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Verizon (VZ) Q2 2025 Earnings Call Transcript

July 21, 2025
11:10 AM
13 min read
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I find it compelling that Image source: The Motley Fool. DATEMonday, July 21, 2025, at 8:30 a. EDTCALL PARTICIPANTSChairman and Chief Executive Officer — Hans VestbergExecutive Vice President and Chief...

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July 21, 2025

11:10 AM

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I find it compelling that Image source: The Motley Fool

DATEMonday, July 21, 2025, at 8:30 a

EDTCALL PARTICIPANTSChairman and Chief Executive Officer — Hans VestbergExecutive Vice President and Chief Financial Officer — Tony SkiadasSenior Vice President, Investor Relations — Brady ConnorNeed a quote from one of our analysts. [ tected]RISKSConsumer postpaid phone churn: Tony Skiadas stated, "second-quarter consumer postpaid phone churn remained consistent with the first quarter at 0, in this volatile climate. 90%," stemming from "the residual effects of our first-quarter pricing actions" and "elevated competitor motional activity

Moreover, " segment public sector pressure: Tony Skiadas said, "A significant majority of the year-over-year decline was driven by the public sector (remarkable data), considering recent developments

Meanwhile, While we anticipate public sector pressures to persist in the second half of the year,"TAKEAWAYSConsolidated Revenue: $34. 5 billion in consolidated revenue, up 5. 2% year over year, driven by wireless service and more than 25% growth in wireless equipment revenue

Wireless Service Revenue: $20. 9 billion in total wireless service revenue, up 2

Nevertheless, 2% year over year, attributed to higher consumer ARPA and pricing actions

On the other hand, Adjusted EBITDA: Adjusted EBITDA was $12. 8 billion, an increase of 4, in this volatile climate. 1% year over year, marking the highest reported and the second consecutive quarter above the guidance range

However, On the other hand, Net Additions (Mobility and Broadband): Over 300,000 net additions reported

Consumer Postpaid Phone Net Losses: 51,000 compared to 109,000 net losses in the prior year period, showing imvement due to strong gross adds

Phone Net Adds: 42,000 versus 135,000 in the prior year, with the majority of the decline attributed to the public sector (something worth watching)

Core Prepaid Net Additions: 50,000, reflecting a 62,000 imvement over the prior year period and marking four consecutive quarters of positive core prepaid additions

Postpaid Phone Churn (Consumer): 0. 90% consumer postpaid phone churn, consistent with the previous quarter and impacted by prior pricing actions and intensified competition

Broadband Net Additions: 293,000, with fixed wireless access (FWA) dering 278,000 net adds and total FWA rs exceeding 5

Fios Internet Net Additions: 32,000, rising from 28,000 in the prior year period, with 650,000 new passings targeted for 2025

Adjusted EPS: Adjusted EPS was $1

In contrast, 1% year over year, linked primarily to adjusted EBITDA strength

However, Free Cash Flow: $5 (fascinating analysis)

However, 2 billion in free cash flow and $8. 8 billion year-to-date for the first half of 2025, a 3, amid market uncertainty

Additionally, 6% increase over the first half of 2024

CapEx: $8 billion for the first half of 2025, slightly down from $8. 1 billion in the prior year period, as C-band and Fios expansion achieve planned efficiencies

Net Unsecured Debt: $116 billion net unsecured debt at the end of the quarter, a year-over-year imvement of $6, in this volatile climate. 9 billion; net unsecured debt to consolidated adjusted EBITDA at 2 (quite telling)

Moreover, 3 times, down by 0, given the current landscape

Moreover, Upgrades: 14% increase in total wireless postpaid upgrades for the first half of 2025 compared to the first half of 2024, with full-year upgrade growth still expected in the mid-single-digit percent range

AI Sales Funnel: Nearly $2 billion, almost double since launch earlier this year

Guidance Raised: Full-year 2025 adjusted EBITDA guidance increased to 2, given current economic conditions

On the other hand, 5% growth; adjusted EPS guidance to 1%-3%; and free cash flow guidance raised to $19. 5 billion, with a $1. 5-$2 billion benefit expected from recent tax reform

C-band Deployment: Ahead of schedule, tracking to reach 80%-90% of planned sites by year-end 2025, with fiber build on pace for 650,000 incremental passings

In contrast, Frontier Acquisition: Transaction remains on track for expected close in first quarter of 2026, with most regulatory apvals received and integration planning underway

SUMMARYVerizon Communications' (VZ 5, amid market uncertainty

On the other hand, 20%) call signaled raised full-year 2025 targets for adjusted EBITDA, adjusted EPS, and free cash flow, supported by record-level fitability, cost efficiency gains, and substantial gress in wireless and broadband r growth

On the other hand, Robust cash generation—amplified by benefits from tax reform—allows for continued debt reduction and capital investment without altering established allocation priorities

