Verizon Communications Q4 2024 Pre Recorded Earnings Report

Verizon Communications EPS Results

• Actual EPS: $1.10
• Consensus EPS: $1.11
• Beat/Miss: Missed by -$0.01
• One Year Ago EPS: $1.08

Verizon Communications Revenue Results

• Actual Revenue: N/A
• Expected Revenue: $35.49 billion
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Verizon Communications Announcement Details

• Quarter: Q4 2024 Pre Recorded
• Date: 1/24/2025
• Time: Before Market Opens
• Conference Call Date: Friday, January 24, 2025
• Conference Call Time: 7:00AM ET

Verizon Communications (NYSE:VZ), through its subsidiaries, engages in the provision of communications, technology, information, and entertainment products and services to consumers, businesses, and governmental entities worldwide. It operates in two segments, Verizon Consumer Group (Consumer) and Verizon Business Group (Business). The Consumer segment provides wireless services across the wireless networks in the United States under the Verizon and TracFone brands and through wholesale and other arrangements; and fixed wireless access (FWA) broadband through its wireless networks, as well as related equipment and devices, such as smartphones, tablets, smart watches, and other wireless-enabled connected devices. The segment also offers wireline services in the Mid-Atlantic and Northeastern United States, as well as Washington D.C. through its fiber-optic network, Verizon Fios product portfolio, and a copper-based network. The Business segment provides wireless and wireline communications services and products, including FWA broadband, data, video and conferencing, corporate networking, security and managed network, local and long-distance voice, and network access services to deliver various IoT services and products to businesses, government customers, and wireless and wireline carriers in the United States and internationally. The company was formerly known as Bell Atlantic Corporation and changed its name to Verizon Communications Inc. in June 2000. Verizon Communications Inc. was incorporated in 1983 and is headquartered in New York, New York.

Verizon Communications Q4 2024 Pre Recorded Earnings Call Transcript

Key Takeaways

• Verizon delivered 3.1% wireless service revenue growth, 2.1% adjusted EBITDA growth, and generated $19.8 billion of free cash flow in 2024, exceeding its financial guidance for the year.
• The company added nearly 2.5 million postpaid mobility and broadband subscribers in 2024, including a Q4 run-rate of almost 1 million net adds—the strongest quarterly result in over a decade—and grew its fixed wireless access base to 4.6 million subscribers.
• Strategic moves such as refreshing the brand, launching offerings like My Home and Verizon Access, signing deals for tower assets and U.S. Cellular spectrum, and agreeing to acquire Frontier are designed to drive long-term growth and customer value.
• Verizon extended its network leadership by deploying C-band to 70% of planned sites, opening 464,000 new Fios premises, partnering on satellite connectivity, and developing AI-focused solutions such as network slicing video calling and mobile edge compute with NVIDIA.
• For 2025, Verizon expects wireless service revenue to grow 2%–2.8%, adjusted EBITDA to increase 2%–3.5%, and free cash flow between $17.5 billion and $18.5 billion, while maintaining dividend growth and continuing debt reduction.

Presentation

[Brady Connor, Senior Vice President-Investor Relations at Verizon]

Hello, and welcome to our Q4 and full year 2024 results discussion. I'm Brady Connor. And on this recording, you'll hear from our chairman and chief executive officer, Hans Vestberg, as well as our chief financial officer, Tony Sciattis. Before we begin, I'd like to draw your attention to our Safe Harbor statement, which can be found at the start of the earnings presentation posted on our Investor Relations website. Information in this presentation contains statements about expected future events and financial results that are forward looking and subject to risks and uncertainties.

[Brady Connor, Senior Vice President-Investor Relations at Verizon]

Discussion of factors that may affect future results is contained in Verizon's filings with the SEC, which are available on our Investor Relations website. This presentation contains certain non GAAP financial measures. Reconciliations of these non GAAP measures to the most directly comparable GAAP measures are included in the financial materials posted on our website. A detailed overview of our Q4 and full year results and other materials related to this discussion were posted this morning to our Investor Relations website. Additionally, we hope you'll join the webcast of our discussion of the earnings results and business update that starts at 8:30 a.

