American Tower 2025 Second Quarter Earnings Comments
Earnings Highlight
Revenue: American Tower reported total revenue of $2.63 billion in Q2 2025, surpassing market expectations of $2.59 billion but down 9.3% from $2.9 billion in Q2 2024. Total property revenue reached $2.527 billion, exceeding expectations of $2.5 billion, up 1.2% year-over-year. Growth was driven by robust global demand for communications infrastructure, particularly in international markets, with strong demand for 4G densification and 5G upgrades. Additionally, the CoreSite data center business achieved double-digit growth, fueled by strong AI-related demand.
Earnings Per Share (EPS): Q2 2025 EPS was $0.78, significantly below market expectations and down approximately 60% from $1.92 in Q2 2024. The primary reason was a sharp increase in foreign exchange losses, reaching $484 million in Q2 2025 compared to $21.7 million in Q2 2024, leading to a 58.1% decline in net income. However, Adjusted Funds From Operations (AFFO) per share was $2.60, down 6.8% from $2.79 in Q2 2024, while total AFFO reached $1.218 billion, up 2.6% year-over-year, reflecting improved operational efficiency and strong data center performance.
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Segment Performance:
Organic Tenant Billings Growth: Organic tenant billings grew by 4.7%, in line with market expectations but slightly below Q2 2024 levels. The U.S. market benefited from accelerated mid-band deployments and network densification demand, while international markets were driven by steady demand for 4G densification and 5G upgrades, particularly in emerging markets. Long-term lease agreements provided revenue stability, ensuring consistent growth.
Data Center Performance: The data center business performed strongly, with CoreSite achieving double-digit revenue growth, driven by rapidly increasing demand for AI interconnect solutions, highlighting the market potential in AI and data-intensive applications. To expand capacity, the company acquired a multi-tenant data center facility in Denver for $15 million, adding customer leases and operational space to support future growth. However, data center gross profit fell from $17.2 million in Q2 2024 to $5.3 million, possibly due to rising costs or revenue structure adjustments, which requires further analysis.
Dividend Policy: American Tower maintained its robust dividend policy, declaring a regular cash dividend of $1.70 per share in Q2 2025, totaling $736 million, up 4.9% from $1.62 in Q2 2024. This increase reflects the company’s commitment to delivering consistent shareholder returns and underscores the stability of its cash flow generation.
Future Outlook
American Tower raised its 2025 full-year guidance, expecting:
· Total property revenue of $10.21 billion, up 2.2%;
· Adjusted EBITDA of $7.04 billion, up 3.3%;
· AFFO per share of $10.555, up 6%;
· Organic tenant billings growth of approximately 5% (4.3% in the U.S. and Canada, 6% in international markets);
· Capital expenditures of approximately $1.7 billion, with 75% allocated to high-return projects in developed markets and data centers;
· Dividend payouts of approximately $3.2 billion ($6.48 per share, up 5%).
Growth drivers include 5G network upgrades, double-digit growth in AI-driven data center business (CoreSite), cost optimization, and favorable foreign exchange trends. However, slower customer deployments in the U.S. and bad debt issues in Latin America may slightly impact growth.
American Tower is transitioning from a traditional tower REIT to a global technology infrastructure platform, with its AI-driven data center business providing new growth momentum. The company’s diversified portfolio of over 149,000 sites globally effectively mitigates regional risks, such as short-term slowdowns in the U.S. market and customer issues in Latin America. Long-term lease contracts and high-margin data center strategies provide defensive cash flows. However, key risks to monitor include:
· Foreign Exchange Volatility: Q2 2025 foreign exchange losses reached $484 million, necessitating ongoing monitoring of currency fluctuations in emerging markets.
· Customer Concentration Risk: Dependence on major clients may pose potential risks.
· Interest Rate Pressure: While 96% of debt is fixed-rate, mitigating short-term risks, sustained high interest rates could impact long-term financing costs.
Market Expectations
American Tower’s Q2 2025 earnings report is expected to be released before the market opens on Tuesday, July 29, 2025, followed by a conference call at 8:30 AM Eastern Time (ET). Below are the market expectations for American Tower’s Q2 2025 revenue and earnings per share (EPS):
- Revenue Expectation: American Tower’s total revenue for Q2 2025 is projected to be $2.59 billion, a 10.69% decline from $2.9 billion in the same quarter of 2024.
- EPS Expectation: The expected earnings per share (EPS) for Q2 2025 is $1.66, down 13.54% from $1.92 in Q2 2024.
Key Investor Focus Areas
- Organic Tenant Billings Growth: Organic tenant billings growth is a key metric for assessing American Tower’s ability to attract new customers and retain existing ones. In Q1 2025, organic tenant billings grew by 4.7%, reflecting sustained demand for communications infrastructure. For Q2 2025, growth is expected to remain in a similar range (approximately 4.5%-5%), driven by global 5G deployments and enterprise digital transformation. Investors will closely monitor whether this steady trend continues, particularly in the U.S. and international markets.
- Property Revenue Growth: In Q1 2025, American Tower’s property revenue reached $2.488 billion, up 0.2% year-over-year. The Indian market was a significant contributor, generating $1.27 billion in property revenue with accelerated cash collections, indicating strong regional growth momentum. For Q2 2025, property revenue is expected to remain stable, with year-over-year growth likely between 0% and 1%. Investors should be mindful of potential currency fluctuations impacting international revenue. Performance in India and other emerging markets (such as Africa and Latin America) and the company’s strategies to mitigate currency risks will be key focus areas.
- AFFO per Share: Adjusted Funds From Operations (AFFO) per share is a critical metric for evaluating the company’s cash flow generation and dividend sustainability. In Q1 2025, AFFO per share was $2.75, down 1.4% year-over-year, but adjusted for foreign exchange and other non-recurring factors, it grew by 6.6%, reflecting effective cost optimization. For Q2 2025, AFFO per share is expected to return to positive growth (projected at 2%-5% year-over-year), supported by tenant billings growth and improved operational efficiency. Investors should focus on the company’s cost management, capital expenditure optimization, and whether AFFO provides room for dividend growth.
- Data Center Performance: American Tower’s CoreSite data center business is a key growth driver, fueled by 5G network deployments and surging cloud computing demand. In Q2 2024, CoreSite achieved its second-highest new business bookings, and in Q1 2025, it recorded its highest single-quarter service revenue since 2021. For Q2 2025, CoreSite is expected to continue driving revenue growth, with bookings and revenue contributions potentially reaching new highs. Investors should evaluate the data center business’s revenue share (approximately 10% of total revenue in Q1 2025) and the impact of new bookings on long-term growth.
- Dividend Policy: American Tower is known for its stable and consistently growing dividend policy, making it a favorite among REIT investors. In Q1 2025, the company generated $955 million in free cash flow, supporting a dividend payment of $1.62 per share. Investors will be watching the Q2 2025 earnings report for any announcement of a dividend increase, particularly if AFFO performance remains robust. The magnitude and sustainability of dividend growth will be critical indicators of the company’s financial health.
