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    VZ
    Earnings call· Jun 2025(Q2 FY25)

    VERIZON COMMUNICATIONS Q2 FY25 earnings call VZ

    Jul 21, 2025 Source

    Executive summary

    Verizon Q2 FY25 — Strong Financial Performance and Raised Full-Year Guidance

    Verizon delivered a strong second quarter, driven by robust wireless service revenue and record adjusted EBITDA, leading to an upward revision of full-year financial guidance. The company's segmented market strategy and disciplined execution are yielding profitable connections and significant cash flow, despite persistent competitive pressures and elevated churn in the postpaid phone segment. Strategic investments in network infrastructure and AI-powered customer experience initiatives are underway to enhance retention and drive future growth, with the pending Frontier acquisition poised to accelerate fiber expansion.

    Highlights

    5

    • Wireless service revenue grew 2.2% year-over-year to $20.9 billion.

    • Adjusted EBITDA reached a record $12.8 billion, up 4.1% year-over-year.

    • Free cash flow for the quarter was $5.2 billion, bringing year-to-date to $8.8 billion, an increase of over $300 million compared to H1 2024.

    • Fixed wireless access (FWA) surpassed 5 million subscribers, on track for 8-9 million by 2028.

    • Full-year guidance for adjusted EBITDA, adjusted EPS, and free cash flow was raised.

    Concerns

    3

    • Postpaid phone churn remained elevated at 0.90% in Q2, consistent with Q1, due to pricing actions and competitive activity.

    • Verizon Business phone net adds significantly declined to 42,000 from 135,000 in the prior year, primarily due to public sector pressures.

    • Softer move environment impacted broadband growth, particularly in the Fios footprint.

    Guidance & targets

    13
    CategoryTargetConfidence
    Full-year Adjusted EBITDA growth
    2.5% to 3.5%
    high materiality
    High
    Full-year Adjusted EPS growth
    1% to 3%
    high materiality
    High
    Full-year Free Cash Flow
    $19.5 billion to $20.5 billion
    high materiality
    High
    Full-year Wireless Service Revenue growth
    Unchanged
    medium materiality
    High
    Full-year Capital Expenditure
    Unchanged
    medium materiality
    High
    C-band deployment coverage
    80% to 90% of planned sites
    medium materiality
    High
    Fiber passings
    650,000 incremental passings
    medium materiality
    High
    Fixed Wireless Access subscribers
    8 million to 9 million
    high materiality
    High
    Perks
    15 million perks
    low materiality
    High
    Prepaid contribution to wireless service revenue growth
    Positively contribute
    medium materiality
    High
    Upgrade activity
    Mid-single-digit percentage increase
    low materiality
    High
    Public sector pressures
    Subside towards the end of the year
    medium materiality
    Medium
    Unsecured debt maturities
    Under $700 million
    low materiality
    High

    Segment performance

    6
    SegmentRevenueYoYQoQMargin
    Wireless Service Revenue
    Market-leading wireless service revenue, driven by consumer ARPU growth and fixed wireless access expansion.
    		$20.9 billion2.2%——
    Verizon Business
    Significant majority of YoY decline in phone net adds driven by public sector business. Focus on disciplined approach and not pursuing low-margin wireless business.
    Phone net adds: 42,000Prior year phone net adds: 135,000
    		———EBITDA grown for 3 consecutive quarters YoY
    Consumer Postpaid Phone
    Benefited from strong gross adds, but churn remained elevated due to pricing actions and competitive activity.
    Net losses: 51,000Prior year net losses: 109,000
    		————
    Core Prepaid
    Fourth consecutive quarter of positive net adds, with strong performance from Visible, Total Wireless, and Straight Talk brands. Expected to positively contribute to wireless service revenue growth in H2 FY25.
    Net additions: 50,000ARPU: >$32
    		—Flat——
    Fixed Wireless Access (FWA)
    Strong demand, on track to achieve 8-9 million subscribers by 2028. Growth continues even as C-band build-out expands into less dense markets.
    Net adds: 278,000Total subscribers: >5.1 million
    		————
    Fios Internet
    Provides industry-leading connectivity with high customer satisfaction, robust ARPU, and low churn rates. Expansion continues with 650,000 new passings targeted for 2025.
    Net adds: 32,000Prior year net adds: 28,000
    		————