The company's infrastructure build, particularly C-band and fiber, is gressing ahead of schedule and supports market gains, while customer-facing initiatives the Best Value guarantee and AI-enabled support are being scaled to drive retention and revenue per account

Vestberg stated, we are on track to achieve our goal of 8 million to 9 million FWA rs by 2028

Reinforcing the company's long-term fixed wireless growth strategy

Management confirmed the postpaid upgrade rate rose in the quarter, and indicated continued investment in upgrading the high-value customer base

Moreover, Skiadas explained, "Core prepaid ARPU rose above $32," and now prepaid volumes are expected to "positively contribute to wireless service revenue growth for the remainder of the year

On the other hand, "The sales funnel for AI Connect offerings has nearly doubled to $2 billion since its launch earlier this year highlighting strong momentum in next-generation enterprise solutions

Additionally, The voluntary separation gram was described as "now complete, generating substantial savings

Additionally, " with further efficiencies expected in legacy network operations and cesses

Nevertheless, In contrast, Skiadas affirmed, "We're increasing our guidance for adjusted EPS growth to a range of 1% to 3%, reflecting the new adjusted EBITDA outlook

However, "The company received regulatory apval for the Frontier acquisition from eight states, FCC, and DOJ, and remains "on track for an early 2026 close, amid market uncertainty. "INDUSTRY GLOSSARYC-band: Mid-band spectrum critical for 5G wireless network capacity and coverage expansion, in this volatile climate

FWA (Fixed Wireless Access): A broadband solution dering high-speed internet to s and es using wireless spectrum rather than traditional wireline infrastructure (which is quite significant), given current economic conditions

Perks: Optional bundled service add-ons and adjacent offerings aimed at boosting consumer value and service revenue, considering recent developments

In contrast, Passings: Residential or premises passed by the company's fiber network and eligible for service activation (an important development)

AI Connect: Verizon's enterprise-focused portfolio for AI-enabled network, cloud, and private fiber connectivity solutions

On the other hand, ARPA (Average Revenue Per Account): Metric representing average monthly service revenue earned per customer account

On the other hand, Full Conference Call TranscriptHans Vestberg: Good morning, everyone, and welcome to our earnings call for the second quarter of 2025

Our performance in the first half of the year, highlighted by a strong second quarter, demonstrates that our strategy is working

We remain committed to disciplined execution and customer-centric innovation, growing fitable connections and the value of our customer relationships (fascinating analysis)

While we always see opportunities to imve, I'm confident in the future of our (which is quite significant)

On the other hand, Our financial performance was strong this quarter, with a market-leading wireless service revenue of $20 (noteworthy indeed). 9 billion, up 2

Furthermore, 2% from last year

On the other hand, We dered adjusted EBITDA of $12. 8 billion, up 4

Additionally, 1% year over year, setting another record for the best-reported quarter and the second consecutive quarter with growth exceeding our guided range for the year (fascinating analysis)

Strong fitability drove free cash flow of $5, given the current landscape

Conversely, 2 billion for the quarter

This brings our year-to-date free cash flow to $8, in this volatile climate. 8 billion, an increase of over $300 million compared to the first half of 2024

Our cash flow from operations underscores the strength of our and vides us flexibility to execute on our capital allocation priorities, which remain unchanged

As a result, we continue to lead the industry with the nation's best network

However, Our segmented market strategy, with a diverse portfolio of offerings, is resonating with our customers, given current economic conditions

Our customer-first offerings, such as My Plan, My, and the new My Best plan, along with our best value guarantee, draw significant sales momentum

We're also deploying AI-powered innovation to enhance the customer experience on the nation's best network

On the other hand, On the infrastructure front, our execution is outpacing our targets

C-band deployment is ahead of schedule

On the other hand, Our fixed wireless base has surpassed five million rs, and our fiber build is tracking ahead of its plan

This demonstrates disciplined execution across our entire portfolio

Conversely, Given our financial performance and the momentum in the first half of the year, we are raising our full-year guidance for adjusted EBITDA and adjusted EPS

We're also raising our guidance for free cash flow for the year, driven by our strong cash flow from operations and further supported by the positive impact from the tax reform

Tony will vide you with more details shortly

Now let's turn to our operational performance

In the second quarter, we dered over 300,000 net additions across our mobility and broadband platforms

In mobility, we dered year-over-year imvements in the combined postpaid and core prepaid phone net adds, including the fourth consecutive quarter of r growth in core prepaid

Market analysis shows wireless market remains competitive, and we continue to take a strategic apach

As expected, postpaid churn remained elevated this quarter, reflecting the lingering effects of our pricing actions and pressure from federal government accounts, in today's market environment

Conversely, We're actively focused on imving retention by strengthening our value positions and leveraging our AI-powered customer experience innovations

On the other hand, On upgrades, after being down year over year for eight out of the last nine quarters, we saw an uptick in the second quarter, driven by our best value guarantee

We continue to expect mid-single-digit growth in upgrade activity for the full year

