Verizon delivers strong wireless service revenue and broadband subscriber growth in Q2

Rhea-AI Summary

Verizon (NYSE, Nasdaq: VZ) reported strong Q2 2024 results, showcasing growth in wireless service revenue and broadband subscribers. Key highlights include:

- Total wireless service revenue of $19.8 billion, up 3.5% year-over-year
- Retail postpaid phone net additions of 148,000
- Total broadband net additions of 391,000, including 378,000 fixed wireless
- Consolidated revenue of $32.8 billion, up 0.6% from Q2 2023
- Earnings per share of $1.09, with adjusted EPS of $1.15

Verizon remains on track to meet its full-year 2024 financial guidance, projecting wireless service revenue growth of 2.0-3.5% and adjusted EBITDA growth of 1.0-3.0%.

Positive

• Total wireless service revenue increased by 3.5% year-over-year to $19.8 billion
• Retail postpaid phone net additions of 148,000
• Total broadband net additions of 391,000, with 378,000 fixed wireless net additions
• Fixed wireless revenue for Q2 2024 was $514 million, up more than $200 million year-over-year
• Consolidated adjusted EBITDA increased to $12.3 billion from $12.0 billion in Q2 2023
• Free cash flow improved to $8.5 billion in first-half 2024, up from $8.0 billion in first-half 2023
• Consumer wireless postpaid phone gross additions increased by 12.0% year-over-year

Negative

• Consolidated net income decreased to $4.7 billion from $4.8 billion in Q2 2023
• Adjusted EPS declined to $1.15 from $1.21 in Q2 2023
• Cash flow from operations decreased to $16.6 billion from $18.0 billion in first-half 2023
• Consumer reported 624,000 wireless retail prepaid net losses in Q2 2024
• Verizon Business revenue decreased by 2.4% year-over-year to $7.3 billion
• Business operating income decreased by 6.2% year-over-year

Financial Analyst

From a financial perspective, Verizon has posted a mixed yet largely positive quarter. A 3.5% increase in wireless service revenue to $19.8 billion is a strong indicator of growth in its core business. This is aided by retail postpaid net additions of 340,000 and a churn rate of 1.11%, which reflects a stable customer base. However, the marginal decrease in net income, from $4.8 billion to $4.7 billion and a minor dip in earnings per share from $1.10 to $1.09 suggests some challenges, possibly from operational costs or competitive pressures.

The free cash flow increase from $8.0 billion to $8.5 billion and a reduction in debt by $3.1 billion in just one quarter reflect sound financial management. Investors might see this as a signal of Verizon's ability to generate liquidity and manage its liabilities effectively, which are critical factors for long-term sustainability.

Overall, while there are some concerns over slight decreases in EPS and net income, the substantial growth in wireless and broadband services, combined with effective debt management and cash flow generation, makes the company appear financially robust.

Market Research Analyst

From a market standpoint, Verizon's consistent growth in broadband subscribers is noteworthy. The company reported 391,000 net additions in broadband, marking the eighth consecutive quarter with over 375,000 additions. This shows a strong market demand and effective customer acquisition strategies. The impressive 69% year-over-year increase in fixed wireless subscribers to 3.8 million indicates a significant shift towards this technology, possibly driven by the increasing need for internet connectivity in more remote areas.

Furthermore, despite the revenue decline in the business segment, the 2.4% growth in business wireless service revenue to $3.4 billion signals resilience in the business sector. However, the decrease in wireline revenue needs monitoring as it could impact overall business segment performance.

Verizon's focus on new pricing actions and product offerings, such as the second number offering, which boosted gross additions by 12%, reflects strategic agility in responding to market needs. For investors, these trends indicate Verizon's capability to innovate and capture market share effectively, ensuring customer growth in both consumer and business segments.

Tech Expert

Verizon's ongoing advancements in wireless and broadband technology are pivotal for its growth. The continuous increase in fixed wireless net additions to 378,000 and the fixed wireless revenue surge to $514 million highlight the successful rollout and adoption of this technology. This positions Verizon well in the competitive telecommunications landscape, especially where traditional wireline services are less feasible.

