Southern Co. Powers Up: Net Income Jumps 16.5% on Strong Revenue Growth

TL;DR

**SOJF is a buy; strong revenue and net income growth prove its pricing power in a rising cost environment.**

AI Summary

The Southern Company (SOJF) reported a robust financial performance for the three and nine months ended September 30, 2025. Total operating revenues increased by 7.5% to $7.823 billion for the three months ended September 30, 2025, up from $7.274 billion in the prior year, and by 10.7% to $22.572 billion for the nine months, compared to $20.383 billion in 2024. This growth was primarily driven by a 6.3% increase in retail electric revenues to $5.707 billion for the quarter and a 9.2% rise to $15.065 billion for the nine months. Net income attributable to common stockholders saw a significant jump, reaching $1.525 billion for the three months ended September 30, 2025, a 16.5% increase from $1.309 billion in the same period last year. For the nine months, net income grew by 10.4% to $3.729 billion from $3.377 billion. Key business changes include increased fuel costs by 17.4% to $1.345 billion for the quarter and 18.2% to $3.753 billion for the nine months, and a 17.5% rise in depreciation and amortization to $1.422 billion for the quarter. Strategic outlook remains focused on managing these rising operational costs while leveraging increased demand for electricity and natural gas, as evidenced by the growth in both retail and wholesale electric revenues.

Why It Matters

This strong performance from Southern Company signals a healthy demand environment for utilities, which is crucial for investors seeking stable, dividend-paying stocks. The significant increase in net income and operating revenues demonstrates the company's ability to pass through rising fuel and operational costs, a key factor for investor confidence in a high-inflation environment. For employees, continued growth could mean job security and potential expansion opportunities within the Southern Company system. Customers might see continued investment in infrastructure, but also potentially higher rates due to increased fuel and depreciation costs. In the broader market, Southern Company's results reflect the resilience of the utility sector amidst economic shifts and highlight the ongoing importance of traditional energy sources, even as the company navigates new environmental regulations.

Risk Assessment

Risk Level: medium — The risk level is medium due to significant increases in operating expenses, specifically fuel costs rising 17.4% to $1.345 billion for the quarter and depreciation and amortization increasing 17.5% to $1.422 billion. While revenues are growing, these rising costs could compress margins if not effectively managed or passed through to customers, as highlighted in the 'Cautionary Statement Regarding Forward-Looking Information' regarding the ability to control costs and avoid overruns.

Analyst Insight

Investors should consider increasing their exposure to SOJF, given its demonstrated ability to grow revenues and net income despite rising operational costs. Monitor future filings for continued effective cost management and the impact of new environmental regulations, as these will be key to sustaining profitability.

Financial Highlights

revenue

$7.823B

operating Margin

33.1%

net Income

$1.525B

revenue Growth

+7.5%

Revenue Breakdown

Key Numbers

• $7.823B — Total operating revenues (Increased 7.5% for the three months ended September 30, 2025)
• $22.572B — Total operating revenues (Increased 10.7% for the nine months ended September 30, 2025)
• $1.525B — Net income attributable to common stockholders (Increased 16.5% for the three months ended September 30, 2025)
• $3.729B — Net income attributable to common stockholders (Increased 10.4% for the nine months ended September 30, 2025)
• $5.707B — Retail electric revenues (Increased 6.3% for the three months ended September 30, 2025)
• $1.345B — Fuel expenses (Increased 17.4% for the three months ended September 30, 2025)
• $1.422B — Depreciation and amortization (Increased 17.5% for the three months ended September 30, 2025)
• 1,101,104,843 — Common Stock Shares Outstanding (As of September 30, 2025, for The Southern Company)

Key Players & Entities

• The Southern Company (company) — Registrant and parent company
• Alabama Power Company (company) — Subsidiary Registrant
• Georgia Power Company (company) — Subsidiary Registrant
• Mississippi Power Company (company) — Subsidiary Registrant
• Southern Power Company (company) — Subsidiary Registrant
• Southern Company Gas (company) — Subsidiary Registrant
• U.S. Securities and Exchange Commission (regulator) — Filing recipient
• EPA (regulator) — U.S. Environmental Protection Agency, issuing new rules
• New York Stock Exchange (regulator) — Exchange where SOJF common stock is traded
• Bloomberg (company) — Publisher of this analysis

FAQ

Risk Factors

• Rising Fuel and Operating Costs [high — operational]: Fuel expenses increased by 17.4% to $1.345 billion for the quarter and 18.2% to $3.753 billion for the nine months. Other operations and maintenance costs also saw an increase. Managing these rising costs is critical to maintaining profitability.
• Increased Depreciation and Amortization [medium — operational]: Depreciation and amortization expenses rose by 17.5% to $1.422 billion for the quarter and 15.7% to $4.030 billion for the nine months. This reflects ongoing investments in infrastructure and assets.
• Regulatory Environment and Rate Adjustments [high — regulatory]: As a regulated utility, Southern Company is subject to extensive regulation. Changes in regulations or the inability to secure timely and adequate rate adjustments could impact financial performance.
• Wholesale Market Volatility [medium — market]: While wholesale electric revenues grew by 15.4% for the quarter, this segment can be subject to price and demand volatility, impacting earnings predictability.
• Interest Rate Sensitivity [medium — financial]: The company's substantial debt levels make it sensitive to changes in interest rates, which could increase financing costs.
• Infrastructure Investment and Maintenance [medium — operational]: Significant ongoing investments in infrastructure are necessary to maintain reliability and meet demand, which requires substantial capital expenditure and can lead to increased depreciation expenses.

