Earnings call transcript: XLSMART’s Q1 2026 revenue up 38%, EPS beats forecast

XLSMART reported Q1 2026 revenue of IDR 11.8 trillion, up 38% year over year, while EPS of -42.85 beat the -56.79 forecast and normalized EBITDA rose 26% to IDR 5.4 trillion with a 46% margin. Management said integration is ahead of plan, with about 77% of targeted tower dismantling completed and full integration expected within 2026, while maintaining full-year guidance and targeting 5G expansion to 88 cities. The stock rose 1.64% after the release, reflecting a positive read-through despite ongoing depreciation and integration-related costs.

Analysis

The core increment here is not just earnings resilience; it is a cleaner path to synergy monetization sooner than the market likely modeled. Once integration costs roll off, the earnings bridge becomes disproportionately levered to modest ARPU gains and traffic growth because the cost base is already being normalized. That makes the next two quarters a transition zone: headline profitability can still look noisy from accelerated depreciation, but cash generation should improve faster than reported EPS.

The second-order winner is the incumbent mobile ecosystem in Indonesia, not just this name. A sustained move toward higher-yield starter packs and fewer low-value SIMs is effectively industry supply discipline, which should support pricing across peers and reduce the odds of a near-term price war. The risk is that rivals respond with targeted promotions in the lowest-value cohort, which would pressure gross adds before it shows up in ARPU.

The market is probably underappreciating how much of the upside is now coming from operating leverage rather than pure price. If usage elasticity from 5G kicks in over the next 6-12 months, ARPU expansion can continue without needing aggressive tariff hikes, which is a better-quality earnings path and should compress perceived downside risk. The contrarian read: the stock may not need a rerating on the quarter alone, but the combination of de-risked integration, visible tower consolidation, and structurally better mix can support a slow grind higher if management avoids reopening the pricing cycle too early.

The main tail risk is regulatory or competitive interference in spectrum and pricing decisions over the next 3-9 months. If the auction environment forces higher-than-expected capital outlays, or if competitors decide to defend share with bundle-heavy offers, the market could quickly reprice the synergy story. Near-term, the cleaner trade is to own the improving operator and fade the more price-sensitive names.

Key Decisions for Investors

• Long XLSMART on 3-6 month horizon; use post-earnings weakness to add, targeting a continued rerate as integration costs normalize and synergies show through. Risk/reward improves if reported EBITDA stays stable while cash profitability inflects.
• Pair trade: long XLSMART / short a more promotion-sensitive Indonesian telco exposure over the next 1-2 quarters. Thesis: industry pricing discipline benefits the operator with the strongest integration-led cost takeout, while laggards are more exposed to share defense.
• Buy near-dated call spreads in XLSMART for the next 2-3 quarters to express upside from synergy realization without paying full convexity. Best if management continues to beat on operational metrics but headline EPS remains clouded by non-cash depreciation.
• Avoid chasing any short in XLSMART on the earnings beat alone; the better short is a competitor forced into subsidy-heavy acquisition to protect volume over the next 6-12 months. The market may be underestimating how sticky the new higher-yield mix is.
• Set a downside alert around spectrum-auction headlines over the next 1-3 months; if capex expectations widen materially, reduce exposure because that is the cleanest catalyst for multiple compression.