Verizon Raises Full-Year Outlook as Service Revenue Accelerates
The telecommunications provider expanded its full-year adjusted EPS growth guidance to a range of 6.0% to 7.0%.
Verizon Communications (VZ) raised its full-year financial outlook after service revenue growth accelerated in the second quarter. The company reported a shift in its revenue mix as growth in mobility and broadband services offset a sharp decline in wireless equipment sales.
Mobility and broadband service revenue grew 2.8% year-over-year in the second quarter, an acceleration from the 1.6% growth recorded in the first quarter. However, total operating revenue declined 0.7% year-over-year to $34.3 billion, reversing a 2.9% increase reported in the prior quarter.
The decline in total revenue was driven largely by wireless equipment revenue, which fell nearly 20%, or over $1.2 billion, year-over-year. This followed a 5.2% increase in equipment revenue during the first quarter.
Profitability metrics improved as the company expanded its consolidated adjusted EBITDA margin to 40.1% in the second quarter, up from 37.1% in the second quarter of 2024. Consolidated adjusted EBITDA grew 7.2% year-over-year to $13.7 billion, compared to 6.7% growth in the first quarter.
Subscriber trends showed mixed results. Postpaid phone net additions rose to 184,000, up from 55,000 in the first quarter, while wireless retail postpaid phone churn improved to 0.92% from 0.97% a year earlier. Broadband net additions grew 12.3% year-over-year to 348,000, though fixed wireless access (FWA) broadband net additions declined 30.6% to 193,000.
Verizon raised its full-year 2024 mobility and broadband service revenue growth guidance to between 2.5% and 3.0%. The company expects growth to accelerate to 3.0% in the third quarter and 4.0% in the fourth quarter.
Free cash flow for the second quarter grew 24.4% year-over-year to $6.4 billion, a significant increase over the 4.0% growth reported in the first quarter. The company also expanded its full-year share buyback target to up to $4.5 billion, up from the previous target of at least $3.0 billion.
Second-quarter results included $1.8 billion in pre-tax special items. This included a $746 million loss from the disposition of the company's international wireline connectivity and managed network services business. The net unsecured debt to consolidated adjusted EBITDA ratio stood at 2.5x at the end of the quarter.