[Brady Connor, Senior Vice President-Investor Relations at Verizon]

M. Eastern Time today, January 24. With that, I'll turn it over to Hans.

[Hans Vestberg, Chairman & CEO at Verizon]

Thank you, Brady. Good morning, everyone, and welcome to our Q4 and full year 2024 earnings update. We had a year of strong growth with a great 4th quarter finish. The team executed our strategy well, transforming Verizon into a more efficient and effective company, which is reflected in our solid operational and financial results. This demonstrates our commitment to continuous improvement as we strive to power and empower our people, live, work and play.

[Hans Vestberg, Chairman & CEO at Verizon]

We delivered on our 2024 financial guidance. Wireless service revenue and adjusted EBITDA exceeded the midpoint of our guided ranges, and we generated strong free cash flow. We grew wireless service revenue sequentially for the 18th consecutive quarter and grew year over year adjusted EBITA every quarter in 2024. Our network product portfolio and brand are resonating with our customers and driving growth for us in the market. We're excited about 2025 and look forward to building on the strong execution and the solid results delivered in 2024.

[Hans Vestberg, Chairman & CEO at Verizon]

Let me start with our strategic moves in 2024, which position Verizon for a long term growth as we better serve our customers with control, simplicity and value. These include refreshing our brand, introducing customer first offerings like My Home, Verizon Access and Verizon Business Complete, accelerating our broadband expansion with the pending acquisition of Frontier and signing strategic transactions, including the tower deal and agreement to acquire U. S. Cellular Spectrum. We extended our network leadership even further.

[Hans Vestberg, Chairman & CEO at Verizon]

We announced satellite partnership with AST Space Mobile and Skylo to offer connectivity in dead zones. And as you will hear more later today, we're connecting the AI ecosystem, putting Verizon at the forefront of the next generation technology. We continue to invest in the business. We have now deployed C band on nearly 70% of our planned sites and expect to be within 80% to 90% by the end of 2025. C band deployment continues to improve our customers' mobility experience while expanding fixed wireless access coverage.

[Hans Vestberg, Chairman & CEO at Verizon]

At the same time, we continue to expand our Fios footprint with 464,000 new premises open for sale. My new leadership team, which came together over the last 12 months, has performed very well and has continued to transform the business and drive efficiencies while improving our operating leverage. With execution of the voluntary separation program, we ended the year with fewer than 100,000 employees, down close to 20,000 over the last 3 years. This gives us more flexibility to execute our strategy and deliver on our capital allocation priorities. These strategic moves and operational improvements drove strong financial results.

[Hans Vestberg, Chairman & CEO at Verizon]

Total wireless service revenue of $79,100,000,000 was up 3.1 percent year over year. Adjusted EBITDA of $48,800,000,000 was up 2.1 percent or $1,000,000,000 year over year. And we generated strong free cash flow of $19,800,000,000 while absorbing higher taxes. Given the financial strengths of our business, we increased our dividend for the 18th consecutive year while maintaining a healthy free cash flow dividend payout ratio of approximately 57% and continued to pay down debt, ending the year with a net unsecured debt to adjusted EBITDA ratio of 2.3 times, down from 2.6 times a year ago. Turning to our operational performance.

[Hans Vestberg, Chairman & CEO at Verizon]

We grew subscribers across all our core businesses for the full year. We added nearly 2,500,000 postpaid mobility and broadband subscribers in the year while expanding our margins. On mobility, we added nearly 900,000 postpaid phone subscribers. Consumer postpaid phone net adds were positive for the year. Business postpaid phone subscribers growth continued with another year of solid performance with over 500,000 net adds.

[Hans Vestberg, Chairman & CEO at Verizon]

Prepaid net adds, excluding SafeLink, were also full year positive for the first time since the Tracfone acquisition. It's been a great turnaround by the consumer team. On broadband, we added nearly 1,600,000 subscribers in 2024, bringing our base to 12,300,000. Our growth was fueled by great momentum in both fixed wireless access and Fios. We have the most complete and differentiated broadband offering covering all segments of the market.

