Cell tower operator Crown Castle International (NYSE:CCI) reported first-quarter results after the closing bell on Wednesday. Business is booming ahead of the impending installation of 5G wireless networks.

Here's a closer look at Crown Castle's report.

Crown Castle's first-quarter results: The raw numbers

Metric

Q1 2018

Q1 2017

Year-Over-Year Change

Site rental revenues

$1.15 billion

$857 million

35%

Net income

$114 million

$119 million

(4%)

AFFO per share (diluted)

$1.36

$1.24

9%

Data source: Crown Castle.

Adjusted funds from operations, or AFFO, is a profitability measure commonly used by real-estate investment trusts (REIT) such as Crown Castle. The metric is meant to reflect profits from the actual rental activity, backing out many unrelated items. It is often used as an alternative to non-GAAP earnings by Wall Street analysts and ordinary investors.

What happened with Crown Castle this quarter?

The company is still integrating its recent fiber network acquisitions while preparing for a new round of infrastructure upgrades among its telecom customers.

Driven by unexpectedly high volumes of new site rental orders, Crown Castle exceeded the midpoint of its first-quarter revenue guidance by $16 million. Almost all of that trickled down the income statement to produce a $15 million surprise against management's AFFO expectations.

Small cell installations with fiber-optic connections to Crown Castle's backbone are popular at the moment. With 50,000 small cell nodes already deployed, Crown Castle now has firm orders for another 30,000 small cell sites in the pipeline. The volume of new orders in the first quarter matched the order volume of the entire fiscal 2016 year.

A heavily populated cell tower in silhouette against a colorful sunset.

Image source: Getty Images.

What management had to say

"We continue to see tremendous activity across our unique portfolio of infrastructure assets," said CEO Jay Brown in a prepared statement.

In our tower business, we have recently signed comprehensive leasing agreements with several of our largest customers, which we believe signals the beginning of a sustained period of infrastructure investments by our customers.

To support these conclusions about the state of the wireless network market, the company also presented some recent quotes from its largest customers. I found these two citations to be particularly helpful:

The race to 5G is heating up, and let me be clear, today's announcement is a huge step forward toward Sprint being first to offer a 5G mobile network

-- Sprint (NYSE:S) CEO Marcelo Claure

...and...

Every dollar we invest in our network is a 5G dollar. All the LTE Advanced work we do is 5G work, and we're leading the industry with the most advanced LTE network in the country. Every step we take -- every innovation -- builds toward a future-proof 5G network.

-- T-Mobile (NASDAQ:TMUS) CTO Neville Ray

Large and swift 5G installations will help Crown Castle directly, so this secular trend should be a serious growth engine for the next few years.

Looking ahead

5G and small cells go hand in hand since the technical standards of the next-generation networks will support many more connection points with fast backbone connections but lower-powered radio signals. Crown Castle investors should keep a close eye on the evolution of the 5G marketplace.

To tide you over until then, Crown Castle issued a detailed slate of guidance targets for the second quarter and full year.

In the second quarter, site rental revenues should rise 33% year over year to land near $1.16 billion. Net income is seen growing 35% larger at $152 million. AFFO guidance pointed to approximately $544 million, or a 24% year-over-year boost.

Full-year site rental revenues are now seen stopping at roughly $4.66 billion, a 1.2% increase over the target provided three months ago. AFFO profits should stop at $2.28 billion, or $5.49 per diluted share. That target sits 1.6% above Crown Castle's previous estimate for the same metric.