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What Drove Sprint’s Fiscal 3Q17 Earnings Growth?

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Dec. 4 2020, Updated 10:53 a.m. ET

Sprint’s earnings trend

Sprint’s (S) solid fiscal 3Q17 (quarter ending December 2017) financial results suggested that the turnaround is on track and the telecom company is indeed holding its own in an intensely competitive wireless market. The company has started to recover from years of customer losses and continues to make progress both on expense optimization initiatives and customer retention and acquisition.

In fiscal 3Q17, Sprint’s earnings grew significantly YoY (year-over-year). Sprint’s earnings per share (or EPS) improved from a loss of $0.12 in fiscal 3Q16 to $1.76 in fiscal 3Q17. However, $7.1 billion of the $7.2 billion in net income in fiscal 3Q17 was a non-cash benefit from tax reform. According to the company, excluding tax reform, hurricane-related impacts, and other non-recurring items, the net loss would have improved by nearly $300 million YoY. On a pro forma basis, Sprint said that it saw a net loss of $0.02 per share in fiscal 3Q17. Wall Street analysts had expected an EPS loss of $0.04.

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Sprint reported strong financials, which were led in part by the company’s continued cost reduction initiatives. In fiscal 3Q17, Sprint realized ~$260 million in net cost reductions. The telecom company added 184,000 in postpaid phone net customers as well as 63,000 prepaid customers in fiscal 3Q17.

Peer comparisons

In 4Q17, Verizon (VZ) posted adjusted EPS of $0.86, which was flat YoY. Meanwhile, AT&T’s (T) adjusted EPS grew by ~18.2% YoY to reach $0.78 during the same quarter. T-Mobile’s (TMUS) adjusted EPS increased by ~35.6% YoY to reach $0.61.

In the next part, we’ll look at Sprint’s revenue growth in fiscal 3Q17.

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