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    VZ
    Earnings call· Mar 2025(Q1 FY25)

    VERIZON COMMUNICATIONS Q1 FY25 earnings call VZ

    Apr 22, 2025 Source

    Executive summary

    Verizon Q1 FY25 — Strong Financial Performance and Broadband Growth

    Verizon delivered a strong financial quarter, driven by robust wireless service revenue and record adjusted EBITDA, alongside significant free cash flow generation. Despite challenges in consumer postpaid phone net adds and churn, the company's diversified portfolio and strategic initiatives in broadband and prepaid segments are driving overall subscriber growth and positioning it for continued financial and operational improvement throughout the year.

    Highlights

    5

    • Wireless service revenue of $20.8 billion was up 2.7% year-over-year, at the high end of guidance.

    • Adjusted EBITDA grew 4% to $12.6 billion, marking the best reported quarterly EBITDA ever.

    • Free cash flow reached $3.6 billion, an increase of over $900 million (34%) year-over-year.

    • Prepaid net adds of 137,000 were the best since the TracFone acquisition, showing significant year-over-year improvement.

    • Broadband net additions totaled 339,000, driven by strong demand for both fiber and fixed wireless access.

    Concerns

    3

    • Consumer postpaid phone net losses totaled 356,000, compared to 194,000 net losses in the prior year period.

    • Consumer postpaid phone churn rose by 7 basis points year-over-year, largely due to multiple pricing actions.

    • Verizon Business phone net adds were 67,000, down from 80,000 net adds in the prior year period.

    Guidance & targets

    6
    CategoryTargetConfidence
    C-band deployment coverage
    80% to 90% of planned sites
    high materiality
    High
    Fios incremental passings
    650,000
    medium materiality
    High
    Fixed Wireless Access subscribers
    8 million to 9 million
    high materiality
    High
    Frontier acquisition close
    early 2026
    high materiality
    High
    Upgrade activity
    increase by mid-single digits
    medium materiality
    Medium
    Consumer postpaid phone net adds
    year-over-year improvement
    high materiality
    High

    Segment performance

    1
    SegmentRevenueYoYQoQMargin
    Verizon Business
    Phone net adds were down from 80,000 in the prior year period, but the team is confident in executing effectively for strong volumes in FY25.
    Phone net adds: 67,000
    		————

    Operational metrics

    13
    Wireless service revenue
    $20.8 billionup 2.7% YoY
    Q1 FY25

    At the high end of the guided range.

    Adjusted EBITDA
    $12.6 billionup 4% YoY
    Q1 FY25

    Fueled by wireless service revenue and cost savings initiatives.

    Adjusted EPS
    $1.19up 3.5% YoY
    Q1 FY25

    Primarily due to the strength in adjusted EBITDA.

    Prepaid net adds
    137,000improvement of 268,000 from prior year
    Q1 FY25

    Strong execution and strategy to invest in Straight Talk, Visible, and Total Wireless brands.

    Incremental service revenue from pricing actions
    over $1 billion
    FY25

    The collective pricing changes implemented over the past few months.

    Consumer postpaid phone gross adds
    up mid-single digitsYoY
    March FY25

    Reflects positive momentum exiting the first quarter.

    Consumer postpaid upgrade rate
    3%slightly lower than prior year
    Q1 FY25

    Customers holding on to their phones for longer periods of time.

    Capital expenditures
    $4.1 billionvs $4.4 billion in Q1 FY24
    Q1 FY25

    Expected to ramp as the year progresses; efficiencies found in C-band deployment and Fios build-out.

    Unsecured debt maturities
    less than $700 million
    FY25

    Remaining in 2025, providing a clear pathway for meaningful debt reduction.

    Fixed Wireless Access subscriber base
    more than 4.8 million
    Q1 FY25

    Growing base with increased opportunity for expansion as C-band is deployed.

    Total broadband premises covered
    more than 100 million
    long-term

    Goal for covering all segments of the market with FWA and fiber.

    Cost savings from voluntary separation program
    run rate savings
    FY25

    Program is now complete and already realizing savings for the full year.

    Combined postpaid and core prepaid phone net adds
    improvedfrom last year
    Q1 FY25

    Performance improved year-over-year despite challenges in federal government accounts and consumer postpaid churn.

    Industry KPIs

    6
    MetricValueDetails
    Postpaid phone churnrose by 7 bpsbps
    Postpaid arpa vs ARPU$146.46USD
    Postpaid phone net adds-356,000subscribers
    Broadband fwa net adds split339,000subscribers
    Share buyback capital returned—
    Net debt EBITDA deleveraging path2.3xratio

    Product announcements

    5
    ProductTypeDetails
    3-year price lock and free phone guaranteelaunch
    My Biz Planlaunch
    AI Connect offeringslaunch
    Satellite partnershiplaunch
    Multi-dwelling unit solution for fixed wireless accesslaunch

    Deals & partnerships

    4
    FrontierAcquisition of Frontier to expand broadband opportunity and accelerate growth.

    Pending acquisition, received regulatory approvals from several states, working with federal and state-level agencies, integration planning efforts underway.

