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    VZ
    Earnings call· Mar 2026(Q1 FY26)

    VERIZON COMMUNICATIONS Q1 FY26 earnings call VZ

    Apr 27, 2026 Source

    Executive summary

    Verizon Q1 FY26 — Strong Momentum with Postpaid Phone Net Adds and Raised EPS Outlook

    Verizon delivered a strong Q1 FY26, marking a significant turnaround with positive postpaid phone net adds for the first time in 13 years, driven by a customer-centric approach and improved churn. The company is executing a comprehensive transformation program, leveraging AI to enhance efficiency and customer satisfaction, which is translating into better unit economics and stronger cash generation. Management raised its full-year adjusted EPS growth and postpaid phone net adds outlook, signaling confidence in its disciplined growth strategy.

    Highlights

    5

    • Delivered 55,000 postpaid phone net adds, a 340,000+ improvement year-over-year and the first positive Q1 in 13 years.

    • Achieved 0.90% consumer postpaid phone churn, a sequential improvement of 5 basis points from Q4 and below 85 basis points by quarter-end.

    • Reduced cost of acquisition and retention by approximately 35% relative to Q4, while still driving positive net adds.

    • Reported adjusted EPS of $1.28, up 7.6% year-over-year, the highest growth rate in over 4 years.

    • Generated free cash flow of $3.8 billion, up 4% year-over-year, representing a strong start to the year.

    Concerns

    3

    • Wireless service revenue was down 1% year-over-year, impacted by 80 basis points from customer credits due to a network outage.

    • Mobility and broadband service revenue grew 1.6% year-over-year, below the annual guided range of 2-3%.

    • Net unsecured debt to consolidated adjusted EBITDA ratio increased to approximately 2.6x due to the Frontier acquisition.

    Guidance & targets

    12
    CategoryTargetConfidence
    Mobility and broadband service revenue growth
    2% to 3%
    high materiality
    High
    Adjusted EPS growth
    5% to 6%
    high materiality
    High
    Postpaid phone net adds
    upper half of our $750,000 to $1 million range
    high materiality
    High
    Free cash flow growth
    approximately 7% or more
    high materiality
    High
    Full year free cash flow
    $21.5 billion or more
    high materiality
    High
    Capital expenditures
    $16 billion to $16.5 billion
    medium materiality
    High
    Fiber passings
    more than 32 million
    medium materiality
    High
    Frontier operating cost synergies
    over $1 billion
    medium materiality
    High
    Operating expense savings target
    $5 billion
    high materiality
    High
    Net unsecured leverage ratio
    2.0 to 2.25x
    high materiality
    High
    Frontier debt repayment
    substantially all
    medium materiality
    High
    Share buyback program
    at least $3 billion
    high materiality
    Medium

    Operational metrics

    16
    Total revenue growth
    2.9%YoY
    Q1 FY26

    Total revenues grew to $34.4 billion.

    Mobility and broadband service revenue growth
    1.6%YoY
    Q1 FY26

    Mobility and broadband service revenue was $22.9 billion.

    Wireless service revenue impact from network outage
    80 basis pointsreduction
    Q1 FY26

    From customer credits and other impacts related to network outage.

    Wireless service revenue promotional amortization headwind
    approximately 180 basis pointslapping prior year pricing impacts
    Q1 FY26

    Expected to improve as the year progresses.

    Adjusted EBITDA
    $13.4 billion6.7% increase in the prior year
    Q1 FY26

    Represents the highest ever reported adjusted EBITDA performance.

    Adjusted EBITDA margin
    38.9%expanded by 140 basis points
    Q1 FY26

    Industry-leading result.

    Severance payments
    approximately $1.1 billion
    Q1 FY26

    Related to restructuring efforts.

    Capital expenditures
    $4.2 billion
    Q1 FY26

    Invested strategically for network excellence and future growth opportunities.

    Dividend increase
    $0.07 per shareup 2.5% from our prior annual dividend rate
    annualized

    Marks the 20th consecutive year of dividend increases.

    Share repurchases
    $2.5 billion
    Q1 FY26

    Successfully completed during the first quarter, part of the share buyback program.

    Customer satisfaction improvement (voice agents)
    1,280 basis point improvement
    YoY

    Result of deploying AI into customer service operations.

    Software development delivery increase (AI)
    40% plus
    current

    Expected increase by deploying quad code across software development life cycle.

    Vendor support cost reduction (AI)
    over 70%
    current

    Expected reduction from AI deployment in software development.

    Network issue autonomous resolution
    85%
    current

    Issues resolved before customers even see them, due to AI deployment.

    Network energy savings (AI)
    over $200 million
    current

    Result of deploying AI into the network to optimize energy.

    Network bill of material reduction (AI)
    from over 1 million different combinations down to about 20 kits
    current

    Radical improvement in deployment and cost savings due to AI.

