Sign in

You're signed outSign in or to get full access.

CC

CROWN CASTLE INC. (CCI)·Q2 2025 Earnings Summary

Executive Summary

  • Crown Castle’s Q2 2025 net revenues were $1.06B, with diluted EPS of $0.67 and AFFO per share of $1.02; organic growth excluding Sprint cancellations was 4.7%, while site rental revenues declined 5.3% YoY due to Sprint churn and lower non-cash straight-line and prepaid rent amortization .
  • Guidance was raised: FY25 midpoints increased by $10M for site rental revenues, $25M for Adjusted EBITDA, $35M for AFFO, and $35M for net income, driven by higher leasing activity, $10M lower overhead, and updated interest expense assumptions .
  • Results beat Street consensus on revenue, Primary EPS, and FFO/share in Q2; beats were driven by higher leasing activity across customers, structural service margin improvements, and lower SG&A YoY from 2024 cost actions and absence of prior advisory fees .
  • Near-term catalysts: continued regulatory progress on fiber/small cell sale (on track for 1H26), operational cycle-time improvements, increased land purchases to secure tower economics, and a capital allocation framework (lower dividend to $4.25 annualized, post-close debt paydown and buybacks) .

What Went Well and What Went Wrong

What Went Well

  • Demand and leasing: “higher leasing activity…as [customers] continue to augment capacity” underpinned the guidance raise; organic growth excluding Sprint cancellations came in at 4.7% and core leasing activity remained solid .
  • Cost and execution: SG&A fell $37M YoY; services contribution increased $6M; cycle times improved at the margin, contributing to higher core leasing expectations and service gross margin improvements described as structural .
  • Balance sheet/liquidity: ~86% fixed-rate debt, >6-year weighted average maturity, ~$4.7B revolver availability vs ~$2.2B maturities over the next 12 months; management reiterated maintaining investment grade with 6–6.5x target leverage post-close .

What Went Wrong

  • Sprint cancellations and non-cash headwinds: Site rental revenues declined 5.3% YoY due to $51M Sprint cancellations, $34M lower straight-lined revenues, and $16M lower amortization of prepaid rent .
  • AFFO slight decline: AFFO was $444M ($1.02/share), down 1% YoY; non-cash revenue components and Sprint churn weighed on reported figures despite operational improvements .
  • Limited visibility and seasonality: Management flagged seasonality/timing in expenses (maintenance capex back-half weighted) and indicated incremental back-billing benefits are episodic rather than persistent .

Financial Results

MetricQ4 2024Q1 2025Q2 2025
Net Revenues ($USD Millions)$1,119 $1,061 $1,060
Site Rental Revenues ($USD Millions)$1,070 $1,011 $1,008
Services & Other ($USD Millions)$49 $50 $52
Adjusted EBITDA ($USD Millions)$777 $722 $705
AFFO ($USD Millions)$523 $479 $444
AFFO per Share ($USD)$1.20 $1.10 $1.02
Diluted EPS — Net ($USD)$(10.97) $(1.07) $0.67
Diluted EPS — Continuing Ops ($USD)$1.28 $0.65 $0.61
Adjusted EBITDA Margin (%)69.4% (777/1,119) 68.0% (722/1,061) 66.5% (705/1,060)
Organic Contribution to Site Rental Billings (Adjusted for Sprint Cancellations, % of prior billings)4.1% 5.1% 4.7%

Segment/KPI components

KPI ($USD Millions unless noted)Q2 2024Q1 2025Q2 2025
Core Leasing Activity28 28 28
Escalators23 24 24
Non-renewals(7) (7) (7)
Other Billings2 3 0
Organic Contribution to Site Rental Billings (Adj. for Sprint Cancellations)45 (4.8%) 49 (5.1%) 45 (4.7%)
Sprint Cancellations (Non-renewals)— (51) (51)
Site Rental Revenues$1,064 $1,011 $1,008

Vs Street estimates (S&P Global)

MetricQ1 2025 ActualQ1 2025 Consensus*SurpriseQ2 2025 ActualQ2 2025 Consensus*Surprise
Net Revenues ($USD Millions)$1,061 $1,040.5*+2.0%$1,060 $1,037.4*+2.2%
Primary EPS (GAAP) ($USD)$0.65 $(0.2311)*+$0.88$0.61 $0.5150*+$0.095
FFO per Share (REIT) ($USD)$1.03 $0.9220*+$0.11$0.98 $0.9200*+$0.06

Values retrieved from S&P Global.
*Consensus values are marked with an asterisk.

Guidance Changes

MetricPeriodPrevious Guidance (Apr 30, 2025)Current Guidance (Jul 23, 2025)Change
Site Rental Revenues ($USD Millions)FY 2025$3,987–$4,032 $3,997–$4,042 Raised ($+10M midpoint)
Site Rental Billings ($USD Millions)FY 2025$3,885–$3,915 $3,895–$3,925 Raised ($+10M midpoint)
Adjusted EBITDA ($USD Millions)FY 2025$2,755–$2,805 $2,780–$2,830 Raised ($+25M midpoint)
AFFO ($USD Millions)FY 2025$1,770–$1,820 $1,805–$1,855 Raised ($+35M midpoint)
AFFO per Share ($USD)FY 2025$4.06–$4.17 $4.14–$4.25 Raised (+$0.08 midpoint)
Net Income ($USD Millions)FY 2025$65–$345 $100–$380 Raised ($+35M midpoint)
Net Income per Share – Diluted ($USD)FY 2025$0.15–$0.79 $0.23–$0.87 Raised (+$0.08 midpoint)
Interest Expense & Amortization – Net ($USD Millions)FY 2025$982–$1,027 $972–$1,017 Lowered ($−10M midpoint)
Site Rental Costs of Operations ($USD Millions)FY 2025$987–$1,032 $972–$1,017 Lowered (non-cash stock comp reclass)
Services & Other Gross Margin ($USD Millions)FY 2025$70–$100 $75–$105 Raised ($+5M midpoint)
Discretionary Capex ($USD Millions)FY 2025$185 $185 Maintained
Organic Site Rental Billings Growth (ex-Sprint)FY 20254.5% 4.7% Raised

