VZ Beats Q1 Earnings Estimates on Healthy Wireless Traction

Verizon Communications Inc. VZ recorded relatively healthy first-quarter 2025 results with adjusted earnings and revenues beating the respective Zacks Consensus Estimate. 

The company recorded consolidated retail prepaid net additions of 137,000 in the quarter – the best since TracFone acquisition. However, both retail postpaid and retail postpaid phone net additions contracted owing to elevated pricing actions in the Consumer segment and pressure from federal government accounts. 

Net Income

On a GAAP basis, net income in the quarter was $4.98 billion or $1.15 per share compared with $4.72 billion or $1.09 per share in the prior-year quarter. The improvement was primarily attributable to top-line growth. Excluding non-recurring items, quarterly adjusted earnings were $1.19 per share compared with $1.15 in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate by 3 cents. (See the Zacks Earnings Calendar to stay ahead of market-making news.)

Revenues

Quarterly total operating revenues improved 1.5% to $33.48 billion with growth in service revenues and higher wireless equipment revenues driven by targeted pricing actions, customer growth, sales of perks and add-on services and growth in fixed wireless access. The top line beat the consensus estimate of $33.32 billion.

Quarterly Segment Results

Consumer: Total revenues from this segment improved 2.2% year over year to $25.62 billion on higher service revenues. The segment revenues exceeded our estimate of $25.23 billion.

Service revenues were up 2.3% to $20.07 billion, while wireless equipment revenues improved 0.9% to $4.53 billion. Other revenues totaled $1.02 billion, up 8.2% year over year.

Wireless retail postpaid churn was 1.13%, while retail postpaid phone churn was 0.9%. The company recorded 41,000 Fios Internet net additions as high demand for reliable fiber optic broadband was spurred by higher video consumption. Fixed wireless broadband net additions were 199,000 for the quarter. However, Verizon registered 58,000 Fios Video net losses in the quarter, reflecting the ongoing shift from traditional linear video to over-the-top offerings.

The segment’s operating income increased 0.7% to $7.42 billion with a margin of 29%. EBITDA improved 2.7% to $11 billion with a margin of 42.8% compared with 42.6% in the prior-year quarter due to lower costs of wireless equipment.

Business: The segment revenues were down 1.2% to $7.29 billion due to lower wireline revenues, partially offset by growth in wireless service revenue. It was also lower than our estimates of $7.35 billion, largely due to challenging macroeconomic conditions.

The segment had 94,000 wireless retail postpaid net additions in the quarter, including 67,000 postpaid phone net additions. Wireless retail postpaid churn was 1.52%, while retail postpaid phone churn was 1.15%. Fixed wireless broadband net additions were 109,000 for the quarter. 

Operating income improved to $664 million from $399 million in the year-ago quarter with respective margins of 9.1% and 5.4%. EBITDA was up 10.3% to $1.68 billion owing to an improvement in wireless service revenues for a margin of 23.1% compared with 20.7% in the year-earlier quarter.

Other Quarterly Details

Total operating expenses remained flat at $25.51 billion, while operating income improved 6.1% to $7.98 billion. Consolidated adjusted EBITDA increased to $12.56 billion from $12.07 billion led by wireless service revenue growth and perceived benefits from lower upgrade volumes for respective margins of 37.5% and 36.6%.

Cash Flow & Liquidity

Verizon generated $7.78 billion of net cash from operating activities in the first quarter. Free cash flow was $3.64 billion for the quarter compared with $2.71 billion in the prior-year period.

As of Mar. 31, 2025, the company had $2.26 billion in cash and cash equivalents with $121.02 billion of long-term debt.

Guidance Reiterated

For 2025, Verizon continues to expect wireless service revenue growth in the range of 2%-2.8%. Adjusted EBITDA is likely to grow 2%-3.5%. The company expects adjusted earnings to grow 0-3% range with a cash flow of $35-$37 billion on capital expenditures of $17.5-$18.5 billion.

Zacks Rank & Stock to Consider

Verizon currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Upcoming Releases

Arista Networks Inc. ANET is scheduled to release first-quarter 2025 earnings on May 6. The Zacks Consensus Estimate for earnings is pegged at 59 cents per share, suggesting a growth of 18% from the year-ago reported figure.

Arista has a long-term earnings growth expectation of 14.4%. Arista delivered an average earnings surprise of 12.9% in the last four reported quarters.

Akamai Technologies, Inc. AKAM is slated to release first-quarter 2025 earnings on May 8. The Zacks Consensus Estimate for earnings is pegged at $1.58 per share, indicating a decline of 3.7% from the year-ago reported figure.

Akamai has a long-term earnings growth expectation of 6.1%. Akamai delivered an average earnings surprise of 3.4% in the last four reported quarters.

Pinterest, Inc. PINS is set to release first-quarter 2025 earnings on May 8. The Zacks Consensus Estimate for earnings is pegged at 25 cents per share, implying a growth of 25% from the year-ago reported figure.

Pinterest has a long-term earnings growth expectation of 31.7%. Pinterest delivered an average earnings surprise of 13.2% in the last four reported quarters.

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This article originally published on Zacks Investment Research (zacks.com).

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