[Hans Vestberg, Chairman & CEO at Verizon]

As announced in October, we expect to cover more than 100,000,000 homes and businesses nationwide over time. Our private networks business continues to scale, with significant wins across key verticals. In early 2024, we were selected for an IT system modernization project from Xerox and a private network build for global power solution leader Cummins Inc. In sports and entertainment, we expanded our service from every NFL stadium in the country to individual teams and the training facilities. We won new mandates from FIFA to support the 2026 Men's World Cup as official telecommunications service sponsor with a state of art technology, and we expanded our partnership with Madison Square Garden.

[Hans Vestberg, Chairman & CEO at Verizon]

This month, the United States Air Force chose us to enhance its communication infrastructure across 35 bases, which will include new C band deployments. In summary, 2024 was a year of strategic execution with strong financial and subscriber growth. Now let me turn to the Q4. We had a very strong quarter, both financial and operationally, with subscriber gains in both mobility and broadband. We continue to gain share in broadband, led by sustained growth in fixed wireless access.

[Hans Vestberg, Chairman & CEO at Verizon]

Wireless service revenue came in at $20,000,000,000 the highest in the industry, up 3.1% year over year. Adjusted EBITDA was $11,900,000,000 up 2.1 percent year over year. We ended the year with a strong free cash flow of $5,400,000,000 for the quarter. Our subscriber growth demonstrated clear momentum. We added nearly 1,000,000 postpaid mobility and broadband subscribers, our highest quarter result in over a decade.

[Hans Vestberg, Chairman & CEO at Verizon]

In mobility, total postpaid phone net adds were 568,000, our best quarterly performance in 5 years. This was driven by strong execution in consumer and continued strength in our business segment. Our total postpaid phone net adds improved year over year in every quarter of 2024. In our value business, excluding SafeLink, prepaid net adds of $65,000 in the Q4 brought us into positive territory for the year. Our broadband business continued to scale effectively.

[Hans Vestberg, Chairman & CEO at Verizon]

We delivered 408,000 net adds, including 373,000 from Fixed Wireless Access. We ended the year with nearly 4,600,000 Fixed Wireless Access subscribers, and we exceeded $2,100,000,000 of Fixed Wireless Access revenue for the year. We're off to a great start to hit our next milestone of 8000000 to 9000000 Fixed Wireless Access subscribers by 2028. Finally, in addition to the new private networks business that we won in the Q4, we were the only U. S.-based carrier to be named a leader in Gartner's Magic Quadrant for Private Networks.

[Hans Vestberg, Chairman & CEO at Verizon]

Gartner recognized us for our vision, our work in building a private networks market and our ability to build great private networks that our customers rely on. On network, our capital efficiency continues to improve as we roll out our fiber and C band ahead of plans and transform our network. Where we have C band deployed, customers are experiencing superior performance, and we're seeing a higher gross adds and lower churn. We continue to enhance our network capabilities and innovate for the evolving needs of our customers. We recently launched enhanced video calling powered by network slicing, and we collaborated with NVIDIA to power AI workloads on private 5 gs networks with mobile edge compute.

[Hans Vestberg, Chairman & CEO at Verizon]

We also successfully tested next generation technology, enabling faster and more energy efficient fiber network data transfers. Our continued advancement further strengthened our position as the best network for all of our customers. Looking ahead to 2025, we'll continue to build on our momentum and execute our long term strategy. We'll focus on growing wireless service revenue, expanding adjusted EBITA and generating strong free cash flow. We will accelerate our mobility momentum and broadband growth with continued deployment of 5 gs ultra wideband and expanded fiber builds while scaling our private networks business.