In terms of network technology, Verizon's industry-leading network infrastructure offers a solid backbone for emerging technologies, including IoT and 5G. The company's ability to maintain low churn rates, such as the 0.85% postpaid phone churn, underscores the reliability and customer satisfaction with its network services. This also serves as a strong competitive differentiator, particularly as new 5G applications and services become mainstream.

Investors should be optimistic about Verizon's tech-driven growth and superior service offerings, as these are important for sustaining long-term competitive advantage and market leadership in a rapidly evolving industry.

Company remains on track to meet full-year 2024 financial guidance

2Q 2024 Highlights

Wireless: Accelerated growth in wireless service revenue

• Total wireless service revenue¹ of $19.8 billion, a 3.5 percent increase year over year.
• Retail postpaid phone net additions of 148,000, and retail postpaid net additions of 340,000.
• Retail postpaid phone churn of 0.85 percent, and retail postpaid churn of 1.11 percent.

Broadband: Double-digit broadband subscriber growth

• Total broadband net additions of 391,000. This was the eighth consecutive quarter with more than 375,000 broadband net additions.
• Total fixed wireless net additions of 378,000. At the end of second-quarter 2024, the company had a base of more than 3.8 million fixed wireless subscribers, representing an increase of nearly 69 percent year over year.
• 11.5 million total broadband subscribers as of the end of second-quarter 2024, representing a 17.2 percent increase year over year.
• Fixed wireless revenue for second-quarter 2024 was $514 million, up more than $200 million year over year.  

Consolidated: Verizon's operational excellence drives upward momentum

• Total operating revenue of $32.8 billion, up 0.6 percent from second-quarter 2023.
• Consolidated net income for the second quarter of $4.7 billion, down from consolidated net income of $4.8 billion in second-quarter 2023, and consolidated adjusted EBITDA² of $12.3 billion, up from $12.0 billion in second-quarter 2023.
• Earnings per share of $1.09, compared with earnings per share of $1.10 in second-quarter 2023; adjusted EPS², excluding special items, of $1.15, compared with $1.21 in second-quarter 2023.
  
  

NEW YORK, July 22, 2024 (GLOBE NEWSWIRE) -- Verizon Communications Inc. (NYSE, Nasdaq: VZ) reported second-quarter 2024 results today with strong wireless service revenue, broadband subscriber growth, and continued momentum in its three financial priorities of wireless service revenue, consolidated adjusted EBITDA and free cash flow. The company remains on track to achieve its full-year 2024 financial guidance.

“The sequential and year over year improvements in the second quarter were a reflection of operational excellence and the moves we made to bring choice, value and control to our customers’ lives,” said Verizon Chairman and CEO Hans Vestberg. “Our industry-leading network serves as a catalyst for how our millions of customers live their lives, and serves as the backbone for new and emerging technologies. We continue to build and expand on our strengths and successes with new products and services, and we are confident that this upward momentum will position us for future growth."

For second-quarter 2024, Verizon reported earnings per share of $1.09, compared with earnings per share of $1.10 in second-quarter 2023. On an adjusted basis², excluding special items, EPS was $1.15 in second-quarter 2024, compared with adjusted EPS² of $1.21 in second-quarter 2023.

Second-quarter 2024 financial results reflected a pre-tax loss from special items of $355 million. This included the amortization of intangible assets related to Tracfone and other acquisitions of $219 million, and a $136 million charge associated with a mark-to-market adjustment for pension liabilities.