    Industry KPIs

    9
    MetricValueDetails
    Postpaid phone churn0.97%%
    Postpaid arpa vs ARPUdeclined
    Postpaid phone net adds55,000net adds
    M a and spectrum transactionsFrontier acquisition
    Fiber passings locations reachedmore than 32 millionpassings
    Fixed mobile convergence cross sell attach55%%
    Legacy copper wind down cost transformationdecommission legacy elements in the network
    Net debt adjusted EBITDA and deleveraging pathapproximately 2.6xratio
    Broadband fiber fwa net adds with fiber vs fwa s341,000net adds

    Deals & partnerships

    2
    Frontier Communicationsacquisition

    Results included in financial and operating results beginning on January 20, 2026, the date the acquisition closed. Integration is on track.

    Starryinvestment

    Transaction closed in the first quarter.

    Risks & headwinds

    4
    Network outage leading to customer creditsQ1 FY26

    80 basis points reduction in wireless service revenue

    Mitigation: Transparent and decisive action, providing immediate customer credits to maintain long-term relationships.

    Elevated promotional amortization pressuresQ1 FY26, expected to subside

    Lapping approximately 180 basis points of pricing impacts from prior year

    Mitigation: Maintaining low churn, disciplined cost of acquisition and retention, driving net adds, expecting a stronger revenue profile by end of 2026.

    Increased leverage from acquisitionNear-term, post-Frontier acquisition

    Net unsecured debt to consolidated adjusted EBITDA ratio increased to approximately 2.6x at end of Q1

    Mitigation: Paid down about half of Frontier's debt, expect to repay substantially all by year-end, on track to achieve target leverage ratio of 2.0-2.25x in 2027.

    Dynamic competitive and macro environmentOngoing

    Not quantified

    Mitigation: Revised guidance reflects a prudent view, maintaining flexibility and a 'war chest' to react to competitive moves, disciplined transformation agenda.

    Q&A highlights

    6

    How are accounts and ARPA performing, and what's the outlook given current promotions and pricing?

    Dan Schulman stated that Verizon is now customer-centric, focusing on accounts rather than just lines, leading to improved account net adds and higher quality new customers with more lines per account. He noted that the majority of Q1 ARPA decline was due to network outage credits, a one-time event. Tony Skiadas added that new-to-Verizon gross adds are up 150 bps, and they expect ARPA improvements as the year progresses by reducing reliance on expensive promotions.

    “A customer-centric approach is driving our progress on both fronts. The net adds we're adding are higher quality than those that are rolling off. Our new accounts are being added with more lines per account or percent of new to Verizon continues to climb, and that's a leading indicator of where our account number is headed next.”

    asked by Michael Rollins · answered by Daniel Schulman

    2 min read5 chapters

    Detailed Narrative

    01

    Customer-Centric Transformation

    Verizon is undergoing an ambitious company-wide transformation built around 10 major work streams, aiming to become an AI-first company, reduce customer journey friction, and simplify products. This program is changing daily operations, focusing on transparency, simplicity, and genuine value delivery to customers, moving away from blunt price increases and expensive promotions. The company's commitment to customer value and trust is becoming embedded in its corporate DNA, influencing offer design, customer communication, and internal success metrics.

    02

    AI Integration and Impact

    The company is rapidly integrating AI into its operations, with a 4-layer tech stack expected to be substantially complete by July. AI is already improving customer satisfaction, with a 1,280 basis point year-over-year improvement in customer SAT scores using voice agents. It's also increasing software development delivery by over 40% and generating over $200 million in energy savings within the network. Verizon is actively exploring multi-billion dollar revenue opportunities by integrating its fiber and 5G assets with hyperscalers and large enterprises for AI infrastructure, including data center connectivity and support for training and inference.

    03

    Broadband Expansion and Convergence

    Verizon continues to aggressively expand its broadband footprint, targeting over 32 million fiber passings by year-end, with a medium-term goal of $40 million to $50 million. The Frontier integration is on track to deliver over $1 billion in run-rate operating cost synergies by 2028. The company sees a significant cross-sell opportunity, with only 20% of its base currently having broadband, and notes that churn is almost 30% less for converged offers, leading to higher customer lifetime value and ARPA. While prioritizing fiber, Verizon will continue to drive Fixed Wireless Access (FWA) leveraging increased network capacity.

    04

    Cost Efficiency and Capital Allocation

    The company realized substantial savings in advertising, network operating expenses, and workforce-related costs, contributing to its $5 billion OpEx savings target for 2026. These efficiencies are dropping to the bottom line, allowing for reinvestment in customer experience and significant capital returns. Verizon's capital allocation priorities include investing in network excellence, maintaining its strong dividend (marking the 20th consecutive year of increases), strengthening the balance sheet by reducing debt, and returning additional value to shareholders through stock buybacks.

    05

    Network Outage and Customer Response

    In Q1, Verizon experienced a network outage in January, which resulted in a one-time📎 pressure of 80 basis points on wireless service revenues due to customer credits. Management emphasized its commitment to doing the right thing for customers and valuing long-term relationships, reacting transparently and decisively to the event. This approach aligns with the broader strategy of improving customer experience and retention by removing friction and providing value, rather than relying on blunt price increases.

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