Sign in
VC

VERIZON COMMUNICATIONS INC (VZ)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered solid operational and financial performance: total operating revenue rose 1.6% YoY to $35.7B, GAAP EPS was $1.18 (vs. $(0.64) in Q4’23), and adjusted EPS was $1.10 (vs. $1.08 in Q4’23); consolidated adjusted EBITDA was $11.9B, up modestly year over year .
  • Wireless service revenue reached an industry-leading $20.0B, up 3.1% YoY, with 568K total postpaid phone net adds and 408K broadband net adds (373K FWA), sustaining share gains across mobility and home broadband .
  • 2025 guidance initiated: total wireless service revenue growth 2.0%–2.8%, adjusted EBITDA growth 2.0%–3.5%, adjusted EPS growth 0%–3%, CFO $35–$37B, capex $17.5–$18.5B, FCF $17.5–$18.5B; note reclassification of >$2.9B device protection revenue into wireless service revenue beginning 2025 .
  • Strategic catalysts: accelerating FWA, pricing and perks driving ARPA, cost transformation, and the new Verizon AI Connect offering leveraging fiber/edge assets with >$1B funnel already supporting margins; management highlighted positive momentum into 2025 and disciplined capital allocation (deleveraging, dividend continuity) .

What Went Well and What Went Wrong

What Went Well

  • Industry-leading wireless service revenue of $20.0B (+3.1% YoY), with sequential growth for the 18th consecutive quarter, driven by pricing actions, perks/add-ons, and FWA adoption .
  • Strong net adds: 568K postpaid phone net adds (up from 449K YoY), 408K broadband net adds, including 373K FWA; consumer ARPA rose 4.2% YoY to $139.77, reflecting monetization of value proposition .
  • Management introduced Verizon AI Connect to monetize connectivity and edge compute assets; >$1B funnel and initial Q4 revenue contribution supported EBITDA trajectory: “We already booked revenue in this regard in the fourth quarter…” .

What Went Wrong

  • Consumer EBITDA margin compressed to 37.5% (38.5% in Q4’23), with higher upgrade volumes and promotional impacts offsetting service revenue gains; consumer operating income fell 1.9% YoY .
  • Business wireline continued secular declines; total Business revenue fell 1.5% YoY to $7.5B despite wireless service revenue growth, limiting segment EBITDA growth to +3.0% YoY .
  • Prepaid pressures persisted earlier in 2024 due to ACP shutdown; while Q4 showed 65K prepaid net adds ex-SafeLink, prepaid remains a swing factor near-term before turning into a tailwind later in 2025 per management .

Financial Results

MetricQ4 2023Q2 2024Q3 2024Q4 2024
Total Operating Revenue ($USD Billions)$35.130 $32.8 $33.3 $35.681
GAAP EPS ($USD)$(0.64) $1.09 $0.78 $1.18
Adjusted EPS ($USD)$1.08 $1.15 $1.19 $1.10
Consolidated Adjusted EBITDA ($USD Billions)$11.678 $12.301 $12.491 $11.927
Net Income ($USD Billions)$(2.573) $4.702 $3.411 $5.114

Segment breakdown

Segment MetricQ4 2023Q3 2024Q4 2024
Consumer Total Operating Revenues ($USD Billions)$26.954 $25.4 $27.560
Consumer Wireless Service Revenue ($USD Billions)$16.034 $16.4 $16.521
Consumer Operating Income ($USD Billions)$7.035 $7.6 $6.904
Consumer Segment EBITDA ($USD Billions)$10.379 $11.0 $10.342
Consumer Segment EBITDA Margin (%)38.5% 43.4% 37.5%
Business Total Operating Revenues ($USD Billions)$7.618 $7.4 $7.504
Business Wireless Service Revenue ($USD Billions)$3.364 $3.5 $3.477
Business Operating Income ($USD Billions)$0.443 $0.565 $0.594
Business Segment EBITDA ($USD Billions)$1.607 $1.6 $1.655
Business Segment EBITDA Margin (%)21.1% 21.8% 22.1%

KPIs

KPIQ2 2024Q3 2024Q4 2024
Total Wireless Service Revenue ($USD Billions)$19.8 $19.8 $19.998
Retail Postpaid Phone Net Adds (000s)148 239 568
Total Broadband Net Adds (000s)391 389 408
FWA Net Adds (000s)378 363 373
Consumer Wireless Postpaid ARPA ($)$138.44 —$139.77
Consumer Postpaid Phone Churn (%)0.79% 0.84% 0.89%
Consumer Postpaid Churn (%)1.00% 1.07% 1.12%
Business Postpaid Phone Net Adds (000s)156 158 142
Business Postpaid Phone Churn (%)1.10% 1.12% 1.09%
Fios Internet Net Adds (000s)24 39 51

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Wireless Service Revenue Growth (%)FY 2025N/A2.0%–2.8% Initiated
Adjusted EBITDA Growth (%)FY 2025N/A2.0%–3.5% Initiated
Adjusted EPS Growth (%)FY 2025N/A0%–3% Initiated
Cash Flow from Operations ($USD Billions)FY 2025N/A$35–$37 Initiated
Capital Expenditures ($USD Billions)FY 2025N/A$17.5–$18.5 Initiated
Free Cash Flow ($USD Billions)FY 2025N/A$17.5–$18.5 Initiated
Device Protection Revenue Reclassification2025Presented in “Other”>$2.9B to be reclassified into Wireless Service Revenue Presentation update
Dividend per Common ShareOngoing$0.6650$0.6775 Raised