[Hans Vestberg, Chairman & CEO at Verizon]

We will maintain our focus on operation excellence, financial discipline and customer experience to drive both customer and financial growth. We will continue to execute on our capital allocation model by investing in the business, supporting and growing our dividend, paying down our debt and eventually executing on share repurchases. And we will leverage our extensive fiber footprint and edge compute assets to open new revenue streams as we continue to connect the AI ecosystem. Toni will provide more details on our 2025 guidance, but we anticipate another year of strong wireless service revenue growth in the 2% to 2.8% range, with underlying growth expected to be nearly double the guided range when excluding promo amortization. Our adjusted EBITDA profile will continue to improve as we remain financially disciplined and execute on our business transformation programs.

[Hans Vestberg, Chairman & CEO at Verizon]

The midpoint of our adjusted EBITDA guidance represent an acceleration from our 2024 growth rate. We expect to generate strong free cash flow while investing for long term growth. Now I will hand it over to Tony to discuss our financial results.

[Tony Skiadas, CFO at Verizon]

Thanks, Hans, and good morning. We finished the year with strong operational momentum in both mobility and broadband, demonstrating year over year improvement in postpaid phone net additions throughout the year. In addition, we deliver our highest broadband quarterly result of the year. All in, we added nearly 1,000,000 postpaid subscribers onto our mobility and broadband platforms in the 4th quarter, the highest quarterly result in over a decade. We did this while delivering on our financial guidance, including finishing above the midpoint of the guided ranges for both wireless service revenue and adjusted EBITDA and generating strong cash flow.

[Tony Skiadas, CFO at Verizon]

These results reflect our disciplined approach to growth and position us well for continued success in 2025. Consumer postpaid phone net adds totaled 426,000 for the Q4, a substantial improvement from 318,000 in the prior year period. For the full year, we delivered 82,000 consumer postpaid phone net adds, excluding the impact of our 2nd number offering, meeting our goal of positive net adds for the year. Volumes are important to delivering our growth objectives. We expect to build off the momentum exiting the year and deliver even more postpaid phone net additions in 2025.

[Tony Skiadas, CFO at Verizon]

We also intend to transition our 2nd number product to a PERC offering within the next few months. As a result of that change, beginning in the Q1 of 2025, we will no longer count 2nd number in calculating postpaid phone net adds and other phone metrics. The strong consumer postpaid phone results in the quarter were primarily driven by postpaid phone gross adds, which were up more than 5% compared to the prior year period. The quarterly phone gross add result was our strongest in 5 years. Customers continue to be attracted to our MyPlan offers with nearly half of our phone base on MyPlan at year end.

[Tony Skiadas, CFO at Verizon]

In addition, our C band expansion, segmented go to market approach, targeted promotions and operational focus all contributed to our strong performance. Consumer postpaid phone churn was 0.89% for the Q4, up slightly versus the same period a year ago, reflecting pricing actions taken during the quarter. Churn management will remain an operational focus for the business in 2025 as we continue to pursue a balanced growth profile between volumes and price. The consumer postpaid upgrade rate was 4.5% in the 4th quarter, up 10 basis points year over year as a result of the approximately 3% increase in upgrades. While upgrades increased year over year for the first time in several quarters, we do not see a significant change in consumer behavior as customers continue to hold on to their phones for longer periods of time.

[Tony Skiadas, CFO at Verizon]

Consumer ARPA of $139.77 in the Q4 represented an increase of 4.2% year over year. This was primarily driven by pricing actions taken throughout the year, growing PERC adoption and fixed wireless access subscriber growth. We expect continued healthy ARPA growth in 2025. Our prepaid results showed continued momentum in the Q4. Excluding Safelink, we had 65,000 prepaid net additions in the 4th quarter, leading to positive full year prepaid net adds.

[Tony Skiadas, CFO at Verizon]

Our strategy is working, and we continue to invest in the Straight Talk, Visible and Total Wireless prepaid brands. We expect to see continued improvement in 2025, with the financial contribution from prepaid expected to turn to a tailwind towards the back half of twenty twenty five. Verizon Business delivered another strong quarter with 142,000 Phonet adds. Our value proposition continues to resonate across all customer groups, with particular strength in small and medium businesses. This is evident as we continue to retain our leading market share and reported a year over year improvement in business phone churn for the full year 2024.

