Verizon Communications Inc. Earnings Recaps
Verizon’s stock rose 5.8% following Q2 results that showed accelerating subscriber growth, improving customer economics, and strong free cash flow, prompting the company to raise its full-year revenue, EPS, and cash flow guidance.
Key takeaways
- Postpaid phone net adds reached 184,000 in Q2, the best consumer postpaid phone growth in five years and the highest gross adds in eight years.
- Mobility and broadband service revenue grew 2.8% year-over-year, up from 1.6% in Q1, with Q3 and Q4 guidance now targeting near 3% and approximately 4% growth, respectively.
- Adjusted EPS increased 6.6% year-over-year to $1.30, leading to raised full-year EPS growth guidance of 6% to 7%.
- Free cash flow surged 24% year-over-year to $6.4 billion, pushing full-year free cash flow growth guidance to 9% to 10%.
- Churn improved meaningfully, with consumer postpaid phone churn declining to 84 basis points, and customer acquisition and retention costs falling 15% to 17%, reflecting enhanced operating leverage and a structural shift in the business model.
Headline Summary: Verizon shares finished up 1.9% after Q1 earnings, reflecting a neutral market response as operational improvements were met by mixed service revenue trends and measured guidance commentary. Investors appeared to weigh improved churn and postpaid phone net adds against below-guided mobility and broadband service revenue growth and impacts from a January network outage. Key Takeaways:
Key takeaways
- Total revenue grew 2.9% to $34.4 billion for the quarter.
- Mobility and broadband service revenue growth came in below the company’s annual guided range, partially due to an 80 basis point headwind from January’s network outage.
- Postpaid phone net adds were 55,000, marking Verizon’s first Q1 with positive postpaid phone growth in 13 years; overall mobility and broadband net adds totaled nearly 0.5 million.
- Consumer postpaid phone churn improved both sequentially and within the quarter, declining to below 85 basis points in March.
- Adjusted EPS rose 7.6% year-over-year to $1.28, and free cash flow increased 4% to $3.8 billion.
Verizon's third quarter results show a stable performance with steady revenue growth while navigating a leadership transition. The company remains committed to enhancing customer growth and retention through strategic investments in network capabilities.
Key takeaways
- Consolidated revenue increased 1.5% year-over-year to $33.8 billion, driven by a $400 million boost in wireless service revenue.
- Postpaid phone gross adds rose 8.4%, yet net losses of 7,000 were reported due to a churn rate of 0.91%.
- Strong momentum in broadband, with 306,000 net adds and total subscribers reaching over 13.2 million; Fios internet achieved its best quarterly performance in two years.
- Effective acquisition strategies include plans to integrate Frontier and expand Fios offerings through a new partnership with Tillman.
- On track to meet full-year financial guidance, with raised expectations for adjusted EBITDA, EPS growth, and free cash flow.