Our dual fixed wireless access and fiber broadband strategy continues to drive market gains

A key highlight is fixed wireless access, which surpassed the five million rs milestone, keeping us firmly on track to achieve our goal of eight to nine million rs by 2028

We achieved robust broadband growth even as our C-band build-out expands in the less dense and despite the softer move environment in our Fios foot

We continue to scale our private network, winning a landmark deal to deploy multiple private fiber networks across the Sam's Freeport, considering recent developments

This network will serve as a nology foundation for one of the UK's busiest commercial corridors, fueling a multibillion-dollar regeneration ject with advanced capabilities AI and real-time logistics (noteworthy indeed), amid market uncertainty

Our AI Connect offerings are also generating strong interest, given the current landscape

Our sales funnel has nearly doubled to $2 billion since launch earlier this year

While these are often complex deals with longer sales cycles, we're actively engaged in several sizable opportunities, in this volatile climate

Moreover, This growth highlights a surging demand for high-bandwidth fiber capacity and diverse routes, both LIP and DOC fiber, to serve different customer needs, amid market uncertainty

As AI transitions from centralized training to widespread real-time application, compute power at the network edge becomes essential

Nevertheless, Our existing infrastructure is uniquely positioned to support this evolution (which is quite significant)

Our network is our key differentiator, consistently dering top performance

Additionally, This leads to the conclusion that quarter, J

Power once again recognized Verizon Communications Inc

For the best network quality

And RootMetrics' first half-year 2025 awards named us the nation's best, fastest, and most reliable 5G network

On the other hand, We're building on this advantage every day

Our C-band deployment is ahead of schedule and on track to cover 80% to 90% of planned sites by year-end, with nearly all sites now standalone capable

Additionally, Our fiber build is tracking ahead of plan, and we're positioned to der 650,000 incremental passings this year

Additionally, Meanwhile, the regulatory apval cess for our pending acquisition of Frontier is gressing as planned (this bears monitoring)

We're encouraged by Frontier's performance and look forward to closing the transaction to further accelerate our fiber expansion (quite telling), in light of current trends

As we near the closing of the Frontier acquisition, we will vide a comprehensive on our strategy, broadband expansion, and capital allocation, considering all stakeholders (this bears monitoring), given the current landscape

We look forward to viding an in the next few months

Additionally, With that, I'll turn it over to Tony to go into the financials in more detail, given current economic conditions

Conversely, Tony Skiadas: Thanks, Hans, and good morning

Additionally, The first half of the year reaffirms the strength of our, highlighting the effective execution of our disciplined strategy and significant gress towards achieving our financial goals

On the other hand, As a leading vider of essential connectivity across the US, we are committed to offering the best value and dering the best service and customer experience within the industry, in light of current trends

We're focused on driving wireless service revenue and adjusted EBITDA growth, and robust free cash flow, amid market uncertainty

The second quarter demonstrated our ability to der strong financial results even in a period of elevated motional activity and broad economic uncertainty (quite telling)

We remain focused on high-quality, fitable growth, recognizing that volume growth is only valuable when aligned with our disciplined financial framework

Our goal is to imve volumes year over year, but we will not do this at the expense of dering on our three key financial priorities

This past quarter, we achieved strong sales, focusing on high-quality customers without overspending for growth

Even with public sector challenges and consumer postpaid phone churn pressure, we maintained our financial discipline

Conversely, Within consumer, second-quarter postpaid phone gross additions were up sequentially and year over year (quite telling)

Nevertheless, Our sales execution remained strong, leveraging our attractive value position, including the recent launch of the Best Value guarantee, considering recent developments

As expected, we saw the residual effects of our first-quarter pricing actions impact our second-quarter consumer postpaid phone churn, in this volatile climate

Additionally, we continue to see elevated competitor motional activity

As a result, second-quarter consumer postpaid phone churn remained consistent with the first quarter at 0

We have taken a series of actions to address our elevated churn (fascinating analysis)

On June 24th, we launched initiatives designed to imve the customer experience, including leveraging AI for more personalized support

In addition, we continue to enhance our value position and build customer loyalty through the best value guarantee

On the other hand, We vide exclusive access to the best events and experiences, and our Refresh app helps customers maximize the value of their plans

However, At the same time, Mobility phone net adds, which includes both consumer and retail postpaid, as well as core prepaid, were 16,000 for the second quarter, considering recent developments

Market analysis shows data indicates that represents an imvement of 25,000 from the prior year period

Consumer postpaid phone net losses totaled 51,000 for the second quarter, compared to 109,000 net losses in the prior year period, as we benefited from strong gross adds

Furthermore, Verizon Communications' dered 42,000 phone net adds in the second quarter, compared with 135,000 net adds in the prior year period

A significant majority of the year-over-year decline was driven by the public sector

Meanwhile, While we anticipate public sector pressures to persist in the second half of the year, we expect the impact to su.