Verizon(VZ)2023-07-27 16:00Revenue Performance - Verizon's Consumer segment reported operating revenues of $24.6 billion for the three months ended June 30, 2023, a decrease of 4.1% compared to $25.6 billion in the same period of 2022[166]. - The Business segment's operating revenues for the same period were $7.5 billion, reflecting a decrease of 1.9% from $7.6 billion in the prior year[167]. - Consolidated operating revenues decreased by 3.5% to $32.6 billion for the three months ended June 30, 2023, down from $33.8 billion in 2022[175]. - Total operating revenues decreased by $1.046 billion (4.1%) to $24.558 billion for the three months ended June 30, 2023, compared to $25.604 billion in the same period of 2022[215]. - Total operating revenues decreased by $143 million, or 1.9%, to $7,483 million for the three months ended June 30, 2023 compared to $7,626 million for the same period in 2022[237]. Expenses and Costs - Cost of wireless equipment decreased by 22.8% to $5.8 billion for the three months ended June 30, 2023, compared to $7.5 billion in the same period of 2022[177]. - Selling, general and administrative expenses increased by 10.1% to $8.3 billion for the three months ended June 30, 2023, up from $7.5 billion in 2022[177]. - Cost of services decreased by $268 million due to the shutdown of competitors' 3G networks and migration of prepaid subscribers to Verizon[180]. - Cost of wireless equipment decreased by $2.6 billion, primarily due to a 26% decrease in the volume of wireless device upgrades[181]. - Cost of services increased by $96 million in personnel costs and $61 million in regulatory costs for the three months ended June 30, 2023 compared to the same period in 2022[226]. - Cost of wireless equipment decreased by $1.6 billion due to a 38% decrease in upgrades for the three months ended June 30, 2023 compared to the same period in 2022[228]. Profitability and Income - Consolidated net income for the six months ended June 30, 2023, was impacted by a decrease in the provision for income taxes, which fell by $196 million (12.7%)[191]. - Consolidated Net Income for Q2 2023 was $4,766 million, a decrease of 10.3% compared to $5,315 million in Q2 2022[198]. - Consolidated EBITDA for Q2 2023 was $11,756 million, slightly down from $11,963 million in Q2 2022, reflecting a decrease of 1.7%[198]. - Consolidated Adjusted EBITDA for Q2 2023 was $11,971 million, an increase of 0.8% compared to $11,873 million in Q2 2022[199]. - Segment operating income for the three months ended June 30, 2023 was $7,330 million, an increase of 2.5% compared to $7,150 million for the same period in 2022[233]. Capital Expenditures and Investments - Capital expenditures for the first half of 2023 totaled $10.1 billion, with full-year expectations ranging from $18.25 billion to $19.25 billion[170]. - The company is focusing on deploying its C-Band spectrum, which as of June 30, 2023, covers approximately 220 million people in the U.S.[171]. - Verizon's ongoing C-Band spectrum deployment will be funded through its general capital expenditure program[170]. - Capital expenditures decreased by approximately $421 million to $10.1 billion for the six months ended June 30, 2023, down from $10.5 billion in the prior year, primarily due to the completion of a $10 billion capital program related to C-band deployment[267]. Debt and Interest - Total debt as of June 30, 2023, was $152.7 billion, with an effective interest rate of 4.7%, up from $150.6 billion and 3.4% in the prior year[274]. - Interest income increased to $92 million in Q2 2023 from $21 million in Q2 2022, reflecting higher interest rates[188]. - Total interest expense increased by $500 million (63.7%) in Q2 2023 compared to Q2 2022, driven by higher average interest rates[190]. - The effective interest rate on debt increased to 4.8% in Q2 2023 from 3.4% in Q2 2022[189]. Customer Metrics - Wireless retail connections are calculated by adding total retail postpaid and prepaid new connections and subtracting disconnects, providing insight into customer growth[201]. - Wireless retail postpaid ARPA increased by $7.67 (6.2%) to $131.83 for the three months ended June 30, 2023, compared to $124.16 in the same period of 2022[215]. - The churn rate for wireless retail increased to 1.58% for the three months ended June 30, 2023, compared to 1.53% in the same period of 2022[215]. - The company reported a net addition of 304,000 wireless retail postpaid connections during the three months ended June 30, 2023, compared to a net addition of 84,000 in the same period of 2022[215]. - Wireless retail postpaid connections increased by 897, reaching 29,105, a 3.2% increase compared to the previous year[237]. Tax and Regulatory Matters - Unrecognized tax benefits remained at $2.8 billion as of June 30, 2023, with interest and penalties related to these benefits at $577 million[193]. - The company reported a provision for income taxes of $1,346 million in Q2 2023, down from $1,542 million in Q2 2022, indicating a reduction of 12.7%[198]. Other Financial Metrics - Free cash flow increased by $776 million to $7.95 billion for the six months ended June 30, 2023, compared to $7.17 billion in the same period of 2022, reflecting higher operating cash flows and lower capital expenditures[282]. - Cash dividends paid were $5.5 billion for the six months ended June 30, 2023, compared to $5.4 billion in the same period of 2022[278]. - Net cash provided by operating activities increased by $355 million to $18.02 billion for the six months ended June 30, 2023, compared to $17.67 billion in the same period of 2022[266].