DSGX's Q4 Earnings Match, Stock Gains on Solid Revenue Growth

Canadian telcos are back to fighting tooth and nail for subscribers, slashing prices for their mobile services. TD Cowen's Vince Valentini says "over the past week we have noticed more aggressive online wireless pricing from the big three flanker brands." The analyst says that the most notable changes include the addition of a C$39/20GB plan at Fido and Virgin Plus, and more aggressive pricing at Koodo, which now offers a C$39/60GB plan. In-store is also more aggressive, with many of the carriers offering C$35/60GB. "After approximately one and a half months of more disciplined behavior, we have seen a return of more aggressive rate plans," Valentini says. "We fear an imminent response from Freedom," Valentini adds. (adriano.marchese@wsj.com)

Telefonica, S.A. TEF reported a fourth-quarter 2024 net income of €425 million, which plummeted 41.8% year over year. Furthermore, basic earnings per share (EPS) were €0.06 compared with €0.12 in the year-ago quarter.

Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.

Quarterly total revenues increased 5.4% year over year to €10,701 million, driven by strong business performance and positive commercial momentum in key markets. This growth was reflected across major segments, with residential revenues rising 6.5% and the business segment up 10%.

For 2024, revenue increased 1.6% year over year, reaching €41,315 million, exceeding the initial target of around 1% growth.

Results by Business Units

Telefonica Espana: Quarterly revenues in Spain increased 1.3% year over year on a reported basis to €3,364 million, driven by an 8.9% increase in handset sales following successful Black Friday and Christmas campaigns, along with steady service revenue growth of 1%. The quarterly adjusted EBITDA grew 1% to €1,255 million, owing to higher revenues and cost-saving measures, including the staff reduction and network upgrades carried out in the first quarter.

Telefonica Deutschland: Quarterly revenues fell 3.7% to €2,205 million due to sluggish trends across the mobile business amid growth in the fixed business. The quarterly adjusted EBITDA margin was 33.4%. Capital expenditure (CapEx) rose 8.2% to €343 million in the quarter.

VirginMedia-O2 U.K.: Quarterly revenues inched down 0.1% to €3,263 million. The quarterly adjusted EBITDA margin was 36.6%. CapEx grew 23.2% to €661 million in the quarter.

Telefonica Brasil: Quarterly revenues in Brazil decreased 7.4% to €2,350 million due to forex headwinds. The quarterly adjusted EBITDA declined 6.9% to €1,050 million. CapEx decreased 7.8% to €397 million in the quarter.

Telefonica SA Price, Consensus and EPS Surprise

Telefonica SA price-consensus-eps-surprise-chart | Telefonica SA Quote

Telefonica Infra (Telxius): The unit expanded its FTTH coverage to 25 million premises. Telxius, Telefonica’s submarine cable unit, maintained high profitability with an EBITDA margin of 48%.

Telefonica Tech: Revenues increased 11.1% year over year to €612 million, fueled by strength in cybersecurity and IoT business, mainly in the Private Sector. Its strong sales momentum and the rapidly expanding open funnel, which continues to grow at a double-digit rate, are expected to have a positive impact throughout 2025.

Telefonica Hispam: Quarterly revenues in the Telefonica Hispam segment climbed 47.1% to €2,432 million, mainly due to a lower comparison base from the prior-year quarter, which was affected by the ARS depreciation. Other factors included the adoption of a new exchange rate in Venezuela and the one-time revenue recorded in the prior-year quarter from exclusivity deals with ONNet Chile and Colombia.

Other Detail

Quarterly adjusted EBITDA was €1,701 million, down 5.2% year over year. Operating loss was €511 million in the quarter under review compared with a loss of €382 million in the prior-year quarter.

Cash Flow & Liquidity

For the year that ended Dec 31, 2024, Telefonica generated €10,994 million of net cash from operating activities compared with €11,649 million a year ago. The free cash flow for the same period totaled €2,634 million, exceeding the target of more than 10% growth, with an impressive 14.1% increase from the previous year.

As of Dec 31, 2024, the company had €8,062 million in cash and cash equivalents, with €33,192 million of non-current financial liabilities.

2025 Financial Guidance

The company expects continued organic growth in revenues, EBITDA, and EBITDAaL – CapEx for 2025. Free cash flow is expected to remain at similar levels as 2024.

In addition, the company has confirmed a cash dividend of €0.30 per share for 2025, to be distributed in two installments—€0.15 per share in December 2025 and €0.15 per share in June 2026. The second tranche of the 2024 dividend will be paid in June 2025, ensuring continued returns for shareholders.

TEF’s Zacks Rank

Telefonica currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Recent Performance of Other Companies

BCE Inc. BCE reported fourth-quarter 2024 adjusted EPS of C$0.79 (56 cents) compared with C$0.76 in the prior-year quarter. The Zacks Consensus Estimate was pegged at 50 cents.

