$Verizon(VZ)$ is scheduled to release its quarterly result for fiscal Q1 2025 on 22 April 2025 before the market opens.
The consensus estimate for Verizon revenue is expected to come in at $33.32 billion, which represent an increase of 1.02% compared to same period last year.
The consensus estimate for earnings per share is projected at $1.15, this signify steadiness compared to the same quarter of the previous year.
Verizon (VZ) Last Positive Earnings Call Saw Share Price Rise By 13.10%
Verizon had a positive earnings call on 24 Jan 2025 which saw its share price rise by 13.10% since.
Verizon reported strong financial performance, subscriber growth, and strategic advancements in AI, offset by headwinds from promo amortization and wireline revenue pressures. The sentiment is cautiously optimistic with a positive outlook for 2025.
Verizon Communications (VZ) Guidance On AI Strategy
During the Verizon Q4 2024 earnings call, the company provided guidance for 2025, highlighting several key financial metrics and strategic initiatives. Verizon expects total wireless service revenue to grow between 2% and 2.8%, driven by improving postpaid consumer phone net additions, healthy business phone volumes, and scaling fixed wireless access. Adjusted EBITDA is projected to grow by 2% to 3.5%, reflecting higher wireless service revenue and ongoing cost transformation initiatives, despite pressures in business wireline revenues. Additionally, full-year adjusted earnings per share growth is anticipated to be flat to up 3%, with capital spending forecasted between $17.5 billion and $18.5 billion. Free cash flow is expected to range from $17.5 billion to $18.5 billion, excluding the impact of the pending Frontier acquisition.
The company also discussed its strategic focus on AI, introducing Verizon's AI Connect to capitalize on the growing demand for AI applications, leveraging their existing network and data center assets to drive future growth.
Key Factors Influencing Verizon’s Q1 2025 Earnings
Verizon delivered on its financial guidance with 3.1% wireless service revenue growth and 2.1% adjusted EBITDA growth, both exceeding the midpoint of guided ranges.
Wireless Subscriber Growth
Postpaid Phone Net Adds: Verizon’s ability to retain and grow premium postpaid subscribers (critical for high-margin recurring revenue) will be pivotal. Competition from T-Mobile (aggressive promotions) and AT&T could pressure subscriber growth.
Added nearly 2.5 million postpaid mobility and broadband subscribers in 2024, with nearly 900,000 postpaid phone net adds and a positive turnaround in prepaid net adds.
Churn Rates: Rising churn (customer losses) due to pricing competition or network dissatisfaction would hurt revenue.
5G and Network Investments
5G Adoption: Revenue upside from 5G service tiers (e.g., premium plans, fixed wireless broadband). Success in converting customers to higher-priced 5G plans will boost ARPU (average revenue per user). Added nearly 1.6 million broadband subscribers, with a significant contribution from fixed wireless access, and grew market share in 2024.
Capital Expenditures (Capex): Heavy spending on 5G infrastructure ($18B+ annually) may weigh on margins, though scale benefits could emerge by 2025.
Fixed Wireless Broadband Growth:
Verizon’s push into 5G home internet (competing with cable providers) could offset wireline declines. Subscriber growth here is a key metric to watch.
Debt and Interest Rates
Verizon’s high debt load (~$150B as of 2023) makes earnings sensitive to interest rates. If rates remain elevated in 2025, interest expenses could pressure net income.
Consumer and Business Sentiment
Economic slowdowns could reduce discretionary spending on premium wireless plans or device upgrades. Conversely, enterprise demand for IoT/cloud solutions might offset weakness.
Faced pressure from cash taxes due to bonus depreciation, impacting free cash flow.
Regulatory and Competitive Pressures
FCC spectrum policies, potential merger reviews (e.g., T-Mobile/Sprint integration’s lasting impact), and pricing wars will shape competitive dynamics.
Strategic Considerations
Cost Management: Verizon’s $2–3B cost-cutting program (2023–2024) must show progress by 2025 to offset inflationary pressures. Launched Verizon AI Connect, leveraging existing assets to meet the growing demand for AI applications, with a potential $40 billion TAM.
Continued debt pay-down, ending the year with a net unsecured debt to adjusted EBITDA ratio of 2.3x, and raised the dividend for the 18th consecutive year.
Continued pressure in business wireline revenues, which is partially offsetting growth in other areas.
Dividend Sustainability: Verizon’s 7%+ dividend yield (as of 2023) relies on stable cash flow. Any erosion in FCF (free cash flow) could raise payout concerns. Expected to peak in 2025, impacting growth rates, although underlying customer economics remain healthy.
Innovation: Success in monetizing 5G use cases (e.g., edge computing, smart cities) will determine long-term growth beyond traditional wireless.
Verizon Communications (VZ) Price Target
Based on 19 Wall Street analysts offering 12 month price targets for Verizon in the last 3 months. The average price target is $46.97 with a high forecast of $55.00 and a low forecast of $40.00. The average price target represents a 7.70% change from the last price of $43.61.
If we were to look at how Verizon have managed to perform well in 2024, but the recession fears might push how the postpaid adds quarterly would perform.
And there are also the cost management that Verizon need to watch.
Technical Analysis - Exponential Moving Average (EMA)
VZ have managed to defend the 26-EMA level and create a daily uptrend possibility, and we could be seeing the bulls attempting to make a daily uptrend expansion.
From the RSI we can see that investors sentiment is back to create a stronger momentum, and we might need a strong postpaid phone and fixed wireless subscriber growth beats expectations, 5G adoption accelerates, driving ARPU expansion and margin improvement to make a bull case.
If there is a possibility of interest rates decline, which could help to reduce debt servicing costs. This would help VZ to further their enterprise growth (e.g., private 5G networks, IoT) adds revenue diversification.
But we need to also understand that VZ might face subscriber growth stalls due to aggressive competition from T-Mobile/AT&T, high capex and interest expenses compress margins despite revenue growth and macroeconomic headwinds (e.g., potential recession) lead to higher churn and reduced consumer spending.
Moreover, the tariff could also have an impact on consumer spending.
Summary
Verizon’s Q1 2025 earnings will hinge on its ability to balance subscriber growth, 5G monetization, and debt management in a competitive and capital-intensive industry. While its dividend and defensive reputation provide stability, execution risks around network quality, pricing, and macroeconomic conditions remain critical.
I think Verizon could be in one’s portfolio for long term strategy.
Appreciate if you could share your thoughts in the comment section whether you think Verizon could get significant revenue contribution from its 5G cases monetization.
@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.
Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.
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