Consolidated results: Upward momentum in key areas

• Total consolidated operating revenue in second-quarter 2024 was $32.8 billion, up 0.6 percent from second-quarter 2023. This growth can be attributed to an increase in service and other revenue, offset by a decrease in wireless equipment revenue due to lower upgrade volumes.
• Total wireless service revenue¹ in second-quarter 2024 was $19.8 billion, a sequential increase of more than $250 million, and an increase of 3.5 percent year over year. This increase was driven primarily by growth of Consumer wireless service revenue.
• Cash flow from operations in first-half 2024 totaled $16.6 billion, down from $18.0 billion in first-half 2023. This decrease was due to higher cash taxes, and higher interest expense primarily related to a reduction in capitalized interest, as well as higher interest rates.
• Capital expenditures in first-half 2024 were $8.1 billion, compared to $10.1 billion in first-half 2023. The company has returned to historic levels of capital intensity.
• The company ended first-half 2024 with free cash flow² of $8.5 billion, up from $8.0 billion in first-half 2023.
• Consolidated net income for second-quarter 2024 was $4.7 billion, down from consolidated net income of $4.8 billion in second-quarter 2023, and consolidated adjusted EBITDA² was $12.3 billion, up from $12.0 billion in second-quarter 2023.
• Verizon's total unsecured debt as of the end of second-quarter 2024 was $125.3 billion, a $3.1 billion decrease compared to first-quarter 2024, and $6.1 billion lower year over year. The company's net unsecured debt² at the end of second-quarter 2024 was $122.8 billion. At the end of second-quarter 2024, Verizon's ratio of unsecured debt to net income (LTM) was 10.7 times and net unsecured debt to consolidated adjusted EBITDA ratio² was 2.5 times.

Verizon Consumer: Revenue up, continued improvement in postpaid phone net additions

• Total Verizon Consumer revenue in second-quarter 2024 was $24.9 billion, an increase of 1.5 percent year over year as gains in service revenue were partially offset by declines in wireless equipment revenue.
• Wireless service revenue in second-quarter 2024 was $16.3 billion, up 3.7 percent year over year, driven by growth in Consumer wireless postpaid average revenue per account (ARPA) from pricing actions and continued fixed wireless adoption.
• Consumer wireless retail postpaid churn was 1.00 percent in second-quarter 2024, and wireless retail postpaid phone churn was 0.79 percent.
• In second-quarter 2024, Consumer reported 8,000 wireless retail postpaid phone net losses, compared with 136,000 wireless retail postpaid phone net losses in second-quarter 2023.
• Consumer wireless postpaid phone gross additions of approximately 1.8 million in second-quarter 2024 represented a 12.0 percent increase year over year. Excluding the contribution from the company's second number offering, wireless postpaid phone gross additions grew approximately 5.0 percent year over year.
• Consumer reported 624,000 wireless retail prepaid net losses in second-quarter 2024. This result included 410,000 wireless retail prepaid net losses related to the shutdown of the Affordable Connectivity Program, the majority of which were in SafeLink Wireless, Verizon's brand offering access to government-sponsored connectivity benefits and programs. Wireless retail prepaid net losses, excluding SafeLink, were 12,000.
• Consumer reported 218,000 fixed wireless net additions and 24,000 Fios Internet net additions in second-quarter 2024. Consumer Fios revenue was $2.9 billion in second-quarter 2024.
• In second-quarter 2024, Consumer operating income was $7.6 billion, an increase of 3.7 percent year over year, and segment operating income margin was 30.5 percent, an increase from 29.8 percent in second-quarter 2023. Segment EBITDA² in second-quarter 2024 was $11.0 billion, an increase of 4.0 percent year over year. This improvement can be attributed to service revenue growth and lower upgrade volumes. Segment EBITDA margin² in second-quarter 2024 was 44.1 percent, an increase from 43.1 percent in second-quarter 2023.

Verizon Business: Strong mobility and broadband growth

• Total Verizon Business revenue was $7.3 billion in second-quarter 2024, a decrease of 2.4 percent year over year, as increases in wireless service revenue were more than offset by decreases in wireline revenue.
• Business wireless service revenue in second-quarter 2024 was $3.4 billion, an increase of 2.4 percent year over year. This result was driven by continued strong net additions for both mobility and fixed wireless, as well as benefits from pricing actions implemented in recent quarters.
• Business reported 268,000 wireless retail postpaid net additions in second-quarter 2024. This included 156,000 postpaid phone net additions, the highest result since fourth-quarter 2022. The company experienced sequential improvement in phone net additions across its small and medium business, enterprise, and public sector customers.
• Business wireless retail postpaid churn was 1.45 percent in second-quarter 2024, and wireless retail postpaid phone churn was 1.10 percent.
• Business reported 160,000 fixed wireless net additions in second-quarter 2024, the highest quarterly result to date.
• In second-quarter 2024, Verizon Business operating income was $500 million, a decrease of 6.2 percent year over year, and segment operating income margin was 6.8 percent, a decrease from 7.1 percent in second-quarter 2023. Segment EBITDA² in second-quarter 2024 was $1.6 billion, a decrease of 3.5 percent year over year, driven by continued declines in wireline revenues. Segment EBITDA margin² in second-quarter 2024 was 21.6 percent, a decrease from 21.9 percent in second-quarter 2023.