    Operational metrics

    12
    Adjusted EBITDA
    $12.8 billionUp 4.1% YoY
    Q2 FY25

    Setting another record for the best reported quarter and second consecutive quarter with growth exceeding guided range.

    Capital Expenditure
    $8 billionvs $8.1 billion in H1 2024
    H1 FY25

    Realizing efficiencies in C-band deployment and Fios expansion.

    Net unsecured debt
    $116 billionDown $6.9 billion YoY
    Q2 FY25

    Debt reduction offset by noncash mark-to-market adjustments in H1.

    Adjusted EPS
    $1.22Up 6.1% YoY
    Q2 FY25

    Primarily due to strength in adjusted EBITDA.

    Consolidated Revenue
    $34.5 billionUp 5.2% YoY
    Q2 FY25

    Driven by solid wireless service revenue and >25% increase in wireless equipment revenue.

    Mobility and broadband net additions
    300,000
    Q2 FY25

    Total net additions across mobility and broadband platforms.

    Mobility phone net adds
    16,000Improvement of $25,000 from prior year
    Q2 FY25

    Includes consumer and business retail postpaid, as well as core prepaid.

    Broadband net additions
    293,000
    Q2 FY25

    Driving market share gains despite seasonal impacts and softer move environment.

    AI Connect sales funnel
    $2 billionNearly doubled since launch
    Current

    Highlights surging demand for high-bandwidth fiber capacity and diverse routes.

    Perks
    15 millionDoubling this year
    Year-end FY25 target

    Robust perk offerings growing at a steady pace and contributing to service revenue.

    Total Wireless postpaid upgrades
    14%Increase vs H1 2024
    H1 FY25

    Driven by healthy initial uptake of Best Value Guarantee program.

    C-band deployment progress
    80% to 90%Ahead of schedule
    Year-end FY25 target

    Deployment is ahead of schedule.

    Industry KPIs

    6
    MetricValueDetails
    Postpaid phone churn0.90%%
    Postpaid arpa vs ARPU2.3%%
    Postpaid phone net adds16,000net adds
    Broadband fwa net adds split293,000net adds
    Share buyback capital returned—
    Net debt EBITDA deleveraging path2.3xx

    Product announcements

    3
    ProductTypeDetails
    My Biz Planlaunch
    AI-powered customer experience initiativeslaunch
    Best Value Guaranteelaunch

    Deals & partnerships

    2
    FrontierAcquisition of Frontier's assets to accelerate fiber expansion and broadband growth.

    Regulatory approval process progressing as planned, with approvals from 8 states, FCC, and DOJ received. Frontier continues to perform well.

    Thames FreeportDeployment of multiple private 5G networks across one of the U.K.'s busiest commercial corridors.

    Landmark deal to deploy private 5G networks, serving as a technology foundation for the region.

    Risks & headwinds

    4
    Elevated postpaid phone churnQ2 FY25, lingering effects expected

    0.90% in Q2 FY25, consistent with Q1 FY25

    Mitigation: Strengthening value propositions (myPlan, myHome, My Biz Plan, Best Value Guarantee), leveraging AI-powered customer experience innovations (June 24 launch), and convergence offers.

    Competitive environmentOngoing

    Elevated competitor promotional activity

    Mitigation: Strategic and segmented approach, maintaining financial discipline, not overspending for growth.

    Public sector pressuresPersist in H2 FY25, subside towards end of year

    Significant majority of YoY decline in Verizon Business phone net adds (42,000 in Q2 FY25 vs 135,000 in Q2 FY24)

    Mitigation: Remaining disciplined and not pursuing low-margin wireless business or overpaying for volumes.

