VZ Q1 Earnings Call: Verizon Highlights Customer Retention and Broadband Growth Amid Stable Results

Telecommunications giant Verizon (NYSE:VZ) met Wall Street’s revenue expectations in Q1 CY2025, with sales up 1.5% year on year to $33.49 billion. Its non-GAAP profit of $1.19 per share was 3.6% above analysts’ consensus estimates. 

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StockStory’s Take

Verizon’s first quarter results reflected management’s focus on stabilizing subscriber trends and expanding its broadband footprint. On the call, CEO Hans Vestberg and Consumer Group CEO Sowmyanarayan Sampath emphasized that targeted pricing actions, new customer offers such as the three-year price lock, and the ongoing expansion of fixed wireless and fiber broadband were central to recent performance. Sampath noted, “Our Verizon Value Guarantee is resonating well, providing predictability and value that customers are seeking in the current environment.”

Looking ahead, management described a strategy anchored in further convergence of mobility and broadband services, disciplined cost control, and continued investment in network quality. While executives expressed confidence in achieving their 2025 operational and financial objectives, they acknowledged headwinds from external factors like tariffs and ongoing industry competition. As Vestberg stated, “We are well positioned to deliver sustainable growth, but remain vigilant given the evolving policy landscape.”

Key Insights from Management’s Remarks

Verizon’s leadership attributed the quarter’s financial performance to disciplined execution across consumer and business segments, progress in its multi-year transformation, and product differentiation. They highlighted several operational and strategic developments shaping both the current quarter and the path forward.

• Consumer value initiatives: Management pointed to the launch of the three-year price lock and free phone guarantee as a response to consumer demand for predictability and value. These offers were designed to retain customers, reduce churn, and attract new subscribers, particularly as price increases in late 2024 had driven some customer losses.

• Broadband expansion momentum: The company continues to prioritize growth in both fiber (Fios) and fixed wireless access (FWA). Leadership said Verizon is ahead of schedule in expanding Fios passings and expects to increase its fixed wireless subscriber base, with a long-term goal of reaching 8–9 million FWA subscribers by 2028.

• Turnaround in prepaid business: Sampath detailed a significant turnaround in the prepaid segment, with 137,000 net adds—its best result since the TracFone acquisition. This improvement followed enhancements to value propositions, distribution, and operational rigor in prepaid brands like Visible, Total Wireless, and Straight Talk.

• Business segment progress: The business unit reported continued margin improvement, aided by cost management and growth in private networks, IoT, and AI Connect offerings. Recent deals, such as those for AdventHealth and Nucor, illustrate traction in enterprise connectivity and managed services.

• Tariff and macroeconomic considerations: Management addressed potential impacts of new tariffs on equipment and handsets, stating that exposure is limited on capital expenditures, but handset tariffs could ultimately affect consumer pricing. The company remains prepared to adapt its approach as the policy environment evolves.

Drivers of Future Performance

Verizon’s outlook for the remainder of the year is shaped by its focus on customer retention, expanding converged offerings, and managing cost pressures from industry and macroeconomic factors.

• Converged product adoption: Management expects continued growth in customers adopting both mobility and broadband services, which historically produce lower churn and higher revenue per user. The integration of offerings like myPlan and myHome is central to this strategy.

• Cost discipline and efficiency: Executives highlighted ongoing cost transformation programs, including automation in customer care and voluntary separation initiatives. These are expected to support margin expansion and offset competitive pressures on pricing.

• Tariff and industry risk management: While management believes broader economic and regulatory changes—including tariffs—pose uncertainties, they plan to pass significant handset tariff costs to consumers if necessary and maintain financial discipline on promotions and capital spending.

Top Analyst Questions

• John Hodulik (UBS): Pressed for details on how new tariffs might impact Verizon’s device promotions and upgrade activity; management stated that only a small portion of capital spending is exposed and that significant handset tariffs would be passed through to customers.

• Ben Swinburne (Morgan Stanley): Asked about the drivers of improved gross additions in March and April; executives credited the new three-year price lock offer and emphasized that recent growth was company-driven rather than a broader industry recovery.

• Jim Schneider (Goldman Sachs): Questioned whether consumer behavior or upgrade cycles had shifted due to economic concerns or tariff speculation; management reported stable customer payment trends and attributed recent upgrade activity to the new value guarantee offer.

• Michael Rollins (Citi): Inquired about the outlook for industry-wide postpaid phone growth and the impact of changing immigration trends; Sampath indicated that Verizon's core markets remain healthy and that improved prepaid performance is not reliant on immigration-driven growth.

• Peter Supino (Wolfe Research): Sought clarification on whether expanding fixed wireless access could pressure capital expenditures or margins; management responded that FWA expansion is incorporated in current plans and should not create outsized future cost pressures.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will be watching (1) whether the three-year price lock and free phone guarantee can materially reduce churn and boost net subscriber additions, (2) the pace and effectiveness of Fios and fixed wireless broadband expansion, and (3) the revenue and margin contribution from the turnaround in prepaid and scaled adoption of converged offerings. The outcome of the pending Frontier acquisition and policy developments around tariffs will also be important signposts for Verizon’s execution.

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