Verizon's Q2 earnings better than expected as company adds business wireless customers

Verizon said it added 451,000 retail postpaid net additions in the second quarter as its earnings topped expectations, but revenue fell a bit short.

The wireless giant reported second quarter net income of $4.1 billion, or 95 cents a share, on revenue of $32.1 billion. Non-GAAP earnings for the second quarter were $1.23 a share. Wall Street was looking for non-GAAP earnings of $1.20 a share on revenue of $323.4 billion. Verizon CEO Hans Vestberg touted the company’s efforts to build out 5G service and retool the operating structure.

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According to Verizon, consumer revenue was $22 billion with 126,000 retail postpaid net additions with business sales of $7.8 billion and 325,000 retail postpaid net additions. The takeaway here is that Verizon’s wireless business has become more of a business play in terms of adding subscribers.

On a conference call with analysts, Vestberg was asked about the net adds on consumer vs. business. He said:

On the business side when it comes to wireless, we are taking share. We feel really good about it. The network quality we have is very important for businesses. I mean there’s no doubt about that coverage and capacity becomes even more important in the enterprise.

If I look at the second quarter, it was with more competitive than the first quarter when it comes to competition in the (consumer) market. We’re doing well on the business side and again, I think that the wireless part of the business side is important with network performance and ease of coverage. But of course there’s competition for those deals as well. I think we’re doing well in that area and we will continue to do well. We have new offerings coming out, and we’ll continue to build the network even more robust and getting more on it.

Here’s how Verizon’s results compare to the wireless carrier field:

On the wireless front, Verizon reported wireless revenue of $22.7 billion in the second quarter, up 1% from a year ago.

Wireline revenue was $7.1 billion and the company added 34,000 net FioS Internet additions. However, Verizon lost 52,000 FioS video connections due to cord cutting. 

The company reiterated its outlook for the year and earnings growth in the low-single digits and revenue gains at the same clip.

Numbers to know include:

• Verizon delivered cash flow from operations of $15.8 billion in the second quarter, down $600 million from a year ago.
• The company spent $8 billion on capital improvements in the first half related to the build out of 5G and higher traffic on 4G.
• Verizon said it has saved $4.1 billion since launching a plan to save $10 billion by 2021. These savings are the result of a voluntary separation program and moves to become more efficient.
• Verizon’s media group reported revenue of $1.8 billion in the second quarter, down 2.9% from a year ago. The company’s media efforts, which revolve around Yahoo and AOL, are hobbled by declines in desktop advertising even as it posts growth in native and mobile ads.