T-Mobile (NASDAQ:TMUS) shares moved lower in premarket trading on Thursday after the wireless carrier reported second-quarter earnings above analysts’ expectations but fell short of revenue forecasts, despite lifting its full-year free cash flow outlook.
While profitability and cash generation remained strong, investors focused on the slight revenue miss following another quarter of steady subscriber growth.
Earnings surpass expectations as revenue narrowly misses
T-Mobile reported second-quarter earnings of $2.85 per share, comfortably ahead of Wall Street’s estimate of $2.58.
Revenue increased approximately 8% from a year earlier to $22.79 billion, although the figure came in just below the consensus forecast of $22.98 billion.
Following the results, the company’s shares fell around 3.4% in premarket trading.
Service revenue and profitability continue to improve
Service revenue climbed 9% year over year to $19.0 billion, supported by a 13% increase in postpaid service revenue, which reached $15.9 billion.
Core adjusted EBITDA rose 12% to $9.5 billion during the quarter, while adjusted free cash flow increased 4% to $4.8 billion, reflecting continued operational strength.
Postpaid average revenue per account (ARPA) improved 2% from the prior year to $152.91.
However, postpaid net account additions declined 13% year over year to 277,000, indicating a slower pace of customer growth compared with the same period last year.
Full-year cash flow guidance increased
T-Mobile raised its full-year outlook for cash generation, increasing its forecast for net cash provided by operating activities, including net payments related to the UScellular merger, to a range of $28.4 billion to $28.8 billion.
The previous forecast had been between $28.1 billion and $28.7 billion.
The company also lifted its adjusted free cash flow guidance, including merger-related costs, to between $18.4 billion and $18.8 billion, compared with its earlier outlook of $18.1 billion to $18.7 billion.
Management noted that the revised forecast does not include any material net cash inflows from securitisation.
Company maintains operating guidance
Alongside the higher cash flow outlook, T-Mobile reaffirmed its expectations for postpaid net account additions of between 950,000 and 1.05 million for the full year.
The company also maintained guidance for core adjusted EBITDA of $37.1 billion to $37.5 billion, while forecasting approximately $10 billion in cash purchases of property and equipment.
Despite the improved cash flow outlook and stronger earnings, the modest revenue shortfall appeared to weigh on investor sentiment in early trading.
T-Mobile US stock price