Industry Context

The electric utility sector is characterized by significant capital investment in infrastructure, regulatory oversight, and a growing demand for electricity driven by economic activity and electrification trends. Companies like Southern Company face challenges in managing rising fuel and operational costs while navigating environmental regulations and transitioning to cleaner energy sources.

Regulatory Implications

Southern Company operates in a heavily regulated environment. Changes in environmental regulations, rate case outcomes, and approvals for capital projects are critical. The company's ability to pass through increased costs to customers through approved rate adjustments is a key factor in maintaining profitability.

What Investors Should Do

1. Monitor fuel cost trends and hedging strategies.
2. Analyze the impact of capital expenditures on future earnings and cash flow.
3. Evaluate the company's success in securing favorable rate adjustments.
4. Assess the company's debt management and interest rate exposure.

Glossary

Allowance for equity funds used during construction (AFUDC)

A component of construction work in progress that represents the cost of debt and equity capital used to finance construction projects. It is capitalized into the cost of the asset and recovered through depreciation and return on rate base over the life of the asset. (Indicates the company is actively investing in new construction projects, which will impact future revenue and expenses.)

Depreciation and amortization

The systematic allocation of the cost of tangible (depreciation) and intangible (amortization) assets over their useful lives. It represents a non-cash expense that reduces net income but is added back in cash flow statements. (A significant operating expense that increased by 17.5% for the quarter, reflecting ongoing capital investments.)

Operating Income

Profitability from a company's core business operations before accounting for interest, taxes, and other non-operating income or expenses. (Showed a healthy increase of 9.5% for the quarter ($2.594B vs $2.368B), indicating strong operational performance.)

Year-Over-Year Comparison

Southern Company has demonstrated strong top-line growth, with total operating revenues increasing by 7.5% for the quarter and 10.7% for the nine months compared to the prior year. Net income attributable to common stockholders also saw robust growth of 16.5% and 10.4%, respectively. However, this growth was accompanied by significant increases in operating expenses, particularly fuel costs (+17.4%) and depreciation/amortization (+17.5%), indicating pressure on margins despite revenue gains. No new major risks were highlighted in this filing compared to the previous period, but the existing risks related to operational costs and regulatory environments remain pertinent.

Key Financial Figures

• $5 — outhern Company Common Stock, par value $5 per share SO New York Stock Exchange (
• $40 — 04,843 Alabama Power Company Par Value $40 Per Share 30,537,500 Georgia Power Com
• $0.01 — 1,000 Southern Power Company Par Value $0.01 Per Share 1,000 Southern Company Gas P

Filing Documents

• so-20250930.htm (10-Q) — 7426KB
• ex4-f6nicorsupplementalind.htm (EX-4.F6) — 187KB
• ex24-c2cookgpcpoa.htm (EX-24.C2) — 4KB
• ex24-d2cherrympcpoa.htm (EX-24.D2) — 5KB
• x31a1-q32025so.htm (EX-31.A1) — 10KB
• x31a2-q32025so.htm (EX-31.A2) — 9KB
• x31b1-q32025apc.htm (EX-31.B1) — 10KB
• x31b2-q32025apc.htm (EX-31.B2) — 10KB
• x31c1-q32025gpc.htm (EX-31.C1) — 9KB
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• x31d2-q32025mpc.htm (EX-31.D2) — 10KB
• x31e1-q32025spc.htm (EX-31.E1) — 10KB
• x31e2-q32025spc.htm (EX-31.E2) — 10KB
• x31f1-q32025gas.htm (EX-31.F1) — 10KB
• x31f2-q32025gas.htm (EX-31.F2) — 9KB
• x32a-q32025so.htm (EX-32.A) — 6KB
• x32b-q32025apc.htm (EX-32.B) — 6KB
• x32c-q32025gpc.htm (EX-32.C) — 6KB
• x32d-q32025mpc.htm (EX-32.D) — 6KB
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• x32f-q32025gas.htm (EX-32.F) — 6KB
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• screenshot2025-10x22135334.jpg (GRAPHIC) — 4KB
• 0000092122-25-000084.txt ( ) — 30915KB
• so-20250930.xsd (EX-101.SCH) — 134KB
• so-20250930_cal.xml (EX-101.CAL) — 165KB
• so-20250930_def.xml (EX-101.DEF) — 1243KB
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—FINANCIAL INFORMATION