Outlook and guidance: Verizon is on track to meet financial guidance

The company does not provide a reconciliation for any of the following adjusted (non-GAAP) forecasts because it cannot, without unreasonable effort, predict the special items that could arise, and the company is unable to address the probable significance of the unavailable information.

For 2024, Verizon continues to expect the following:

• Total wireless service revenue growth¹ of 2.0 percent to 3.5 percent.
• Adjusted EBITDA growth² of 1.0 percent to 3.0 percent.
• Adjusted EPS² of $4.50 to $4.70.
• Capital expenditures between $17.0 billion and $17.5 billion.
• Adjusted effective income tax rate² in the range of 22.5 percent to 24.0 percent.

¹ Total wireless service revenue represents the sum of Consumer and Business segments.

² Non-GAAP financial measure. See the accompanying schedules and www.verizon.com/about/investors for reconciliations of non-GAAP financial measures cited in this document to most directly comparable financial measures under generally accepted accounting principles (GAAP).

Verizon Communications Inc. (NYSE, Nasdaq: VZ) powers and empowers how its millions of customers live, work and play, delivering on their demand for mobility, reliable network connectivity and security. Headquartered in New York City, serving countries worldwide and nearly all of the Fortune 500, Verizon generated revenues of $134.0 billion in 2023. Verizon’s world-class team never stops innovating to meet customers where they are today and equip them for the needs of tomorrow. For more, visit verizon.com or find a retail location at verizon.com/stores.

VERIZON’S ONLINE MEDIA CENTER: News releases, stories, media contacts and other resources are available at verizon.com/news. News releases are also available through an RSS feed. To subscribe, visit www.verizon.com/about/rss-feeds/.

Forward-looking statements
In this communication we have made forward-looking statements. These statements are based on our estimates and assumptions and are subject to risks and uncertainties. Forward-looking statements include the information concerning our possible or assumed future results of operations. Forward-looking statements also include those preceded or followed by the words “anticipates,” “assumes,” “believes,” “estimates,” “expects,” “forecasts,” “hopes,” “intends,” “plans,” “targets” or similar expressions. For those statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements, except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. The following important factors, along with those discussed in our filings with the Securities and Exchange Commission (the “SEC”), could affect future results and could cause those results to differ materially from those expressed in the forward-looking statements: the effects of competition in the markets in which we operate, including the inability to successfully respond to competitive factors such as prices, promotional incentives and evolving consumer preferences; failure to take advantage of, or respond to competitors' use of, developments in technology and address changes in consumer demand; performance issues or delays in the deployment of our 5G network resulting in significant costs or a reduction in the anticipated benefits of the enhancement to our networks; the inability to implement our business strategy; adverse conditions in the U.S. and international economies, including inflation and changing interest rates in the markets in which we operate; cyber attacks impacting our networks or systems and any resulting financial or reputational impact; damage to our infrastructure or disruption of our operations from natural disasters, extreme weather conditions, acts of war, terrorist attacks or other hostile acts and any resulting financial or reputational impact; disruption of our key suppliers’ or vendors' provisioning of products or services, including as a result of geopolitical factors or the potential impacts of global climate change; material adverse changes in labor matters and any resulting financial or operational impact; damage to our reputation or brands; the impact of public health crises on our operations, our employees and the ways in which our customers use our networks and other products and services; changes in the regulatory environment in which we operate, including any increase in restrictions on our ability to operate our networks or businesses; allegations regarding the release of hazardous materials or pollutants into the environment from our, or our predecessors’, network assets and any related government investigations, regulatory developments, litigation, penalties and other liability, remediation and compliance costs, operational impacts or reputational damage; our high level of indebtedness; significant litigation and any resulting material expenses incurred in defending against lawsuits or paying awards or settlements; an adverse change in the ratings afforded our debt securities by nationally accredited ratings organizations or adverse conditions in the credit markets affecting the cost, including interest rates, and/or availability of further financing; significant increases in benefit plan costs or lower investment returns on plan assets; changes in tax laws or regulations, or in their interpretation, or challenges to our tax positions, resulting in additional tax expense or liabilities; and changes in accounting assumptions that regulatory agencies, including the SEC, may require or that result from changes in the accounting rules or their application, which could result in an impact on earnings.

