rose to $51.91 from $51.45 a year ago, with postpaid churn rates of 1.29% and 1.16%, respectively. Prepaid ARPU was $31.72, down from $32.37 in the prior-year quarter. The prepaid churn rate decreased to 3.58% from 3.6% recorded in the year-ago quarter.

Quarterly Details of USM

Adjusted EBITDA in the quarter was $254 million, down from $268 million in the prior-year quarter. Adjusted OIBDA was $208 million, down from $227 million in the year-earlier quarter. Total operating expenses were $881 million, down 1% year over year. The company reported an operating income of $35 million compared with $36 million in the prior-year quarter.

USM's Cash Flow & Liquidity

In the June quarter, Array Digital generated $325 million of cash from operating activities compared with $313 million in the year-ago quarter. As of June 30, 2025, the company had $386 million in cash and cash equivalents and $2.81 billion in long-term debt.

USM’s Zacks Rank & Stocks to Consider

USM currently carries a Zacks Rank #3 (Hold).

Ubiquiti Inc. UI carries a Zacks Rank of 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, it delivered an earnings surprise of 61.29%. Ubiquiti spends significantly on research and development activities for developing innovative products and state-of-the-art technology to expand its addressable market and remain at the cutting edge of networking technology. The company believes its new product pipeline will help to increase average selling prices for high-performance, best-value products, thus raising the top line. Ubiquiti is witnessing healthy traction in the Enterprise Technology segment.

Jabil, Inc. JBL currently carries a Zacks Rank #2. In the last reported quarter, it delivered an earnings surprise of 9.44%.

Jabil’s focus on end-market and product diversification is a key catalyst. The company’s target of “no product or product family should be greater than 5% operating income or cash flows in any fiscal year” is commendable. This initiative should position Jabil well on the growth trajectory.

Motorola Solutions, Inc. MSI currently carries a Zacks Rank of 2. Motorola delivered an earnings surprise of 6.8% in the trailing four quarters.

The company expects to record strong demand across video security and services, land mobile radio products and related software while benefiting from a solid foundation. Motorola intends to boost its position in the public safety domain by entering into strategic alliances with other players in the ecosystem.

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This article originally published on Zacks Investment Research (zacks.com).

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