PART I—FINANCIAL INFORMATION

Financial Statements (Unaudited)

Item 1. Financial Statements (Unaudited) 9

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 97

Quantitative and Qualitative Disclosures about Market Risk

Item 3. Quantitative and Qualitative Disclosures about Market Risk 150

Controls and Procedures

Item 4. Controls and Procedures 150

—OTHER INFORMATION

PART II—OTHER INFORMATION

Legal Proceedings

Item 1. Legal Proceedings 151

Risk Factors

Item 1A. Risk Factors 151

Unregistered Sales of Equity Securities and Use of Proceeds Inapplicable

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Inapplicable

Defaults Upon Senior Securities Inapplicable

Item 3. Defaults Upon Senior Securities Inapplicable

Mine Safety Disclosures Inapplicable

Item 4. Mine Safety Disclosures Inapplicable

Other Information

Item 5. Other Information 151

Exhibits

Item 6. Exhibits 151

Signatures

Signatures 155 3 Table of Contents Index to Financial Statements DEFINITIONS Term Meaning 2022 ARP Alternate Rate Plan approved by the Georgia PSC in 2022 for Georgia Power for the years 2023 through 2025 2023 IRP Update Georgia Power's updated IRP filed in 2023 and approved by the Georgia PSC in April 2024 as modified by a stipulation among Georgia Power, the staff of the Georgia PSC, and certain intervenors 2024 ELG Rule Final rule published by the EPA in May 2024 revising the steam effluent guidelines 2024 GHG Rules Final rules published by the EPA in May 2024 for existing fossil fuel-fired steam electric generating units and new fossil fuel-fired combustion turbines and combined cycle generation facilities 2024 Legacy Rule Final rule published by the EPA in May 2024 related to legacy surface impoundments and CCR management units AFUDC Allowance for funds used during construction AGL Services Company AGL Services Company, Inc., the Southern Company Gas system service company and a wholly-owned subsidiary of Southern Company Gas Alabama Power Alabama Power Company ARO Asset retirement obligation Atlanta Gas Light Atlanta Gas Light Company, a wholly-owned subsidiary of Southern Company Gas CAMT Corporate alternative minimum tax CCR Coal combustion residuals CCR Rule Disposal of Coal Combustion Residuals from Electric Utilities final rule published by the EPA in 2015 Chattanooga Gas Chattanooga Gas Company, a wholly-owned subsidiary of Southern Company Gas Clean Air Act Clean Air Act Amendments of 1990 COD Commercial operation date CODM Chief operating decision maker CWIP Construction work in progress Dalton City of Dalton, Georgia, an incorporated municipality in the state of Georgia, acting by and through its Board of Water, Light, and Sinking Fund Commissioners Dalton Pipeline A pipeline facility in Georgia in which Southern Company Gas has a 50% undivided ownership interest DOE U.S. Department of Energy ECCR Geo

Financial Statements (Unaudited)

Item 1. Financial Statements (Unaudited). Page The Southern Company and Subsidiary Companies: Condensed Consolidated Statements of Income 10 Condensed Consolidated Statements of Comprehensive Income 11 Condensed Consolidated Statements of Cash Flows 12 Condensed Consolidated Balance Sheets 13 Condensed Consolidated Statements of Stockholders' Equity 15 Alabama Power Company: Condensed Statements of Income 17 Condensed Statements of Comprehensive Income 17 Condensed Statements of Cash Flows 18 Condensed Balance Sheets 19 Condensed Statements of Common Stockholder's Equity 21 Georgia Power Company: Condensed Statements of Income 22 Condensed Statements of Comprehensive Income 22 Condensed Statements of Cash Flows 23 Condensed Balance Sheets 24 Condensed Statements of Common Stockholder's Equity 26 Mississippi Power Company: Condensed Statements of Income 27 Condensed Statements of Comprehensive Income 27 Condensed Statements of Cash Flows 28 Condensed Balance Sheets 29 Condensed Statements of Common Stockholder's Equity 31 Southern Power Company and Subsidiary Companies: Condensed Consolidated Statements of Income 32 Condensed Consolidated Statements of Comprehensive Income (Loss) 32 Condensed Consolidated Statements of Cash Flows 33 Condensed Consolidated Balance Sheets 34 Condensed Consolidated Statements of Stockholders' Equity 36 Southern Company Gas and Subsidiary Companies: Condensed Consolidated Statements of Income 38 Condensed Consolidated Statements of Comprehensive Income 38 Condensed Consolidated Statements of Cash Flows 39 Condensed Consolidated Balance Sheets 40 Condensed Consolidated Statements of Stockholder's Equity 42 Combined Notes to the Condensed Financial Statements 43 9 Table of Contents Index to Financial Statements THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) For the Three M

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