Shares of BCE have plunged 37.3% in the past year.

Iridium Communications IRDM reported EPS of 32 cents for the fourth quarter of 2024, beating the Zacks Consensus Estimate by 94%. The bottom line compared favorably with the prior quarter's figure of 30 cents per share.

In the past year, IRDM shares have risen 5.1%.

Gilat Satellite Networks Ltd. GILT reported fourth-quarter 2024 adjusted EPS of 15 cents compared with 11 cents a year ago. The bottom line beat the Zacks Consensus Estimate by 7.14%.

Shares of GILT have soared 52.7% in the past six months.

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

Zacks Investment Research

Wix.com Ltd WIX reported non-GAAP earnings per share (EPS) of $1.93 for fourth-quarter 2024, which exceeded the Zacks Consensus Estimate of $1.61. The company had reported EPS of $1.22 in the year-ago quarter.

Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.

Quarterly revenues increased 14% year over year to $460.5 million but missed the Zacks Consensus Estimate of $461.3 million. For 2024, revenues expanded 13% to $1.761 billion.

At the end of Dec. 31, 2024, registered users were 282 million.

In response to the results and strategic updates for 2025, WIX’s shares went up 6.2% in pre-market trading on Feb. 19. WIX's shares have gained 81.8% compared with the Zacks Computer-IT Services’s growth of 7.4% in the past year.

Quarter in Detail

Creative Subscriptions’ revenues (71.6% of total revenues) increased 11% year over year to $329.7 million. Business Solutions’ revenues (28.4% of total revenues) rose 21% to $130.7 million.

For the fourth quarter, Creative Subscriptions annualized recurring revenues were $1.34 billion, up 13% year over year.

Bookings of $464.4 million improved 18% year over year. Creative Subscriptions’ bookings increased 15% year over year to $325.2 million. Business Solutions’ bookings rose 25% to $139.4 million.

Partners revenues in the fourth quarter were $168.1 million, up 29% year over year. WIX continues to witness strong growth and success with its Partners, driven by rapid adoption of its WIX Studio platform.

Wix.com Ltd. Price, Consensus and EPS Surprise

Wix.com Ltd. price-consensus-eps-surprise-chart | Wix.com Ltd. Quote

Region-wise, North America, Europe, and Asia and others contributed 60%, 25%, and 11%, respectively, to fourth-quarter revenues, up 15%, 17% and 10% year over year. Latin America contributed 4% to total quarterly revenues, declining 2% year over year.

Operating Details

Non-GAAP gross margin was flat year over year at 70%, with the Creative Subscriptions segment achieving 85% and the Business Solutions segment at 32%.

Wix reported a non-GAAP operating income of $100.5 million compared with $64.7 million in the year-ago quarter.

Balance Sheet & Cash Flow

As of Dec. 31, 2024, Wix had cash and cash equivalents of $660.9 million compared with $439.4 million as of Sept. 30, 2024.

Cash flow from operations amounted to $497.4 million compared with $248.2 million in the previous year.

Capital expenditures totaled $19.3 million. Free cash flow was $478.1 million.

Financial Vision for 2025

Approximately 40% of Wix’s revenues come from non-U.S. dollar currencies, exposing it to forex fluctuations. The company acknowledges headwinds from a stronger U.S. dollar but expects the impact on free cash flow to be minimal due to cost efficiencies. Its Rule of 45 strategy (which combines revenue growth and free cash flow margin) is expected to be met at the high end of its 2025 outlook.

For first-quarter 2025, revenues are expected to be between $469 million and $473 million, suggesting 12-13% growth from the prior-year quarter's reported figure.

The company anticipates 2025 revenues to grow 12-14% in the range of $1.97-$2 billion.

Wix estimates free cash flow for 2025 in the range of $590-$610 million, implying 30-31% of revenues.

WIX’s Zacks Rank

Currently, Wix carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Recent Performance of Other Companies

Sensata Technologies Holding plc ST reported fourth-quarter 2024 EPS of 76 cents compared with 81 cents a year ago. The bottom line met the Zacks Consensus Estimate.

In the past year, shares of ST have lost 20.2%.

BCE Inc. BCE reported fourth-quarter 2024 adjusted EPS of C$0.79 (56 cents) compared with C$0.76 in the prior-year quarter. The Zacks Consensus Estimate was pegged at 50 cents.

Shares of BCE have plunged 38.3% in the past year.

PTC Inc PTC reported first-quarter fiscal 2025 non-GAAP EPS of $1.10, beating the Zacks Consensus Estimate by 20.9%. The company reported non-GAAP EPS of $1.11 in the prior-year quarter.

In the past year, shares of PTC have declined 5.5%.