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3 2024)Current Period (Q4 2024)Trend
AI/Technology InitiativesCollaboration with NVIDIA to power AI workloads; edge compute positioning (Q4 context) . Q3 noted continued adjusted EBITDA growth enabled by lower upgrades and cost initiatives .Launch of Verizon AI Connect; leveraging fiber/edge assets; >$1B funnel; initial Q4 revenue contribution aiding margins .Accelerating monetization; tangible pipeline and revenue contribution.
Pricing/ARPAPricing actions driving service revenue; Consumer ARPA $138.44 in Q2 (+5% YoY) . Q3 ARPA “above $139” and perks adoption .Consumer ARPA $139.77 (+4.2% YoY); continued selective price-ups and perks adoption supporting revenue .Sustained ARPA growth; pricing and perks remain tailwinds.
Promo AmortizationHeadwind noted, peaking in 2025; underlying customer economics healthy (Q3) .Underlying wireless service revenue growth “nearly double” guided range when excluding promo amortization; headwinds expected to ease by YE 2025 .Headwind peaking; improvement expected into late 2025.
FWA/BroadbandQ2: 378K FWA net adds; Q3: 363K; reached prior FWA target 15 months early .Q4: 373K FWA; scaling MDU solution and Fios expansion to 650K OFS in 2025; 408K total broadband net adds .Continued growth with product expansion (MDU, fiber build).
Prepaid/ACPQ2 prepaid net losses from ACP shutdown; positioning for recovery .Q4: 65K prepaid net adds ex-SafeLink; management expects prepaid to become a tailwind in back half 2025 .Recovering; turning into tailwind.
Cost TransformationQ3 severance ($1.7B) with savings flowing into Q4; EBITDA growth faster than service revenue .Headcount <100K; voluntary separation benefits to 2025 EBITDA; deleveraging continues (net unsecured debt/adj. EBITDA 2.3x) .Structural cost actions underpin margin and cash flow.
Regulatory/Legal/MacroHigher cash taxes and interest expense pressure (Q2/Q3) .Ongoing higher cash taxes; 2025 FCF guide reflects tax and upgrade assumptions; wildfire response emphasized in CEO remarks .Neutral-to-slight headwind in cash taxes; operational resilience.

Management Commentary

  • “We delivered on our financial guidance with 3.1% wireless service revenue growth and 2.1% adjusted EBITDA growth… We raised the dividend for the 18th consecutive year and continued debt pay-down…” — Hans Vestberg .
  • “Verizon AI Connect… intended to meet the growing demand for AI applications… We already have a funnel of over $1 billion simply leveraging our existing infrastructure… Some of these deals are reflected in our fourth quarter results and are contributing to the margin improvements…” — Kyle Malady .
  • “We expect total wireless service revenue to grow between 2% and 2.8%… adjusted EBITDA to grow 2% to 3.5%… free cash flow in the range of $17.5B to $18.5B in 2025.” — Anthony Skiadas .

Q&A Highlights

  • AI Connect opportunity/TAM: management cited >$1B funnel leveraging connectivity and edge, with initial Q4 revenue; TAM “$40B+” addressable with existing assets, expanding with power/space/cooling offerings .
  • Upgrades and 2025 assumptions: after a low cycle in 2024, mid‑single‑digit upgrade growth assumed for 2025 as devices age beyond 40 months and 3‑year DPP cohorts roll off .
  • Service revenue phasing: pricing actions, improving volumes, FWA scaling, and prepaid turning into a tailwind in H2’25; promo amortization headwind peaks in 2025 and fades into 2026 .
  • Reclassification of device protection revenue: ~$2.9B annual recurring will be moved from “Other” to wireless service revenue starting Q1’25; historical results to be recast; limited impact on growth rates .
  • Broadband strategy: steady 350–400K quarterly broadband net adds expected with Tier 2/3 C‑band deployments, MDU FWA launch, and Fios expansion to 650K OFS locations .

Estimates Context

  • We attempted to retrieve S&P Global consensus estimates for Q4 2024 (EPS, revenue, EBITDA) but were unable due to data access limits. As a result, we cannot quantify beats/misses versus Wall Street consensus for this quarter. Values retrieved from S&P Global.*
  • Given reported actuals (GAAP EPS $1.18; adjusted EPS $1.10; revenue $35.7B; adjusted EBITDA $11.9B), sell-side models may modestly lift 2025 service revenue and EBITDA trajectories given management’s commentary on underlying service revenue growth (excluding promo amortization) and cost transformation .

Key Takeaways for Investors

  • Service revenue durability: $20.0B wireless service revenue (+3.1% YoY) and sequential growth streak continue; 2025 guidance (2.0%–2.8%) is supported by pricing, perks, FWA scaling, and improving volumes .
  • Margin/FCF resilience: adjusted EBITDA at $11.9B in Q4 and $48.8B LTM; 2025 FCF guide of $17.5–$18.5B provides room for deleveraging and dividend support despite higher cash taxes .
  • AI Connect optionality: near-term revenue contribution with an >$1B funnel leveraging existing fiber/edge assets, potentially improving Business segment EBITDA trajectory in 2025 .
  • Broadband share capture: 408K total broadband net adds (373K FWA) in Q4; MDU solution and Fios expansion to 650K OFS locations in 2025 should sustain >350K quarterly broadband net adds .
  • Consumer monetization: ARPA rose 4.2% YoY to $139.77; selective price-ups and perks adoption remain tailwinds, offsetting promotional/upgrade pressures .
  • Prepaid inflection: ACP-related drag has abated; Q4 prepaid net adds ex-SafeLink were positive (65K), with management expecting prepaid to become a revenue tailwind in H2’25 .
  • Capital allocation: net unsecured debt/adjusted EBITDA improved to 2.3x; continued debt pay-down and dividend continuity position Verizon for optionality as leverage approaches repurchase threshold .