Verizon reports strong 3Q results momentum, raises free cash flow guidance
Company ended the quarter with approximately 10.3 million broadband subscribers, an increase of nearly 21 percent year over year
Year-to-date cash flow from operations increased approximately $600 million year over year, and year-to-date free cash flow(1) increased $2.2 billion year over year
3Q 2023 highlights
Consolidated:
-- $1.13 in EPS, compared with $1.17 in third-quarter 2022; adjusted EPS1,
excluding special items, of $1.22, compared with $1.32 in third-quarter
2022.
-- Total operating revenue of $33.3 billion, a decrease of 2.6 percent from
third-quarter 2022.
-- Year-to-date cash flow from operations of $28.8 billion, an increase from
$28.2 billion in 2022.
-- Free cash flow1 year-to-date was $14.6 billion, an increase from $12.4
billion in 2022.
-- Net income of $4.9 billion, a decrease of 2.8 percent from third-quarter
2022, and consolidated adjusted EBITDA1 of $12.2 billion, up 0.2 percent
year over year.
Total Broadband:
-- Total broadband net additions of 434,000, representing the fourth
consecutive quarter that Verizon reported more than 400,000 broadband net
additions. Total broadband net additions included 384,000 fixed wireless
net additions, an increase of 42,000 fixed wireless net additions from
third-quarter 2022. Verizon now has approximately 10.3 million total
broadband subscribers, including nearly 2.7 million subscribers on its
fixed wireless service.
-- 72,000 Fios Internet net additions, an increase from 61,000 Fios Internet
net additions in third-quarter 2022.
Total Wireless:
-- Total wireless service revenue2 of $19.3 billion, a 2.9 percent increase
year over year.
-- Postpaid phone net additions of 100,000, and retail postpaid net
additions of 581,000.
-- Total retail postpaid churn of 1.15 percent, and retail postpaid phone
churn of 0.90 percent.
NEW YORK, Oct. 24, 2023 (GLOBE NEWSWIRE) — Verizon Communications Inc. (NYSE, Nasdaq: VZ) reported third-quarter results today and raised its free cash flow guidance for the year. The company’s performance was highlighted by continued wireless service revenue growth, total broadband net additions, and improving profitability.
“We continued to make steady progress in the third quarter with a clear focus on growing wireless service revenue, delivering healthy consolidated adjusted EBITDA and increasing free cash flow,” said Verizon Chairman and CEO Hans Vestberg. “Our financial discipline, combined with our healthy balance sheet, enabled us to increase our dividend for the 17th consecutive year, which is the longest current streak of dividend increases in the U.S. telecom industry.”
For third-quarter 2023, Verizon reported EPS of $1.13, compared with $1.17 in third-quarter 2022. On an adjusted basis(1) , excluding special items, EPS was $1.22 in third-quarter 2023, compared with adjusted EPS(1) of $1.32 in third-quarter 2022.
Third-quarter 2023 earnings reflected a pre-tax loss from special items of approximately $579 million. This included the impacts of amortization of intangible assets related to TracFone and other acquisitions of $224 million, a pre-tax non-strategic business shutdown charge of $179 million related to the shutdown of the BlueJeans business offering and pre-tax business transformation costs of $176 million.
Consolidated results
-- Total consolidated operating revenue in third-quarter 2023 of $33.3
billion, a decrease of 2.6 percent from third-quarter 2022. This decline
was primarily due to reduced wireless equipment revenue and lower
postpaid upgrade activity.
-- Total wireless service revenue2 in third-quarter 2023 increased 2.9
percent year over year and 1.1 percent from second-quarter 2023. This
increase was driven by targeted pricing actions implemented in recent
quarters, the larger allocation of administrative and telco recovery fees
from other revenue into wireless service revenue, and growth from fixed
wireless offerings.
-- Net income of $4.9 billion, a decrease of 2.8 percent compared to
third-quarter 2022, and consolidated adjusted EBITDA1 of $12.2 billion,
an increase of 0.2 percent year over year.
-- Year-to-date cash flow from operations totaled $28.8 billion, an increase
from $28.2 billion in 2022. This increase is related to continued working
capital improvements associated with fewer upgrades and lower inventory
levels, partially offset by higher interest payments.
-- Capital expenditures year-to-date were $14.2 billion.
-- Free cash flow1 year-to-date was $14.6 billion, an increase from $12.4
billion in 2022.