    AdventHealth and NucorPrivate network deals.

    Closed more than a dozen private network deals in the quarter, including for AdventHealth and Nucor.

    Atlanta HawksAgreement to deliver a turnkey IoT solution.

    Reached an agreement to deliver a turnkey IoT solution for Atlanta Hawks.

    Unnamed satellite partnerSatellite partnership enabling texting anywhere for free.

    Executed on a satellite partnership that enabled texting anywhere for free.

    Risks & headwinds

    5
    Tariff environment

    uncertain and evolving nature of these impacts

    Mitigation: Actively monitoring and working closely with strategic suppliers to effectively manage potential impacts, as successfully done during COVID-19 pandemic.

    Macro uncertainties and market volatility

    dynamic environment marked by broad macro uncertainties, market volatility and an evolving global trade landscape

    Mitigation: Diverse portfolio of offerings serves all segments of the market, positioning for success in any economic environment; business resilience and differentiators.

    Elevated churn in consumer postpaidQ1 FY25

    consumer postpaid phone churn rose by 7 basis points in the first quarter relative to last year

    Mitigation: Due to multiple pricing actions; positive sales momentum seen in March and April; 3-year price lock and free phone guarantee launched; focus on driving mobility volume growth for full year.

    Pressure from federal government accountsQ1 FY25

    largely driven by elevated churn in consumer from our recent pricing actions and pressure from federal government accounts

    Mitigation: Executing on multiyear business transformation effort in consumer; confident to deliver full year improvements in postpaid phone net adds.

    Customers holding phones longerQ1 FY25

    consumer postpaid upgrade rate was 3% in the first quarter, slightly lower than the prior year

    Mitigation: Expect upgrade activity to increase by mid-single digits from 2024 for the full year, reflecting anticipated increase in volumes.

    What to watch in Q2 FY25

    5

    Consumer postpaid phone net adds

    FY25
    Current-356,000 in Q1 FY25
    Targetyear-over-year improvement for FY25

    Why it matters

    Indicates the effectiveness of new pricing strategies and customer retention efforts in the core wireless business.

    We remain confident that for the full year 2025, we will deliver year-over-year improvement in consumer postpaid phone net adds while maintaining our financial discipline.

    2 min read6 chapters

    Detailed Narrative

    01

    Financial Highlights

    Verizon delivered a strong financial performance in Q1 FY25, with wireless service revenue reaching $20.8 billion, a 2.7% year-over-year increase, meeting the high end of guidance. Adjusted EBITDA grew 4% to a record $12.6 billion, marking the highest quarterly EBITDA in nearly four years. The company also generated robust free cash flow of $3.6 billion, up over $900 million year-over-year, enabling continued execution of capital allocation priorities.

    02

    Broadband Expansion and Subscriber Growth

    The company's broadband strategy, encompassing both Fixed Wireless Access (FWA) and Fios, resulted in 339,000 net additions in the quarter. Verizon is on track to deliver 650,000 incremental Fios passings this year and aims to reach 8 million to 9 million FWA subscribers by 2028. This dual strategy positions Verizon to cover over 100 million premises over time⏳, driving market share gains.

    03

    Subscriber Trends and Pricing Actions

    While consumer postpaid phone net adds saw a loss of 356,000, largely due to elevated churn from recent pricing actions, the company noted positive sales momentum in March and April. These pricing changes are anticipated to yield over $1 billion in incremental service revenue for the full year. Prepaid net adds were strong at 137,000, the best since the TracFone acquisition, contributing to an overall year-over-year improvement in combined postpaid and prepaid phone net adds.

    04

    Strategic Initiatives and Network Leadership

    Verizon introduced a 3-year price lock and free phone guarantee for myPlan customers and launched My Biz Plan for small and medium businesses, enhancing customer-first offerings. The C-band deployment is ahead of schedule, targeting 80% to 90% coverage of planned sites by year-end, reinforcing Verizon's leadership in 5G. The company also launched a multi-dwelling unit solution for FWA in over 50 markets.

    05

    Enterprise and AI Connect Growth

    The private network business continues to scale, closing more than a dozen deals in the quarter, including with AdventHealth and Nucor. Verizon's AI Connect offerings have seen accelerated interest, adding hundreds of new opportunities to the funnel, particularly for dark fiber and wave services, leveraging existing assets to unlock new revenue streams.

    06

    Debt Reduction and Capital Allocation

    Net unsecured debt improved by $11 billion year-over-year to $115.1 billion, with the net unsecured debt to adjusted EBITDA ratio at 2.3x. With less than $700 million in unsecured debt maturities remaining in 2025, Verizon has a clear pathway for meaningful debt reduction, aligning with its capital allocation strategy of investing in growth, supporting dividends, and eventually executing share repurchases.

    AI-generated summary of the company’s earnings call. Not investment advice.