    Softer move environmentQ2 FY25

    Impacted broadband growth

    Mitigation: Continued focus on strong demand for FWA and Fios, expanding Fios footprint, and MDU rollout.

    What to watch in Q3 FY25

    5

    Postpaid phone churn

    Next quarter
    Current0.90%
    TargetImprovement from Q2 levels

    Why it matters

    Churn remained elevated in Q2; management's new CX initiatives and AI tools are expected to drive improvement.

    As expected, postpaid phone churn remained elevated this quarter, reflecting the lingering effects of our pricing actions and ongoing pressure from federal government accounts. We're actively focused on improving retention by strengthening our value propositions, and leveraging our AI-powered customer experience innovations.

    Q&A highlights

    6

    With increased free cash flow due to tax benefits, how will Verizon prioritize capital allocation (buybacks, fiber build)? Also, will consumer postpaid net add improvement continue in 2025, and what's the churn outlook for H2?

    Capital allocation priorities remain unchanged (invest in business, dividend, debt paydown, then buybacks). The tax reform helps accelerate these. A holistic view on capital allocation, including Frontier synergies and fiber investment, will be provided after the Frontier closing. Consumer net add improvement for 2025 is still valid, but financial discipline is paramount. Churn is being addressed with new CX initiatives and AI tools, with expectations for improvement.

    “But clearly, the tax reform is helping us to get faster to the priorities we have. So we feel good about that. But let me come back to that. So I think we can give you a holistic view on capital allocation.”

    asked by Benjamin Swinburne · answered by Hans Vestberg

    2 min read5 chapters

    Detailed Narrative

    01

    Strategic Execution and Financial Discipline

    Verizon's strong performance in the first half of FY25, including record adjusted EBITDA and increased free cash flow, demonstrates the effectiveness of its disciplined strategy. The company remains committed to profitable growth, prioritizing financial discipline over volume chasing, particularly in the competitive wireless market. Cost savings initiatives, including the completion of the voluntary separation program and ongoing network efficiencies, are contributing significantly to operating leverage.

    02

    Mobility Performance and Retention Efforts

    The company delivered year-over-year improvements in combined postpaid and core prepaid phone net adds, with core prepaid achieving its fourth consecutive quarter of subscriber growth. Despite elevated postpaid phone churn, consistent with Q1, due to pricing actions and competitive activity, Verizon is actively focused on improving retention through enhanced value propositions like the Best Value Guarantee and AI-powered customer experience innovations launched on June 24.

    03

    Broadband Growth and Fiber Expansion

    Verizon continues to gain broadband market share, driven by strong demand for both fixed wireless access (FWA) and Fios offerings. FWA surpassed 5 million subscribers, staying on track for its 2028 goal. The fiber build is ahead of plan, targeting 650,000 incremental passings in FY25. The pending Frontier acquisition is progressing, with regulatory approvals received from 8 states, the FCC, and DOJ, and is expected to accelerate fiber expansion upon closing in early 2026.

    04

    AI and Network Infrastructure Leadership

    Verizon is leveraging AI-powered innovations to enhance customer experience and drive new revenue streams. The AI Connect offerings sales funnel has nearly doubled to $2 billion since launch, indicating strong demand for high-bandwidth fiber capacity and edge compute. The C-band deployment is ahead of schedule, aiming for 80-90% coverage by year-end, reinforcing Verizon's network leadership as recognized by J.D. Power and RootMetrics.

    05

    Capital Allocation and Debt Reduction

    The company's capital allocation priorities remain unchanged: strategic investment in the business, supporting a healthy dividend, and paying down debt. Strong cash flow from operations and a $1.5 billion to $2 billion benefit from tax reform are accelerating progress towards long-term leverage targets. Net unsecured debt improved by $6.9 billion year-over-year, with a net unsecured debt to adjusted EBITDA ratio of 2.3x.

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