TLDR
- Verizon (VZ) posted Q3 adjusted EPS of $1.31, above the $1.27 to $1.28 analysts expected, but revenue of $34.3 billion missed estimates.
- The company added 406,000 postpaid phone customers, about double the 195,300 Wall Street expected.
- Verizon raised full-year guidance for the third straight quarter, with adjusted EPS now seen at $5.04 to $5.06.
- A new Amazon Web Services dark fiber deal worth more than $2 billion lifts AI Connect contracts to about $4 billion.
- The stock traded near $43.30 in premarket, down about 3%, even though it is up about 10% for the year.
Verizon (VZ) stock fell about 3% in premarket trading on Monday to around $43.30. The drop came after the company reported third-quarter results that beat on profit but fell short on revenue. The stock later traded near $43.52, down 2.55%.
Verizon Communications Inc., VZ
Before the report, the stock was up 9.6% for the year through Friday’s close. AT&T is down 16% and T-Mobile is down 28% over the same period.
The company posted adjusted earnings of $1.31 a share, up 8.3% from a year ago. Analysts were looking for $1.27 to $1.28.
Revenue rose 1.5% to $34.3 billion. That was below the $34.8 billion analysts had expected, a miss of roughly 1%.
Customer numbers were the bright spot. Verizon added 406,000 postpaid phone customers, well ahead of the 195,300 Wall Street expected. A year ago it added just 44,000.
CEO Dan Schulman said the gains did not rely on “free line” promotions. Management called it the best third quarter in five years.
Churn improved to 0.94%, down 4 basis points from last year. Broadband added 314,000 customers, and fiber made up nearly half of those gains.
Guidance goes up again
Verizon raised its outlook for the third quarter in a row. Full-year adjusted EPS is now expected at $5.04 to $5.06.
Adjusted EPS growth guidance moved up to 7% to 7.5%. Postpaid phone net additions are now seen at 1.1 million to 1.2 million for the year.
Free cash flow growth is now expected to approach 12%, up from the earlier 9% to 10% range. Third-quarter free cash flow hit $7.8 billion, the highest quarterly figure since 2020.
Adjusted EBITDA grew 8% to $13.8 billion. The margin reached 40.2%, which the company called a record.
Verizon signed a deal worth more than $2 billion with Amazon to build fiber connectivity for AWS data centers. That brings its signed AI Connect contracts to about $4 billion. The company does not expect much revenue from that business until 2027.
What the numbers mean for holders
Not every number looked good. Wireless postpaid upgrades fell 20.3% to 3.3 million, and equipment revenue dropped 9%.
Total debt rose to $166.2 billion from $146.8 billion, mostly due to the January purchase of Frontier Communications. Net unsecured debt to adjusted EBITDA edged up to 2.3x from 2.2x.
Verizon returned $12.8 billion to shareholders in the first nine months of the year. That included $8.8 billion in dividends and $4.0 billion in buybacks.
The dividend yield is about 6.3%, and Verizon has raised its payout for 22 straight years. The stock sits in the lower half of its 52-week range of $38.68 to $51.68.
Capital spending guidance is unchanged at $16.0 billion to $16.5 billion. Management expects fourth-quarter service revenue growth of about 4%, up from 2.9% in the third quarter.
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
