Verizon Communications Inc. (VZ) Earnings & Analysis

Latest quarter

Verizon reported Q2 FY2026 revenue of $34.3 billion, compared with the consensus of $35.3 billion. The company reported adjusted EPS, as the consensus counts it, of $1.30, compared with the consensus of $1.27. Its filing shows reported revenue declined 0.73% from $34.5 billion in Q2 FY2025, while diluted EPS declined 22.0% to $0.92.

The filing attributes the quarterly revenue decrease primarily to a decline in Consumer revenue, partly offset by higher Business revenue. Consumer operating revenue was $26.2 billion, down 1.5%, as lower wireless-equipment revenue outweighed increases in mobility and broadband service revenue and other revenue. Business operating revenue was $7.2 billion, up 2.6%, led by other revenue. Verizon said Consumer wireless-equipment revenue declined because fewer devices were sold amid a strategic decrease in upgrades.

Verizon reported gross margin of 61.8%, versus 59.8% a year earlier, while operating margin was 21.0%, versus 23.7%. Free cash flow was $5.4 billion, compared with $5.1 billion in the prior-year quarter.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

On the Q2 2026 earnings call, Chief Executive Officer Dan Schulman said improvements in customer-acquisition and retention costs reflected structural changes rather than seasonal or one-time effects. He said Verizon is using micro-segmentation to tailor offers to customers and is moving away from treating a free handset as the default retention tool. Schulman said the approach is intended to improve unit economics by addressing a customer’s specific service issue rather than applying the same offer broadly.

Chief Financial Officer Tony Skiadas said Verizon absorbed about 6% higher upgrade volumes year over year during the quarter. He said the rate of growth in upgrades had slowed in recent months and into Q2, attributing this both to more segmented retention activity and to customers retaining their phones longer. Skiadas said Verizon does not guide on upgrade volumes.

Analysts asked how the company’s $5 billion operating-expense savings program would develop through the year. Skiadas said current initiatives include removing legacy network elements, recycling and monetizing copper, optimizing third-party access costs, improving advertising and marketing efficiency, reducing workforce and contractor spending, and targeting retention spending. He said the company is also working on customer-experience changes, IT-platform and real-estate rationalization, and Frontier integration, which Verizon expects to produce more than $1 billion of run-rate operating-cost synergies by 2028.

When asked about broadband investment and the mix between fiber and fixed wireless access, Schulman said Verizon intends to prioritize fiber where it has coverage while continuing to expand fixed-wireless capacity. He said converged offers have lower churn and higher lifetime value and ARPA, according to the company. Schulman also said Verizon sees a cross-sell opportunity because only 20% of its base has broadband, and said the company is considering partnerships and potential acquisitions to expand fiber passings.

Guidance

Verizon raised its FY2026 adjusted EPS guidance to $4.99 to $5.04, which the company said represents year-over-year growth of 6.0 to 7.0 percent. The company also raised its FY2026 share-repurchase target to up to $4.5 billion.