[Tony Skiadas, CFO at Verizon]

We are confident that we will continue to deliver strong business volumes in 2025. Moving on to broadband, we delivered 408,000 net additions in the quarter, continuing the quarterly pace of over 350,000 broadband net adds. We are taking broadband share and continue to see strong demand for both our fiber and fixed wireless access offerings. We are confident that both Fios and FWA will continue to grow market share in 2025. Key initiatives driving our optimism include expanding our Fios footprint by up to 650,000 new locations and further deploying C band spectrum.

[Tony Skiadas, CFO at Verizon]

In addition, we anticipate bringing new products and offers to the market such as our MDU solution for fixed wireless access that will be launched in the next few months. In fixed wireless access, we delivered 373,000 net adds for the quarter, growing the base to nearly 4,600,000 subscribers. In the Q4, we saw a higher proportion of consumer fixed wireless gross adds coming from suburban and rural customers, showing the high demand for quality broadband services in our newer C band markets. We're off to a great start towards achieving our 8 to 9000000 subscriber goal by 2028 and see continued opportunities to grow as we expand our C band footprint. Fios Internet net adds for the Q4 were 51,000 versus 55,000 in the prior year period.

[Tony Skiadas, CFO at Verizon]

With 20 years of Fios experience, we continue to grow our fiber subscribers while others face challenges. Let's now look at our financials. Consolidated revenue for the Q4 was $35,700,000,000 up 1.6% year over year. Service and other revenue grew 1.8 percent, driven primarily by wireless service revenue growth, partially offset by ongoing business wireline declines. Total wireless service revenue was an industry leading $20,000,000,000 in the 4th quarter, up 3.1% year over year.

[Tony Skiadas, CFO at Verizon]

Revenue growth benefited from targeted pricing actions, customer growth, sales of Perks and add on services and growth in fixed wireless access. This was partially offset by the pressure from promo amortization as well as prepaid revenue. Consolidated adjusted EBIT in the quarter was $11,900,000,000 an increase of 2.1% compared to the prior year period. The increase was driven by higher wireless service revenue and benefits from cost savings initiatives, which were partially offset by investments to drive growth and legacy wireline revenue declines. Notably, business segment EBITDA for the Q4 was $1,700,000,000 up 3% year over year.

[Tony Skiadas, CFO at Verizon]

This represents the 1st year over year increase in quarterly EBITDA for the business segment since the Q4 of 2020. Adjusted EPS was $1.10 in the quarter, up 1.9 percent year over year, resulting in full year adjusted EPS of $4.59 Turning to our cash flow summary, cash flow from operating activities for the Q4 was 10,400,000,000 dollars bringing the total for 2024 to $36,900,000,000 For the Q4, it's important to note that we received approximately $2,800,000,000 in proceeds from the vertical bridge tower deal, of which approximately $2,000,000,000 flow through cash flow from operations. The remaining proceeds flow through cash flow from financing activities. In addition, we made severance payments related to our voluntary separation program of approximately $600,000,000 CapEx for the quarter came in at $5,100,000,000 compared to $4,600,000,000 in the prior year. The full year CapEx totaled $17,100,000,000 down from $18,800,000,000 in 2023.

[Tony Skiadas, CFO at Verizon]

We came in at the low end of our guided range supported by efficiencies in our C band build out and fiber expansion activities. Free cash flow was $5,400,000,000 in the 4th quarter and $19,800,000,000 for the full year 2024, including a net positive impact of $1,400,000,000 from the Tara transaction and voluntary separation payments. This result shows very strong underlying cash flow generation in the business, given that we paid $3,300,000,000 more in cash taxes in 2024 than in 2023. Net unsecured debt at the end of the quarter was $113,700,000,000 a $12,700,000,000 improvement year over year and better by $7,700,000,000 sequentially. Unsecured debt decreased sequentially primarily due to a debt tender offer of $3,300,000,000 the repayment of $1,200,000,000 of maturing notes in the quarter and mark to market adjustments.

