T Misses Q3 Earnings & Revenue Estimates Despite Healthy Demand

AT&T Inc. T reported modest third-quarter 2025 results with healthy mobility and broadband demand trends. However, both adjusted earnings and revenues missed the respective Zacks Consensus Estimate.

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 $9.28 billion or $1.29 per share against a net loss of $0.23 billion or a loss of 3 cents per share in the year-ago quarter. The significant improvement was primarily attributable to a $5.5 billion gain from the sale of DIRECTV investments during the reported quarter and a $4.4 billion non-cash goodwill impairment charge in the year-earlier period.

Excluding non-recurring items, adjusted earnings remained flat at 54 cents per share. Adjusted earnings for the third quarter missed the Zacks Consensus Estimate by a penny.

Quarter Details

Quarterly GAAP operating revenues increased 1.6% year over year to $30.71 billion, largely due to higher Mobility service and equipment sales, Consumer Wireline and Mexico revenues, partially offset by lower Business Wireline revenues. The top line missed the consensus mark of $30.96 billion. 

Adjusted operating income increased to $6.55 billion from $6.51 billion for respective adjusted operating income margins of 21.3% and 21.6%. Adjusted EBITDA improved to $11.86 billion from $11.59 billion.

AT&T witnessed solid subscriber momentum with 328,000 post-paid net additions. This included 405,000 postpaid wireless phone additions. Postpaid churn was 1.07%, while postpaid phone-only average revenue per user (ARPU) decreased 0.8% year over year to $56.64 due to lower international roaming.

Segmental Performance

Communications: Total segment operating revenues were $29.52 billion, up from $29.07 billion, as improvements in the Mobility business (up 3.1% to $21.71 billion) and Consumer Wireline (up 4.1% to $3.56 billion) was partially offset by a decline in Business Wireline (down 7.8% to $4.25 billion). The segment revenues missed our estimates of $30.67 billion.

Service revenues from the Mobility unit improved 2.3% to $16.93 billion, driven by solid subscriber gains, while equipment revenues were up 6.1% year over year to $4.79 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 288,000, while Internet Air added 270,000 subscribers during the quarter. By the end of 2030, AT&T expects to reach approximately 50 million customer locations with its in-region fiber network and more than 60 million fiber locations when including the Lumen Mass Markets fiber assets.

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 0.8% to $7.1 billion, with operating margins of 24% (down 60 bps). Adjusted EBITDA was $12.17 billion compared with $11.97 billion in the year-ago quarter.

Latin America: Total operating revenues were $1.09 billion, up 7.1% year over year, due to higher equipment sales and service revenues. Adjusted EBITDA improved to $199 million from $168 million in the year-ago quarter.

Cash Flow & Liquidity

For the first nine months of 2025, AT&T generated $28.96 billion of cash from operations compared with $26.87 billion a year ago. Free cash flow for the quarter was $4.86 billion compared with $4.6 billion in the year-ago quarter. As of Sept. 30, 2025, AT&T had $20.27 billion of cash and cash equivalents with long-term debt of $128.09 billion. The company repurchased $1.5 billion worth of shares during the quarter. Net debt to adjusted EBITDA was about 2.59X.

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 3% or more, while broadband revenues are anticipated to grow in the mid to high-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. AT&T expects to repurchase $4 billion worth of shares in 2025. The company is also aiming to reduce its debt burden by monetizing non-core assets.

Zacks Rank

AT&T currently has a Zacks Rank #3 (Hold). 

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 third-quarter 2025 earnings on Nov. 5. The Zacks Consensus Estimate for earnings is pegged at 72 cents per share, suggesting a growth of 20% from the year-ago reported figure.

Arista has a long-term earnings growth expectation of 18.7%. Arista delivered an average earnings surprise of 12.8% in the last four reported quarters.

Akamai Technologies, Inc. AKAM is slated to release third-quarter 2025 earnings on Nov. 6. The Zacks Consensus Estimate for earnings is pegged at $1.64 per share, indicating a 3.1% growth from the year-ago reported figure.

Akamai has a long-term earnings growth expectation of 4.9%. Akamai delivered an average earnings surprise of 7.1% in the last four reported quarters.

Pinterest, Inc. PINS is set to release third-quarter 2025 earnings on Nov. 4. The Zacks Consensus Estimate for earnings is pegged at 42 cents per share, implying a growth of 5% from the year-ago reported figure.

Pinterest has a long-term earnings growth expectation of 33.9%. Pinterest delivered an average negative earnings surprise of 1.1% in the last four reported quarters.

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

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