Earnings Call Themes & Trends

TopicQ4 2024 (Mar 13)Q1 2025 (Apr 30)Q2 2025 (Jul 23)Trend
Fiber/small cell sale progressAgreement signed; close expected 1H26 Recast to discontinued ops; 1H26 close reiterated State approvals underway; DOJ second request in process; still on track 1H26 Improving regulatory progress
Capital allocation/dividendsFramework: dividend ~75–80% of AFFO ex prepaid rent, post-close buyback ~$3B, debt paydown ~$6B Board intends to reduce annualized dividend to ~$4.25 starting Q2 Dividend reduced; post-close buybacks opportunistic vs programmatic Executed dividend reset; buyback details pending
Leasing activity/demandTowers organic growth target 4.5% FY25 Q1 organic growth 5.1% excl. Sprint; activity consistent “Higher leasing activity across the board”; capacity augmentation Stable to rising activity
Operational efficiency/cycle timesEmphasis on system/process upgrades Efficiency focus underway Marginal cycle-time reductions; structural services margin uplift Incremental execution gains
Sprint churn trajectory~$205M hit in 2025; ~$20M annually 2026–2034 Consistent long-term churn 1–2% No change; results reflect 2025 impact Known headwind rolling off over time
AI/mobile data implicationsNot detailedNot detailedAI could drive mobile data growth over time; still early Emerging positive narrative

Management Commentary

  • “With strong operational performance and higher leasing activity…we delivered solid results in the second quarter and increased our full year 2025 Outlook.” — Interim CEO Dan Schlanger .
  • “We have improved the margins in our services business by reducing operating costs, and we have reduced expected full year 2025 overhead costs by $10 million.” — Interim CEO Dan Schlanger .
  • “Second quarter 2025 Adjusted EBITDA was $705 million…partially offset by a $37 million decrease in SG&A…and a $6 million increase in services contribution.” — CFO Sunit Patel .
  • Balance sheet: “86% fixed rate debt…weighted average debt maturity of over 6 years…$4.7B availability.” — CFO Sunit Patel .

Q&A Highlights

  • Leasing drivers: Activity broad-based across customers/geographies, tied to subscriber growth and churn; capacity augments and densification consistent with prior cycles .
  • 5G cycle length: Management expects 5G investment cycle to be at least as long as 4G (10–12 years), potentially longer due to data growth .
  • Cost allocations: Shared corporate costs remain in continuing ops; no systematic quarter-by-quarter shift to discontinued ops; minor adjustments possible .
  • Cycle times: Marginal reductions boost throughput; incentives/process streamlining driving incremental improvements, not step-changes .
  • Capex timing: Maintenance capex back-half weighted; discretionary increases for land purchases and systems .

Estimates Context

  • Q2 2025 delivered revenue and EPS beats versus consensus; higher leasing activity, lower SG&A, and structural service margin improvements supported the beat. Primary EPS (GAAP) beat by ~$0.095 and revenue by ~2.2% versus consensus; FFO/share beat by ~$0.06* .
  • Q1 2025 also exceeded revenue/FFO/share expectations, and Primary EPS came in far above a negative consensus (reflecting expected discontinued ops impacts); management emphasized seasonality and negative straight-line trajectory into year-end* .

Values retrieved from S&P Global.
*Consensus values are marked with an asterisk in the tables.

Key Takeaways for Investors

  • The quarter’s quality was strong beneath non-cash headwinds: organic growth ex-Sprint cancellations was 4.7% and service margins improved structurally, supporting higher FY25 EBITDA/AFFO guidance .
  • Sprint cancellations remain the primary revenue headwind in 2025; beyond 2025, trailing Sprint churn is ~$20M annually within a 1–2% long-term churn framework .
  • Capital allocation is disciplined: dividend reset to ~$4.25 annualized enhances flexibility; post-close priorities are debt reduction and opportunistic buybacks to maintain investment grade (6–6.5x leverage) .
  • Regulatory progress for the fiber/small cell sale is tracking to 1H26; state approvals ongoing and DOJ second request underway; operational separation planning is advanced .
  • Tactical drivers to watch: land purchases to secure tower economics, incremental cycle-time gains, and episodic back-billing/other billings while escalators/core leasing remain stable .
  • Near-term estimate revisions likely bias upward for FY25 EBITDA/AFFO, given raised guidance and lower interest expense assumptions .
  • Medium-term thesis: durable U.S. tower demand (capacity overlays and densification), potential AI-driven mobile data growth, and a focused pure-play tower model should support cash flow compounding beyond the Sprint churn window .