Zacks Investment Research

TELUS Corporation TU reported fourth-quarter 2024 adjusted earnings per share (EPS) of C$0.25 (18 cents) compared with C$0.24 in the prior-year quarter. The bottom line surpassed the Zacks Consensus Estimate by 20%.

Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.

Quarterly total operating revenues increased 3.5% year over year to C$5,381 million ($3,846 million) owing to higher service revenues and higher other income from real estate and copper monetization in the TELUS technology solutions (TTech) segment, offset by lower service revenues in the TELUS digital experience segment (TELUS Digital). The top line beat the Zacks Consensus Estimate of $3,643.7 million.

TELUS Corporation Price, Consensus and EPS Surprise

TELUS Corporation price-consensus-eps-surprise-chart | TELUS Corporation Quote

The company’s operating revenues (from contracts with customers) were C$5,331 million, up 3.4% year over year. TELUS reported 328,000 net customer additions in the fourth quarter, down 76,000. This includes strong mobile phone net additions of 70,000, 194,000 connected device additions and 64,000 total fixed net additions.

Quarterly Segmental Results

In the fourth quarter, TTech revenues and other income rose 4.9% year over year to C$4,677 million. TTech operating revenues (arising from contracts with customers) increased 4.1% year over year to $4,622 million.

This was driven by mobile equipment, fixed data revenue growth and strong growth in health, agriculture and consumer goods services. However, the growth is partly offset by lower prices in mobile, along with a decline in TV and fixed legacy voice services sales.

Mobile network revenues decreased 0.1% year over year to C$1,758 million due to a decline in mobile phone ARPU, partially offset by higher mobile phone subscriber count and strength in IoT connections.

Fixed voice services revenues declined 8% year over year to C$173 million as a result of the ongoing fall in legacy voice revenues due to technological substitution and price plan changes. The decrease was partly offset by the success of bundled product offerings and the company’s retention efforts.

Health services revenues increased 10% year over year to C$475 million, driven by business acquisitions in employee and family assistance programs along with organic growth, a boost in virtual pharmacy sales and rising demand for health benefits management and retirement solutions.

The segment’s adjusted EBITDA of C$1,711 million increased 7% year over year, owing to broad-based cost-reduction efforts, benefits from real estate and copper monetization and a rise in health services revenues. Adjusted EBITDA margin improved 110 basis points year over year to 38.2%.

TELUS Digital's operating revenues (arising from contracts with customers) fell 0.7% to C$709 million due to lower revenues from certain technology and eCommerce clients. This was partially offset by a favorable foreign currency impact.

TELUS Digital's operating revenues and other income inched down 0.2% to C$967 million. The segment’s adjusted EBITDA of C$143 million decreased 42.6% from the year-ago quarter.

Other Details

Adjusted EBITDA decreased a modest 0.6% year over year to C$1,838 million.

Cash Flow & Liquidity

In the fourth quarter, TELUS generated C$1,077 million of cash from operating activities compared with C$1,314 million in the year-ago quarter. The free cash flow decreased 10.3% to C$534 million.

Capital expenditures (excluding spectrum licenses) increased 3.4% year over year to C$551 million.

2025 Guidance

TELUS issued its financial targets for 2025, backed by long-term financial objectives, policies and guidelines. The company anticipates 2-4% growth in TTech operating revenues, which excludes other income. In 2024, TTech's operating revenues totaled $17,407 million.

TTech adjusted EBITDA is expected to grow 3-5%, while free cash flow is projected to reach nearly $2.15 billion. Capital expenditures are estimated at $2.5 billion, excluding $100 million allocated for real estate development initiatives.

TU’s Zacks Rank

TELUS currently carries a Zacks Rank #4 (Sell). Shares of the company have lost 17.2% in the past year compared with the Zacks Diversified Communication Services industry’s decline of 16.1%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Recent Performance of Other Companies in Broader Utilities Space

BCE Inc. BCE reported fourth-quarter 2024 adjusted EPS of C$0.79 (56 cents) compared with C$0.76 in the prior-year quarter. The Zacks Consensus Estimate was pegged at 50 cents.

In the past year, shares of BCE have declined 36.6%.

DTE Energy Company DTE reported fourth-quarter 2024 operating EPS of $1.51, which beat the Zacks Consensus Estimate of $1.46 by 3.4%. However, the bottom line declined 23.4% from the year-ago reported figure of $1.97.

In the past year, shares of DTE have gained 18.6%.

Exelon Corporation’s EXC fourth-quarter 2024 EPS of 64 cents surpassed the Zacks Consensus Estimate of 59 cents by 8.5%. The figure also increased from the year-ago level of 60 cents per share. Higher distribution and transmission rate increases at Pepco Holdings LLC boosted earnings.

In the past year, EXC shares have gained 23.2%.

Zacks Investment Research