Verizon Communications Inc. ($VZ) faced a challenging second quarter as the company reported revenues that fell short of market expectations, driven by a noticeable decline in upgrade volumes for wireless equipment. For the quarter ending in June, adjusted earnings reached $1.15 per share, aligning with estimates gathered through Capital IQ, albeit a decrease from the $1.21 reported during the same period last year.
Operating revenue experienced a modest rise of 0.6%, totaling $32.8 billion, aided by service and other revenue streams; however, this was partially countered by a downturn in wireless equipment sales resulting from reduced upgrade activity. Unfortunately, the revenue tally did not meet the expectations of market analysts, who had anticipated $33.05 billion. As a result of the mixed earnings report, the telecommunications giant's stock experienced a significant drop, plummeting by 6.2% during trading on Monday. Wireless service revenue advanced by 3.5%, amounting to $19.77 billion, which was primarily propelled by a 3.7% increase in consumer wireless service gains, helping it to reach $16.3 billion.
Chief Financial Officer Tony Skiadas discussed these outcomes during an earnings call, as per a transcript from Capital IQ. Additionally, service and other revenue increased by 1.8%, totaling $27.8 billion. However, total upgrades for wireless equipment witnessed a considerable decline of 13% year-over-year, as articulated by Skiadas. In this quarter, Verizon successfully added 148,000 net retail postpaid phone subscribers, a significant spike compared to the mere 8,000 added in the previous year’s quarter.
Meanwhile, broadband net additions were recorded at 391,000, a slight dip from the 418,000 reported in the same quarter last year. The telecom behemoth concluded the quarter with a total of 11.5 million broadband subscribers, demonstrating an impressive annual growth of 17%. Despite these victories, Verizon faced challenges in its wireless retail prepaid segment, losing approximately 624,000 subscribers during the June quarter on a net basis.
Notably, this included a loss of 410,000 subscribers linked to the cessation of the Affordable Connectivity Program. In comparison, the company reported a net loss of 304,000 subscribers during the previous year’s quarter. "Our overall execution in consumer mobility has been improving quarter after quarter since early last year," commented Chief Executive Officer Hans Vestberg during the earnings call.
He further noted, "We expect to have positive postpaid phone net additions in consumer for the year." Looking ahead, the company maintains its guidance for adjusted earnings per share (EPS) between $4.50 and $4.70 for the year 2024, with market expectations of $4.57. Moreover, Verizon reiterated its projection for wireless service revenue growth, which is anticipated to be between 2% to 3.5%.
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