Verizon Communications Q2 Earnings Call Highlights
Key Points
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- Verizon raised its 2026 outlook after a stronger second quarter, now expecting higher mobility and broadband service revenue growth, adjusted EPS growth of 6% to 7%, and free cash flow growth of 9% to 10%. The company also lifted its share repurchase commitment to as much as $4.5 billion.
- Subscriber trends improved notably, with 184,000 postpaid phone net additions and more than 550,000 total mobility and broadband net additions. Churn fell, prepaid added 73,000 customers, and management said promotional spending and upgrade volumes are declining.
- Verizon’s new consumer offers and fiber strategy are helping support growth, with the company saying its Simplicity and Verizon One plans are exceeding internal expectations. It also sees a future revenue opportunity from AI infrastructure connectivity, including a recently announced deal with Google valued at more than $1 billion.
Verizon Communications (NYSE:VZ) raised its full-year 2026 outlook for mobility and broadband service revenue, adjusted earnings per share and free cash flow after reporting improved subscriber trends, lower churn and stronger operating leverage in the second quarter.
Chief Executive Officer Dan Schulman said the company’s customer-focused transformation was producing “a structural and meaningful inflection” in operating and financial performance. Verizon reported 184,000 postpaid phone net additions during the quarter, including its strongest consumer postpaid phone net-add result in five years. Total mobility and broadband net additions exceeded 550,000.
The company also reported 348,000 broadband net additions, comprising 193,000 fixed wireless access additions and 155,000 fiber additions. Verizon ended the quarter with more than 17.1 million broadband subscribers and said it remained on track to reach more than 32 million fiber passings by year-end.
Subscriber Growth and Churn Improvement
Consumer postpaid phone churn was 0.84% in the second quarter, down from 0.90% in the first quarter and 0.95% in the fourth quarter of 2025. The result marked a six-basis-point improvement from a year earlier. Overall postpaid phone churn improved five basis points year over year.
Schulman said the company has begun growing both accounts and lines, with net new accounts positive for the past two months. During the question-and-answer session, he said Verizon expects positive new account growth in the third quarter as well.
Verizon also continued to grow its prepaid business. Prepaid net additions totaled 73,000, representing the company’s eighth consecutive quarter of positive prepaid additions. Prepaid revenue rose about $90 million, or nearly 5%, from the prior-year period.
The company attributed its improving customer economics partly to reduced promotional spending. Schulman said consumer promotional acquisition costs declined approximately 15% year over year, while promotional retention costs fell about 17%. Chief Financial Officer Tony Skiadas added that upgrade volumes declined nearly 27% from the prior year.
Financial Results and Higher Outlook
Mobility and broadband service revenue totaled $23.4 billion in the second quarter, rising 2.8% year over year and improving from 1.6% growth in the first quarter. Wireless service revenue declined 0.7% to $20.8 billion, while total revenue fell 0.7% to $34.3 billion. Skiadas said lower equipment revenue, which declined by more than $1.2 billion, reflected the company’s lower upgrade volumes.
Adjusted EBITDA was $13.7 billion, up 7.2% year over year, and adjusted EBITDA margin reached 40.1%, which Skiadas said was Verizon’s highest reported level. Adjusted EPS increased 6.6% to $1.30.
Free cash flow was $6.4 billion in the quarter and $10.2 billion for the first half, up 16% from the prior-year period. Cash flow from operations for the first six months totaled $18.4 billion, up nearly 10%, while capital expenditures were $8.2 billion.
Verizon now expects:
- Full-year mobility and broadband service revenue growth of 2.5% to 3%, the upper half of its prior 2% to 3% range.
- Third-quarter mobility and broadband service revenue growth approaching 3% year over year.
- Fourth-quarter mobility and broadband service revenue growth of approximately 4%.
- Full-year adjusted EPS growth of 6% to 7%.
- Free cash flow growth of 9% to 10%, up from its prior outlook of about 7% or more.
- Share repurchases of up to $4.5 billion for 2026, compared with its previous commitment of at least $3 billion.
The company repurchased $1 billion of shares in the quarter, bringing year-to-date buybacks to $3.5 billion. It also paid $5.9 billion in dividends during the first half, for total year-to-date shareholder returns of $9.4 billion, according to Skiadas.
New Consumer Offers and Convergence Strategy
In mid-June, Verizon introduced a loyalty program available to all customers, along with new Simplicity and Verizon One offerings. Simplicity is a $45 wireless plan that separates device subsidies from wireless pricing. Verizon One combines mobility and broadband for $70, including taxes and fees, on one bill.
Schulman said the new offers are designed to reduce complexity, improve customer retention and lower customer-acquisition costs. He said gross additions since the launch were about 16% above Verizon’s forecasts, while net new accounts were 31% above forecast. He also said migration from the existing base has been about one-third of what the company expected and that Simplicity has been average-revenue-per-account accretive.
Skiadas said app traffic grew by double digits after the launches, which he described as a potential leading indicator of improved churn. Verizon said its loyalty program is funded within its existing operating budget.
Fiber, AI Infrastructure and International Wireline
Verizon said it sees an additional growth opportunity in AI infrastructure connectivity. The company recently signed an agreement valued at more than $1 billion with Google to use Verizon dark fiber to connect data centers. Schulman said other expected agreements could collectively represent multiple billions of dollars of revenue over the coming years.
The company said the contracts may involve either dark or lit fiber, depending on customer requirements, and that associated margins are expected to be equal to or greater than Verizon’s existing margin structure. Schulman said the AI infrastructure initiative is expected to begin contributing noticeably to revenue in 2027.
Verizon is also retrofitting certain central offices for inference edge computing. Schulman said a small initial trial of that capability sold out within 24 hours.
Separately, Verizon previously announced an agreement to form a 50-50 joint venture with BT Group plc combining their international wireline operations. The venture is expected to serve more than 3,000 joint enterprise customers and have roughly $4 billion in combined revenue at formation. Verizon expects the transaction to close in the second half of 2027 and generate approximately $200 million in annualized savings versus its current course and speed.
Verizon acquired 82 AWS-3 spectrum licenses for approximately $3.2 billion in FCC Auction 113. Skiadas said the spectrum complements Verizon’s existing holdings and can be deployed without additional capital investment once licenses are issued. The company also said it had paid off substantially all of Frontier’s debt six months ahead of schedule and ended the quarter with net unsecured debt-to-consolidated adjusted EBITDA of 2.5 times.
Finally, Verizon said its board extended Schulman’s employment contract through Dec. 31, 2028.
About Verizon Communications (NYSE:VZ)
Verizon Communications Inc (NYSE: VZ) is a major U.S.-based telecommunications company that provides a broad range of communications and information services. Its operations span consumer and business markets, with core offerings that include wireless voice and data services, fixed-line broadband and fiber-optic services, and enterprise networking solutions. Verizon is headquartered in New York City and operates a nationwide wireless network that supports consumer subscribers as well as business and government customers.
The company's consumer products include mobile phone plans, unlimited data services, and Fios, its branded fiber-optic internet, television and voice service for homes and small businesses.
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