Verizon(US:VZ)2024-02-08 16:00Financial Performance - Verizon's total operating revenues for the year ended December 31, 2023, were $133.974 billion, a decrease of 2.0% from $136.835 billion in 2022[354]. - The company's net income for 2023 was $12.095 billion, down 44.4% from $21.748 billion in 2022[356]. - Verizon's operating income decreased to $22.877 billion in 2023, compared to $30.467 billion in 2022, reflecting a decline of 25.1%[354]. - Verizon's basic earnings per share attributable to common shareholders decreased to $2.76 in 2023 from $5.06 in 2022, a decline of 45.5%[354]. - Total comprehensive income for 2023 was $12.580 billion, down from $20.810 billion in 2022, reflecting a decrease of 39.6%[356]. - Verizon's interest expense increased to $5.524 billion in 2023, compared to $3.613 billion in 2022, marking a rise of 52.9%[354]. - Total current assets decreased to $36,814 million in 2023 from $37,857 million in 2022, reflecting a decline of 2.8%[358]. - Cash and cash equivalents at the end of the period were $3,497 million, down from $4,111 million in 2022, representing a decrease of 15%[359]. - Long-term debt decreased to $137,701 million in 2023 from $140,676 million in 2022, a reduction of 2.1%[358]. - Total equity increased to $93,799 million in 2023 from $92,463 million in 2022, reflecting a growth of 1.4%[358]. Revenue Segmentation - The company reported Enterprise and Public Sector revenues of $15.1 billion in 2023, accounting for approximately 50% of the Business segment's total revenues[21]. - Business Markets and Other revenues reached $12.7 billion in 2023, representing approximately 42% of the Business segment's total revenues[24]. - Wholesale revenues were $2.3 billion in 2023, making up approximately 8% of the Business segment's total revenues[25]. - The company's service revenues and other for 2023 were $109.652 billion, slightly up from $109.625 billion in 2022[354]. Network and Technology - The company’s 5G network, utilizing C-Band spectrum, covers approximately 242 million people in the U.S. as of December 31, 2023[32]. - The 4G LTE network covers approximately 330 million people, excluding areas served by LTE in Rural America partners[33]. - The company has approximately 3.1 million FWA broadband connections as of December 31, 2023[16]. - The company is transforming its network architecture into the Intelligent Edge Network to enhance performance and simplify operations[31]. - The company’s global IP network provides connectivity to Business customers in over 190 countries, supporting the demand for cloud-based solutions[40]. - The company holds spectrum licenses covering nearly all of the U.S. population, including low and mid-band spectrum for mobile and fixed wireless services[41]. Competition and Market Dynamics - The telecommunications industry remains highly competitive, with factors such as network reliability, pricing, and customer service influencing market dynamics[45]. - Competition is intensified by aggressive pricing, promotions, and the emergence of new competitors, including MVNOs and smaller wireless providers merging with larger ones[46]. - The company faces competition from major players like AT&T and T-Mobile, as well as resellers such as Comcast and Charter Communications[47]. - Increasing competition is also expected from technology companies like Microsoft and Apple, which offer alternative messaging and voice services[48]. - The market is shifting from traditional linear video to OTT offerings, with customer migration from traditional voice services to wireless services continuing[49]. Employee and Workforce - As of December 31, 2023, the company employed approximately 105,400 individuals, with 89% based in the U.S., and has a commitment to diversity and inclusion in its workforce[65][67]. - The company engages with unions representing approximately 24% of its employees, with collective bargaining agreements extending through August 1, 2026[68]. Debt and Financial Obligations - As of December 31, 2023, approximately 76% of the total debt portfolio consisted of fixed-rate indebtedness, with a potential annual interest expense change of approximately $379 million for a 100-basis-point change in floating rate debt[327]. - The fair value of long-term debt and related derivatives was $150.058 billion as of December 31, 2023, with a sensitivity analysis indicating a fair value range of $142.551 billion to $158.912 billion for a 100-basis-point shift[330]. - The fair value of interest rate swaps was $4.5 billion as of December 31, 2023, with a total notional amount of $26.1 billion[331]. - The fair value of cross currency swaps was $762 million as of December 31, 2023, with a total notional amount of $33.5 billion[334]. - The company posted $1.4 billion of collateral related to derivative contracts under collateral exchange agreements as of December 31, 2023[326]. - The company transitioned outstanding debt and derivative transactions from LIBOR to the Secured Overnight Financing Rate by June 30, 2023, with no significant impact on financial position[328]. - The company is exposed to foreign currency risks primarily related to the British Pound Sterling, Euro, Australian Dollar, and Swedish Krona[332]. - The total notional amount of foreign exchange forwards was $1.1 billion as of December 31, 2023[335]. Goodwill and Impairment - The goodwill related to Verizon's Business Group reporting unit was $1.7 billion as of December 31, 2023, representing 0.4% of total assets[348]. - An impairment charge of $5.841 billion was recorded for the Business reporting unit during the year[354]. - The company incurred a goodwill impairment of $5,841 million related to the Verizon Business Group[359]. - Goodwill impairment testing is performed annually in the fourth quarter or more frequently if impairment indicators are present[400]. Capital Expenditures and Investments - Capital expenditures, including capitalized software, were $18,767 million in 2023, down from $23,087 million in 2022, a decrease of 18.5%[359]. - Verizon completed the acquisition of TracFone Wireless, Inc. for approximately $3.5 billion in cash and stock, with additional contingent consideration of up to $650 million[452]. - Verizon made payments of $257 million and $188 million related to contingent consideration for TracFone in 2023 and 2022, respectively[453]. Revenue Recognition and Contracts - The company recognizes revenue from contracts with customers primarily through telecommunications services and equipment sales, adhering to GAAP standards[370]. - The allowance for credit losses is reassessed quarterly based on management's expectations, considering factors such as historical experience and current macroeconomic conditions[392]. - The company recognizes revenue from telematics services primarily through subscription contracts, with revenue recognized over time[385]. - Advertising revenues are generated through display and search advertising, with revenue recognized as ads are delivered[384]. - The company completed the sale of Verizon Media on September 1, 2021, which primarily earned revenue through display advertising[384]. - Consumer group contracts with traditional wholesale resellers typically extend longer than two years, with some including minimum revenue commitments[437]. - As of December 31, 2023, the total transaction price related to unsatisfied performance obligations expected to be recognized in 2024, 2025, and thereafter is $25.7 billion, $18.7 billion, and $7.5 billion, respectively[438]. - Contract liabilities increased by $668 million during the year ended December 31, 2023, primarily due to increases in sales promotions and upfront fees[442]. - Revenue recognized related to contract liabilities for the years ended December 31, 2023, and 2022 was $4.9 billion and $5.0 billion, respectively[442]. - Total contract assets as of December 31, 2023, amount to $814 million, a slight decrease from $863 million in 2022[444]. - Deferred contract costs totaled $5,395 million as of December 31, 2023, compared to $5,104 million in 2022[448]. - The company recognized $3.2 billion in expenses for the amortization of deferred contract costs in 2023, up from $3.0 billion in 2022[449].