Verizon(VZ) - 2024 Q1 - Quarterly Results

Q1 2024 Performance Highlights Overall Performance Summary The company reported stable Q1 results with slight revenue growth to $33.0 billion, driven by strong wireless service revenue and broadband net additions Q1 2024 Key Financial and Operational Metrics | Metric | Q1 2024 | Q1 2023 | Change | | :--- | :--- | :--- | :--- | | Total Operating Revenue | $33.0 billion | $32.9 billion | +0.2% | | Net Income | $4.7 billion | $5.0 billion | -6.0% | | Adjusted EBITDA | $12.1 billion | $11.9 billion | +1.7% | | EPS | $1.09 | $1.17 | -6.8% | | Adjusted EPS | $1.15 | $1.20 | -4.2% | | Total Wireless Service Revenue | $19.5 billion | $18.9 billion | +3.3% | | Retail Postpaid Phone Net Losses | (68,000) | (127,000) | Improvement | | Total Broadband Net Additions | 389,000 | 437,000 | -11.0% | - Fixed wireless continues to be a major growth driver, with 3.4 million total subscribers and Q1 revenue of $452 million, up $197 million year-over-year[3] - The company is on track to meet its 2024 financial guidance and expects to deliver positive Consumer postpaid phone net adds for the full year[4] Consolidated Financial Results Financial Performance Details Consolidated revenue grew slightly to $33.0 billion, supported by a 3.3% increase in wireless service revenue and higher free cash flow Q1 2024 Consolidated Financials vs. Q1 2023 | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Total Operating Revenue | $33.0 billion | $32.9 billion | | Wireless Service Revenue | $19.5 billion | $18.9 billion | | Consolidated Net Income | $4.7 billion | $5.0 billion | | Consolidated Adjusted EBITDA | $12.1 billion | $11.9 billion | | Cash Flow from Operations | $7.1 billion | $8.3 billion | | Capital Expenditures | $4.4 billion | $6.0 billion | | Free Cash Flow | $2.7 billion | $2.3 billion | - Total unsecured debt stood at $128.4 billion at the end of Q1 2024, a decrease of $3.6 billion year-over-year, with a net unsecured debt to adjusted EBITDA ratio of 2.6 times[7] Condensed Consolidated Statements of Income Net income declined to $4.72 billion from $5.02 billion year-over-year, primarily due to higher operating and interest expenses Q1 2024 vs Q1 2023 Income Statement (in millions) | Line Item | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Total Operating Revenues | $32,981 | $32,912 | | Operating Income | $7,521 | $7,584 | | Interest Expense | ($1,635) | ($1,207) | | Net Income | $4,722 | $5,018 | | Diluted EPS | $1.09 | $1.17 | Condensed Consolidated Balance Sheets Total assets remained stable at $380.2 billion, while total debt decreased to $151.7 billion and total equity increased to $95.7 billion Balance Sheet Highlights (as of March 31, 2024, in millions) | Account | 3/31/2024 | 12/31/2023 | | :--- | :--- | :--- | | Total Current Assets | $37,957 | $36,814 | | Property, Plant and Equipment, net | $107,863 | $108,310 | | Total Assets | $380,158 | $380,255 | | Total Current Liabilities | $53,631 | $53,223 | | Long-term Debt | $136,104 | $137,701 | | Total Liabilities | $284,432 | $286,456 | | Total Equity | $95,726 | $93,799 | Condensed Consolidated Statements of Cash Flows Free cash flow increased to $2.7 billion for the quarter, driven by a significant reduction in capital expenditures despite lower operating cash flow Q1 2024 vs Q1 2023 Cash Flows (in millions) | Cash Flow Item | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $7,084 | $8,289 | | Capital Expenditures | ($4,376) | ($5,958) | | Net Cash Used in Investing Activities | ($5,245) | ($6,110) | | Net Cash Used in Financing Activities | ($1,428) | ($2,383) | Segment Performance Verizon Consumer The Consumer segment's revenue grew 0.8% to $25.1 billion, with improved subscriber trends and strong fixed wireless access growth Financial Results Consumer segment revenue grew to $25.1 billion, fueled by a 3.4% increase in wireless service revenue and an expanded EBITDA margin Consumer Segment Financials (Q1 2024 vs Q1 2023) | Metric | Q1 2024 | Q1 2023 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $25.1 billion | $24.9 billion | +0.8% | | Wireless Service Revenue | $16.1 billion | $15.6 billion | +3.4% | | Operating Income | $7.4 billion | $7.1 billion | +3.8% | | Segment EBITDA | $10.7 billion | $10.3 billion | +3.6% | | Segment EBITDA Margin | 42.6% | 41.5% | +110 bps | Operating Statistics The segment reported its best Q1 postpaid phone