Verizon's Premium Plans Drive Higher Profit Projections After Solid Quarter

Verizon Communications (NYSE: VZ) stock gained on Monday after the company reported better-than-expected second-quarter financial results and raised guidance.

The company reported quarterly revenue growth was 5.2% year-over-year (Y/Y), reaching $34.50 billion, topping the analyst consensus estimate of $33.57 billion, driven by its broad wireless and broadband offerings across market segments. Adjusted EPS of $1.22 topped the analyst consensus estimate of $1.19.

The company boosted retention and acquisition through a three-year price lock, a free phone guarantee, and the rollout of AI-powered tools for personalized support and better customer experience.

Also Read: Verizon Teams Up With Nokia To Bring High-Tech 5G Boost To Busy British Ports

Verizon reported a net loss of 9,000 postpaid phone connections in the latest quarter, falling short of analysts’ forecast for a gain of 13,000, per the Wall Street Journal report on Monday. The company added 148,000 postpaid phone connections during the same quarter last year.

Total wireless service revenue was $20.9 billion, up 2.2% Y/Y backed by add-ons such as access to streaming services like Netflix NFLX, as per Reuters.

Verizon Business’ retail postpaid net additions were 65,000. The quarter saw 293,000 total broadband net additions versus 391,000 Y/Y. The company ended the quarter with over 12.9 million broadband subscribers, up 12.2% Y/Y.

At the end of the quarter, the company had over 5.1 million fixed wireless subscribers. Total fixed wireless access net additions reached 278,000 in the quarter, compared with 378,000 Y/Y.

Total Verizon Business revenues were $7.3 billion, down 0.3% Y/Y. Total Verizon Consumer revenue rose by 6.9% Y/Y to $26.6 billion. Consumer wireless retail postpaid churn was 1.12%, and wireless retail postpaid phone churn was 0.90%. 

Verizon Consumer clocked wireless retail postpaid phone net losses of 51,000, versus 109,000 net losses Y/Y. Consumer reported 50,000 wireless retail core prepaid net additions compared to 12,000 net losses Y/Y.

Verizon’s net income stood at $5.1 billion versus $4.7 billion a year ago. The consumer segment EBITDA margin declined by 200 bps to 42.1%, while the business segment EBITDA margin grew by 130 bps to 22.9%. Company-level adjusted EBITDA of $12.8 billion, up from $12.3 billion Y/Y.

Verizon’s quarterly free cash flow was $5.2 billion, down from $5.8 billion Y/Y.

Heading into the year’s second half, Verizon plans to maintain momentum by growing wireless service revenue, expanding adjusted EBITDA, and generating solid free cash flow.

FY25 Outlook

Verizon reiterated a 2.0%-2.8% growth in wireless service revenue. It narrowed its adjusted EPS outlook from $4.59-$4.73 to $4.64-$4.73 versus the consensus of $4.68, driven by demand for its higher-tier plans as per the Reuters report.

Verizon expects $19.5 billion-$20.5 billion (prior $17.5 billion-$18.5 billion) in 2025 free cash flow, $37.0 billion-$39.0 billion (prior $35 billion-$37 billion) in operating cash flow, and reiterated $17.5 billion-$18.5 billion in capital expenditure. Verizon’s guidance does not reflect any assumptions regarding the pending acquisition of Frontier Communications Parent FYBR.

According to the Wall Street Journal, Verizon reiterated that it is well-positioned to achieve the next milestone of 8 to 9 million fixed wireless access subscribers.

Price action: VZ stock is trading higher by 4.06% to $42.50 premarket at last check Monday.

Read Next:

• Telecom Stocks Are No Longer One-Size-Fits-All, Analyst Says — Here’s Which Company Stands Out

Photo by Karolis Kavolelis via Shutterstock