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 (NASDAQ: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.

View more earnings on VZ

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 (NASDAQ: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.

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