Non-GAAP Reconciliations - Consolidated Verizon

Consolidated EBITDA and Consolidated Adjusted EBITDA
(dollars in millions)
Unaudited		3 Mos. Ended 6/30/24			3 Mos. Ended 3/31/24				3 Mos. Ended 12/31/23				3 Mos. Ended 9/30/23				3 Mos. Ended 6/30/23				3 Mos. Ended 3/31/23
Consolidated Net Income (Loss)		$	4,702		$	4,722			$	(2,573	)		$	4,884			$	4,766			$	5,018
Add:
Provision for income taxes			1,332			1,353				756				1,308				1,346				1,482
Interest expense			1,698			1,635				1,599				1,433				1,285				1,207
Depreciation and amortization expense(1)			4,483			4,445				4,516				4,431				4,359				4,318
Consolidated EBITDA		$	12,215		$	12,155			$	4,298			$	12,056			$	11,756			$	12,025
Add/(subtract):
Other (income) expense, net(2)		$	72		$	(198	)		$	807			$	(170	)		$	(210	)		$	(114	)
Equity in (earnings) losses of unconsolidated businesses			14			9				11				18				33				(9	)
Severance charges			—			—				296				—				237				—
Legacy legal matter			—			106				—				—				—				—
Verizon Business Group goodwill impairment			—			—				5,841				—				—				—
Asset rationalization			—			—				325				—				155				—
Legal settlement			—			—				100				—				—				—
Business transformation costs			—			—				—				176				—				—
Non-strategic business shutdown			—			—				—				158				—				—
			86			(83	)			7,380				182				215				(123	)
Consolidated Adjusted EBITDA		$	12,301		$	12,072			$	11,678			$	12,238			$	11,971			$	11,902
Footnotes:
(1) Includes Amortization of acquisition-related intangible assets and a portion of the Non-strategic business shutdown, where applicable.
(2) Includes Pension and benefits remeasurement adjustments, where applicable.

Consolidated EBITDA and Consolidated Adjusted EBITDA (LTM)
(dollars in millions)
Unaudited		12 Mos. Ended 6/30/24			12 Mos. Ended 12/31/23
Consolidated Net Income		$	11,735		$	12,095
Add:
Provision for income taxes			4,749			4,892
Interest expense			6,365			5,524
Depreciation and amortization expense(1)			17,875			17,624
Consolidated EBITDA		$	40,724		$	40,135
Add/(subtract):
Other expense, net(2)		$	511		$	313
Equity in losses of unconsolidated businesses			52			53
Severance charges			296			533
Legacy legal matter			106			—
Verizon Business Group goodwill impairment			5,841			5,841
Asset rationalization			325			480
Legal settlement			100			100
Business transformation costs			176			176
Non-strategic business shutdown			158			158
			7,565			7,654
Consolidated Adjusted EBITDA		$	48,289		$	47,789
Footnotes:
(1) Includes Amortization of acquisition-related intangible assets and a portion of the Non-strategic business shutdown, where applicable.
(2) Includes Pension and benefits remeasurement adjustments, where applicable.

Net Unsecured Debt and Net Unsecured Debt to Consolidated Adjusted EBITDA Ratio
(dollars in millions)
Unaudited		6/30/24			3/31/24			12/31/23			6/30/23
Debt maturing within one year		$	23,255		$	15,594		$	12,973		$	14,827
Long-term debt			126,022			136,104			137,701			137,871
Total Debt			149,277			151,698			150,674			152,698
Less Secured debt			24,015			23,290			22,183			21,342
Unsecured Debt			125,262			128,408			128,491			131,356
Less Cash and cash equivalents			2,432			2,365			2,065			4,803
Net Unsecured Debt		$	122,830		$	126,043		$	126,426		$	126,553
Consolidated Net Income (LTM)		$	11,735					$	12,095
Unsecured Debt to Consolidated Net Income Ratio		10.7x						10.6x
Consolidated Adjusted EBITDA (LTM)		$	48,289					$	47,789
Net Unsecured Debt to Consolidated Adjusted EBITDA Ratio		2.5x						2.6x