net loss performance since 2018, alongside continued growth in FWA and Fios Internet subscribers Consumer Segment Key Operating Metrics (Q1 2024) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Wireless Retail Postpaid Phone Net Losses | (158,000) | (263,000) | | Fixed Wireless Net Additions | 203,000 | 256,000 | | Fios Internet Net Additions | 49,000 | 63,000 | | Wireless Retail Postpaid Phone Churn | 0.83% | 0.84% | | Wireless Retail Postpaid ARPA | $135.75 | $130.06 | Verizon Business The Business segment's revenue declined 1.6% to $7.4 billion, though it achieved record fixed wireless net additions of 151,000 Financial Results Business segment revenue was $7.4 billion, as a 2.7% growth in wireless service revenue was offset by declines in wireline revenue Business Segment Financials (Q1 2024 vs Q1 2023) | Metric | Q1 2024 | Q1 2023 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $7.4 billion | $7.5 billion | -1.6% | | Wireless Service Revenue | $3.4 billion | $3.3 billion | +2.7% | | Operating Income | $399 million | $551 million | -27.6% | | Segment EBITDA | $1.5 billion | $1.6 billion | -7.2% | | Segment EBITDA Margin | 20.7% | 22.0% | -130 bps | Operating Statistics The segment achieved a record quarter for fixed wireless net additions and reported 90,000 postpaid phone net additions Business Segment Key Operating Metrics (Q1 2024) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Wireless Retail Postpaid Phone Net Additions | 90,000 | 136,000 | | Fixed Wireless Net Additions | 151,000 | 137,000 | | Wireless Retail Postpaid Phone Churn | 1.13% | 1.16% | Total Wireless Performance Total wireless service revenue grew 3.3% to $19.5 billion, with strong FWA revenue growth of 77.3% to $452 million Total Wireless Metrics (Q1 2024 vs Q1 2023) | Metric | Q1 2024 | Q1 2023 | Change | | :--- | :--- | :--- | :--- | | Wireless Service Revenue | $19,513 M | $18,889 M | +3.3% | | FWA Revenue | $452 M | $255 M | +77.3% | | Retail Postpaid Net Additions | 253,000 | 633,000 | -60.0% | | Retail Postpaid Phone Net Losses | (68,000) | (127,000) | +46.5% | | Retail Postpaid Phone Churn | 0.89% | 0.90% | -1 bp | 2024 Outlook and Guidance Full-Year 2024 Guidance Verizon reaffirmed its full-year 2024 guidance, expecting growth in wireless service revenue and adjusted EBITDA 2024 Full-Year Financial Guidance | Metric | Guidance Range | | :--- | :--- | | Total Wireless Service Revenue Growth | 2.0% to 3.5% | | Adjusted EBITDA Growth | 1.0% to 3.0% | | Adjusted EPS | $4.50 to $4.70 | | Capital Expenditures | $17.0B to $17.5B | | Adjusted Effective Income Tax Rate | 22.5% to 24.0% | Non-GAAP Reconciliations Consolidated Adjusted EBITDA Reconciliation This section reconciles Q1 2024 Net Income of $4.7 billion to Consolidated Adjusted EBITDA of $12.1 billion Q1 2024 Adjusted EBITDA Reconciliation (in millions) | Line Item | Q1 2024 | | :--- | :--- | | Consolidated Net Income | $4,722 | | Provision for income taxes | $1,353 | | Interest expense | $1,635 | | Depreciation and amortization | $4,445 | | Consolidated EBITDA | $12,155 | | Special Items Adjustments | ($83) | | Consolidated Adjusted EBITDA | $12,072 | Net Unsecured Debt Ratio Reconciliation The ratio of net unsecured debt to LTM consolidated adjusted EBITDA remained stable at 2.6x as of March 31, 2024 Net Unsecured Debt Ratio (as of March 31, 2024) | Metric | Amount (in millions) | | :--- | :--- | | Total Debt | $151,698 | | Less: Secured debt | ($23,290) | | Unsecured Debt | $128,408 | | Less: Cash and cash equivalents | ($2,365) | | Net Unsecured Debt | $126,043 | | Consolidated Adjusted EBITDA (LTM) | $47,959 | | Net Unsecured Debt to Adjusted EBITDA Ratio | 2.6x | Adjusted EPS Reconciliation Reported GAAP EPS of $1.09 was adjusted for $0.06 in special items, resulting in an Adjusted EPS of $1.15 for Q1 2024 Q1 2024 EPS to Adjusted EPS Reconciliation | Item | Per Share Amount | | :--- | :--- | | GAAP EPS | $1.09 | | Amortization of acquisition-related intangible assets | $0.04 | | Legacy legal matter | $0.02 | | Adjusted EPS | $1.15 | Free Cash Flow Reconciliation Free cash flow increased to $2.7 billion in Q1 2024 from $2.3 billion in the prior year, driven by lower capital expenditures Q1 2024 Free Cash Flow (in millions) | Line Item | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $7,084 | $8,289 | | Capital Expenditures | ($4,376) | ($5,958) | | Free Cash Flow | $2,708 | $2,331 |