Yahoo Finance TELUS (TU) Q1 Earnings Beat Estimates, Revenues Decrease Y/Y
TELUS Corporation TU reported first-quarter 2024 adjusted earnings per share (EPS) of C$0.26 (19 cents per share), which decreased 3.7% year over year. The bottom line surpassed the Zacks Consensus Estimate of 18 cents.
Quarterly total operating revenues decreased 0.6% year over year to C$4,932 million ($3,658.5 million) owing to lower service revenues in TELUS technology solutions and TELUS International. The top line missed the consensus estimate of $3,726.2 million.
However, it was partly offset by higher demand for premium bundled offerings and strong customer retention efforts, resulting in total customer net additions of 209,000 in the reported quarter.
TELUS Corporation Price, Consensus and EPS Surprise
TELUS Corporation price-consensus-eps-surprise-chart | TELUS Corporation Quote
Quarterly Segmental Results
TELUS reports revenues in two segments — TELUS technology solutions (TTech) and Digitally-led customer experiences — TELUS International (DLCX).
In the first quarter, TTech revenues (arising from contracts with customers) rose 0.4% year over year to C$4,184 million, primarily driven by higher mobile network revenues and solid performance across fixed data services, partly offset by lower fixed voice revenues. Mobile network revenues rose 2.9% year over year to C$1,746 million due to increasing mobile phone and connected device subscriber growth and roaming revenue growth.
Fixed voice services revenues declined 6.8% year over year to C$179 million. This reflects the ongoing decline in legacy voice revenues from technological substitution and price plan changes. This was partly offset by strong demand for bundled product offerings and migration from legacy to intellectual property service offerings.
Health services revenues decreased 0.7% year over year to C$420 million due to customer churn outpacing the growth of new clients, partly offset by growth in the pharmacy management software business. The segment’s adjusted EBITDA of C$1,659 million increased 4.1% year over year, owing to broad-based cost-reduction efforts and subscriber growth. Adjusted EBITDA margin was 39.4% compared with 37.8% in the year-ago quarter.
Revenues from DLCX fell 0.4% year over year to C$924 million. Operating revenues (arising from contracts with customers) fell 9.8% to C$682 million due to lower revenues from a leading social media client and a reduction in revenues in several industry verticals, especially in eCommerce and fintech and travel and hospitality.
The segment’s adjusted EBITDA of C$207 million increased 11.3% from the year-ago quarter’s figure. Adjusted EBITDA margin was 22.4% compared with 20.1% in the prior-year quarter.
Other Details
Adjusted EBITDA increased 4.3% year over year to C$1,856 million, driven by higher residential Internet and security revenues and broad-based cost-reduction efforts across both the TTech and DLCX segments.
Cash Flow & Liquidity
In the first quarter, TELUS generated C$950 million of cash from operating activities compared with C$761 million in the year-ago quarter. The free cash flow for the same period decreased 26% to C$396 million.
Capital expenditures (excluding spectrum licenses) rose 1.7% year over year to C$725 million to support the construction of multi-year development projects, including TELUS OceanTM and other commercial buildings in British Columbia.
As of Mar 31, 2024, the company had C$2,164 million of net cash and temporary investments with C$24,450 million in long-term debt compared with C$864 million and C$23,355 million, respectively, as of Dec 31, 2023.
2024 Outlook
TELUS TTech expects operating revenue growth of approximately 2-4%.
TELUS expects TTech adjusted EBITDA to grow in the range of 5.5-7.5%. The free cash flow is anticipated to be approximately $2.3 billion.
Capital expenditures are expected to be $2.6 billion.
Zacks Rank & Stocks to Consider
TELUS currently has a Zacks Rank #3 (Hold).
Some better-ranked stocks from the broader technology space are Badger Meter BMI, Watts Water Technologies WTS and Arista Networks ANET. Badger Meter sports a Zacks Rank #1 (Strong Buy), whereas Watts Water Technologies and Arista Networks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Badger Meter’s 2024 EPS has increased 9.9% in the past 60 days to $3.89. BMI’s long-term earnings growth rate is 15.6%.
Badger Meter’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, delivering an average surprise of 12.7%. BMI shares have risen 35% in the past year.
The Zacks Consensus Estimate for Watts Water Technologies’ fiscal 2024 EPS has improved 2.5% in the past 60 days to $8.54. WTS’ long-term earnings growth rate is 8%.
WTS’ earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 11.7%. Shares of WTS have risen 16.5% in the past year
The Zacks Consensus Estimate for ANET’s 2024 EPS has increased 0.9% in the past 60 days to $7.53. ANET’s long-term earnings growth rate is 17.5%.
Arista Networks’ earnings beat the Zacks Consensus Estimate in each of the last four quarters, delivering an average earnings surprise of 13.3%. Shares of ANET have gained 62.2% in the past year.
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TELUS Corporation (TU) : Free Stock Analysis Report
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