-- Verizon's unsecured debt as of the end of third-quarter 2023 decreased by
$4.9 billion sequentially to $126.4 billion. The company's net unsecured
debt1 balance improved sequentially by $4.3 billion to $122.2 billion. At
the end of third-quarter 2023, Verizon's ratio of unsecured debt to net
income (LTM) was approximately 5.9 times, and its net unsecured debt to
adjusted EBITDA ratio1 was approximately 2.6 times.
Verizon Consumer results
-- Total Verizon Consumer revenue was $25.3 billion, a decrease of 2.3
percent year over year. Growth in service and other revenue was offset by
wireless equipment revenue declines.
-- Wireless service revenue increased 2.9 percent year over year. This
increase was driven by growth in retail postpaid Average Revenue Per
Account (ARPA), partially offset by a decline in retail postpaid phone
connections and prepaid connections.
-- Consumer wireless retail postpaid churn was 1.04 percent in third-quarter
2023, and wireless retail postpaid phone churn was 0.85 percent.
-- In third-quarter 2023, Consumer reported 51,000 wireless retail postpaid
phone net losses, representing an improvement of 85,000 from
second-quarter 2023 and 138,000 from third-quarter 2022. Consumer
postpaid phone gross additions increased 2.3 percent year over year in
third-quarter 2023, continuing the momentum that began in second-half
2022.
-- Consumer reported 207,000 wireless retail prepaid net losses in
third-quarter 2023.
-- Consumer reported 251,000 fixed wireless net additions and 69,000 Fios
Internet net additions in third-quarter 2023. Consumer Fios revenue was
$2.9 billion in third-quarter 2023, a decrease of 0.2 percent year over
year.
-- In third-quarter 2023, Consumer operating income was $7.5 billion, an
increase of 2.7 percent year over year, and segment operating income
margin was 29.9 percent, an increase from 28.4 percent in third-quarter
2022. Segment EBITDA1 in third-quarter 2023 was $10.8 billion, an
increase of 2.2 percent year over year. This improvement can be
attributed to wireless service revenue growth and lower upgrade volumes.
Segment EBITDA margin1 was 42.8 percent, an increase from 40.9 percent in
third-quarter 2022.
Verizon Business results
-- Total Verizon Business revenue was $7.5 billion in third-quarter 2023, a
decrease of 4.0 percent year over year. Lower wireline revenue and lower
wireless equipment revenue was partially offset by higher wireless
service revenue.
-- Business wireless service revenue was $3.4 billion, an increase of 2.9
percent year over year. This growth was driven by continued strong net
additions and pricing actions implemented in recent quarters.
-- Business reported 330,000 wireless retail postpaid net additions in
third-quarter 2023, including 151,000 postpaid phone net additions. This
was the ninth consecutive quarter that Business reported more than
125,000 postpaid phone net additions. Business continues to grow volumes
and expand its relationships with customers strengthening its position as
a wireless market share leader.
-- Business wireless retail postpaid churn was 1.47 percent in third-quarter
2023, and wireless retail postpaid phone churn was 1.14 percent.
-- Business reported 133,000 fixed wireless net additions in third-quarter
2023.
-- In third-quarter 2023, Verizon Business operating income was $539 million,
a decrease of 22.8 percent year over year, and segment operating income
margin was 7.2 percent, a decrease from 8.9 percent in third-quarter
2022. Segment EBITDA1 was $1.7 billion in third-quarter 2023, a decrease
of 6.2 percent year over year, driven by continued declines in high
margin wireline revenues. Segment EBITDA margin1 was 22.1 percent in
third-quarter 2023, a decrease from 22.7 percent in third-quarter 2022.
Outlook and guidance
The company does not provide a reconciliation for certain 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 2023, Verizon expects the following:
-- Cash flow from operations in the range of $36.25 billion to $37.25
billion.
-- Capital spending at the higher end of the previously guided range of
$18.25 billion to $19.25 billion.
-- Free cash flow1 above $18 billion, a $1 billion increase from the
previously issued guidance.
In addition, for 2023, Verizon continues to expect the following:
-- Total wireless service revenue growth2 3 of 2.5 percent to 4.5 percent.
-- Adjusted EBITDA1 of $47.0 billion to $48.5 billion.
-- Adjusted EPS1 of $4.55 to $4.85.
-- Adjusted effective income tax rate1 in the range of 22.5 percent to 24.0
percent.