Adjusted Earnings per Common Share (Adjusted EPS)
(dollars in millions, except per share amounts)
Unaudited		3 Mos. Ended 6/30/24										3 Mos. Ended 6/30/23
		Pre-tax		Tax			After-Tax					Pre-tax		Tax			After-Tax
EPS									$	1.09									$	1.10
Amortization of acquisition-related intangible assets		$	219	$	(55	)	$	164		0.04		$	206	$	(53	)	$	153		0.04
Severance, pension and benefits charges			136		(34	)		102		0.02			237		(59	)		178		0.04
Asset rationalization			—		—			—		—			155		(33	)		122		0.03
		$	355	$	(89	)	$	266	$	0.06		$	598	$	(145	)	$	453	$	0.11
Adjusted EPS									$	1.15									$	1.21
Footnote:
Adjusted EPS may not add due to rounding.

Free Cash Flow
(dollars in millions)
Unaudited		6 Mos. Ended 6/30/24				6 Mos. Ended 6/30/23
Net Cash Provided by Operating Activities		$	16,569			$	18,020
Capital expenditures (including capitalized software)			(8,071	)			(10,070	)
Free Cash Flow		$	8,498			$	7,950

Non-GAAP Reconciliations - Segments

Segment EBITDA and Segment EBITDA Margin
Consumer
(dollars in millions)
Unaudited		3 Mos. Ended 6/30/24				3 Mos. Ended 6/30/23				6 Mos. Ended 6/30/24				6 Mos. Ended 6/30/23
Operating Income		$	7,604			$	7,330			$	14,976			$	14,429
Add Depreciation and amortization expense			3,394				3,247				6,703				6,461
Segment EBITDA		$	10,998			$	10,577			$	21,679			$	20,890
Year over year change %			4.0	%							3.8	%
Total operating revenues		$	24,927			$	24,558			$	49,984			$	49,415
Operating Income Margin			30.5	%			29.8	%			30.0	%			29.2	%
Segment EBITDA Margin			44.1	%			43.1	%			43.4	%			42.3	%

Business
(dollars in millions)
Unaudited		3 Mos. Ended 6/30/24				3 Mos. Ended 6/30/23				6 Mos. Ended 6/30/24				6 Mos. Ended 6/30/23
Operating Income		$	500			$	533			$	899			$	1,084
Add Depreciation and amortization expense			1,078				1,103				2,206				2,197
Segment EBITDA		$	1,578			$	1,636			$	3,105			$	3,281
Year over year change %		(3.5		)%						(5.4		)%
Total operating revenues		$	7,300			$	7,483			$	14,676			$	14,977
Operating Income Margin			6.8	%			7.1	%			6.1	%			7.2	%
Segment EBITDA Margin			21.6	%			21.9	%			21.2	%			21.9	%

	Media contacts:
	Katie Magnotta
	201-602-9235
	katie.magnotta@verizon.com
	Eric Wilkens
	201-572-9317
	eric.wilkens@verizon.com

FAQ

What was Verizon's (VZ) total wireless service revenue in Q2 2024?

Verizon's total wireless service revenue in Q2 2024 was $19.8 billion, representing a 3.5% increase year-over-year.

How many retail postpaid phone net additions did Verizon (VZ) report in Q2 2024?

Verizon reported 148,000 retail postpaid phone net additions in Q2 2024.

What was Verizon's (VZ) consolidated revenue for Q2 2024?

Verizon's consolidated revenue for Q2 2024 was $32.8 billion, up 0.6% from Q2 2023.

How many fixed wireless net additions did Verizon (VZ) report in Q2 2024?

Verizon reported 378,000 fixed wireless net additions in Q2 2024.

What is Verizon's (VZ) projected wireless service revenue growth for 2024?

Verizon projects wireless service revenue growth of 2.0% to 3.5% for 2024.