AD Q2 Earnings Beat Estimates on Strong Site Rental Growth

Array Digital Infrastructure, Inc. AD delivered second-quarter 2026 results above the Zacks Consensus Estimate, with earnings of 64 cents per share topping the 62-cent estimate by 3.2%. Revenues of $54 million also beat the $52 million estimate by 3.8%. Company-reported earnings per share from continuing operations surged 2,170.6% year over year to $3.86, while revenues rose 89.5% to $54.1 million.

The top line benefited from a 95% year-over-year increase in site rental revenues as Array continued optimizing its tower portfolio. Tower tenancy also increased sequentially, while spectrum monetization generated substantial proceeds during the quarter.

AD's Tower Leasing Gains Momentum

Array generated $54.1 million in operating revenues, up from $28.5 million in the year-ago quarter. Site rental revenues climbed 95% to $53.2 million, while services revenue declined 31% to $0.9 million. The company attributed the rental growth to its expanded tower leasing activity following the T-Mobile master license agreement.

Cash site rental revenues increased to $47.7 million from $26.4 million. Revenues from T-Mobile committed sites contributed $14.2 million, while interim sites added $6.7 million. Excluding interim sites, total site rental revenues increased 65% year over year.

Array Expands Its Tower Footprint

Array ended the quarter with 4,456 owned towers, up from 4,452 at the end of the first quarter. Colocations increased to 4,362 from 4,290, while the tower tenancy rate improved to 0.98 from 0.96. The company highlighted consecutive quarter-over-quarter tenancy growth as evidence of continued progress in optimizing tower operations.

The company is also managing the transition following the sale of its wireless operations. T-Mobile has until January 2028 to finalize committed-site selections, after which Array estimates it could own between 1,000 and 1,700 tenantless towers. Array plans to pursue lease-up efforts and ground-rent rationalization while assessing alternatives for remaining sites.

AD Advances Spectrum Monetization

Array continued monetizing its remaining spectrum assets during the second quarter. It closed sales of certain 700 MHz licenses for $74.8 million on May 5, certain 600 MHz licenses for $86.4 million on May 12 and cellular and other spectrum licenses for $1 billion on June 1.

The transactions drove a $409.8 million gain on license sales and exchanges during the quarter. Array also has roughly $30 million of additional 600 MHz and 700 MHz licenses tied to pending T-Mobile transactions, subject to regulatory approval and customary closing conditions.

Array Improves Adjusted Profitability

Adjusted EBITDA rose 56% year over year to $56.2 million, supported by stronger site rental revenue. Adjusted OIBDA improved to $15.1 million from a $9.5 million loss in the prior-year quarter, reflecting better underlying operating performance.

Cost of operations increased 21% to $23.5 million, while selling, general and administrative expenses rose 18% to $22.9 million. The company also recorded $7.4 million of expenses related to its strategic alternatives review. The gain on license sales nevertheless pushed operating income to $399.3 million from an $18.2 million operating loss a year earlier.

AD Strengthens Its Financial Position

Array ended June with $416.4 million in cash and cash equivalents, compared with $113.4 million at the end of 2025. The increase was supported by proceeds from asset divestitures, which contributed $2.19 billion to investing cash flow during the first six months of 2026.

The company returned substantial capital to shareholders after monetizing spectrum. Dividends paid to Array shareholders totaled $1.84 billion through June 30, including the $11-per-share special dividend issued June 25. Array also reported $666.8 million of long-term debt, net, at quarter-end.

Cash generation from operations was weaker, with $19 million of net cash used in operating activities during the first six months. The company reported a free cash flow of $6.6 million.

Array Raises 2026 Guidance

Management raised its 2026 revenue outlook to $205-$215 million from $200-$215 million, citing higher interim site revenue. Adjusted EBITDA guidance increased to $220-$235 million from $200-$215 million, while adjusted OIBDA guidance rose to $60-$75 million from $50-$65 million. Capital expenditures remain projected at $25-$35 million.

Array continues to focus on tower tenancy growth, spectrum monetization and operational efficiency. The company also faces a non-binding proposal from majority owner TDS to acquire the Array shares it does not already own, with a special committee of independent directors evaluating the proposal.

AD’s Zacks Rank

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

Other Upcoming Releases

Keysight Technologies, Inc. KEYS is scheduled to release third-quarter fiscal 2026 earnings on Aug. 18. The Zacks Consensus Estimate for earnings is pegged at $2.46 per share, suggesting growth of 43.02% from the year-ago reported figure.

Keysight has a long-term earnings growth expectation of 19.44%. The company delivered an average earnings surprise of 9.46% in the last four reported quarters.

Analog Devices, Inc. ADI is set to release third-quarter fiscal 2026 earnings on Aug. 19. The Zacks Consensus Estimate for earnings is pegged at $3.33 per share, implying growth of 62.44% from the year-ago reported figure.

Analog Devices has a long-term earnings growth expectation of 31.04%. The company delivered an average earnings surprise of 5.48% in the last four reported quarters.

Applied Materials, Inc. AMAT is scheduled to release third-quarter fiscal 2026 earnings on Aug. 13. The Zacks Consensus Estimate for earnings is pegged at $3.36 per share, suggesting growth of 35.48% from the year-ago reported figure.

Applied Materials has a long-term earnings growth expectation of 32.44%. The company delivered an average earnings surprise of 6.06% in the last four reported quarters.

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