[Tony Skiadas, CFO at Verizon]

Our net unsecured debt to consolidated adjusted EBITDA ratio was 2.3x@yearend, down from 2.5x last quarter as we continue to focus on our debt reduction ahead of the closing of the Frontier transaction in alignment with our capital allocation strategy. Now let's look at our 2025 guidance, which, similar to 2024, reflects our commitment to wireless service revenue, adjusted EBITDA and cash flow growth. For 2025, we expect total wireless service revenue to grow between 2% 2.8%. We expect the growth to be driven by anticipated postpaid phone net additions in both consumer and business, fixed wireless access subscriber growth, PERC adoption and pricing actions implemented in 2024 that carry over into 2025. We anticipate significant promo amortization headwinds to impact wireless service revenue growth in 2025.

[Tony Skiadas, CFO at Verizon]

Please note that beginning in the Q1 of 2025, we are reclassifying recurring device protection and insurance related plan revenues from other revenue into wireless service revenue. The reclassification of more than $2,900,000,000 better reflects that these products represent values our customers receive that is complementary to our connectivity services. Where applicable, historical results will be recast to conform to the updated presentation. The midpoint of the guidance implies $2,000,000,000 of wireless service revenue growth over a higher base of revenue. Consolidated adjusted EBITDA is expected to grow 2% to 3.5% compared to 20.24.

[Tony Skiadas, CFO at Verizon]

This outlook reflects higher expected wireless service revenue and benefits of ongoing cost transformation initiatives, partially offset by continued pressure in business wireline revenues. Full year adjusted earnings per share growth is expected to be between 0% 3%, reflecting the adjusted EBITDA growth, partially offset by higher depreciation and amortization. As we discussed in October, capital spending for the full year is expected to be between $17,500,000,000 $18,500,000,000 That is an all in number that includes all of our growth initiatives, including accelerating our Fios expansion. We expect free cash flow in the range of $17,500,000,000 to $18,500,000,000 in 2025, which assumes mid single digit growth in upgrades and no change to current tax legislation. Please note that our guidance exclude any impact from the pending acquisition of Frontier.

[Tony Skiadas, CFO at Verizon]

We're currently working with all the regulatory bodies that must approve the transaction. The process is going as planned, and we continue to expect the transaction to close by early 2026. In summary, we delivered on our financial guidance and remain disciplined with our capital allocation approach. We exited 2024 with good momentum in both mobility and broadband. Overall, we are pleased with how we performed in 2024 and look forward to extending our leadership in 2025.

[Tony Skiadas, CFO at Verizon]

With that, I will now turn the call back over to Hans for his closing thoughts.

[Hans Vestberg, Chairman & CEO at Verizon]

Thank you, Tony. Let me close by saying I'm proud of everything we accomplished in 2024. Our team delivered strong results through disciplined execution and relentless customer focus. We strengthened our network leadership, transformed our operating model and positioned Verizon for long term success. We enter 2025 with clear priorities and momentum across our business.

[Hans Vestberg, Chairman & CEO at Verizon]

Our network advantages continues to grow. Our cost transformation is delivering results, and we're capturing opportunities in mobility, broadband and private networks. We will maintain focus on our 3 key financial metrics: wireless service revenue, adjusted EBITA and free cash flow. As I always say, continuous improvements never ends. We will keep pushing forward to deliver value for our customers and our shareholders.

[Hans Vestberg, Chairman & CEO at Verizon]

Finally, our industry sits at the center of next wave of innovation as AI transform how consumers and businesses operate. Our network assets and capabilities position us uniquely in this evolving landscape. I look forward to sharing more about how Verizon will connect the AI ecosystem on our 8:30 a. M. Call this morning.

Participants

Executives

• Hans Vestberg, Chairman & CEO

Analysts

• Brady Connor, Senior Vice President-Investor Relations at Verizon
• Tony Skiadas, CFO at Verizon