VERIZON COMMUNICATIONS INC Q1 FY2025 earnings call

Evolving Policy and Macroeconomic Landscape

• Monitors ongoing developments, confident in managing business due to essential nature of connectivity services, strong customer base, and balance sheet.

First Quarter Results

• Strong growth in wireless service revenue, adjusted EBITDA, and free cash flow.

Strategic Moves

• Brand refresh, customer-first offerings (myPlan, myHome, My Biz Plan), organic and inorganic broadband expansion, AI Connect and satellite partnerships, network leadership (RootMetrics recognized Verizon as best 5G network in US).

Operational Performance

• Segmentation strategy yielding positive results, mobile and broadband growth, private networks scaling, consumer group transformation progressing.

Priorities

• Continue growing wireless service revenue, expand adjusted EBITDA, generate strong free cash flow; accelerate mobility and broadband growth, scale private networks; leverage assets for AI Connect; focus on financial discipline, operational excellence, customer experience; execute capital allocation priorities.

Wireless service revenue was up 2.7%, adjusted EBITDA was $12.6 billion (highest ever, growing 4%), and free cash flow was up over $900 million. In the consumer segment, postpaid phone net losses in Q1 were due to recent pricing, but March gross adds were up mid-single-digit and April was strong; prepaid net adds were 137,000 (best since TracFone acquisition); broadband had 339,000 net adds, taking market share. In the business segment, private networks business scaled with over a dozen deals closed, named a leader in Gartner Magic Quadrant for Managed IoT Connectivity Services, and saw accelerated interest in AI Connect.

Forward-Looking Statements

• Confident in delivering 2025 financial guidance despite uncertain tariff environment. Focus on growing wireless service revenue, expanding adjusted EBITDA, generating strong free cash flow; accelerating mobility and broadband growth, scaling private networks; leveraging existing assets for AI Connect; maintaining financial discipline and capital allocation priorities.

Risks

• Uncertain tariff environment impact on handsets and telecom equipment. Competitive market dynamics.

Q: Any color on how tariffs on handsets and telecom equipment could affect the business?

A: Tariffs on handsets and telecom equipment are a moving target. Small portion of CapEx exposed to tariffs; working with suppliers. Won't absorb large handset tariff increases, will pass on to customers.

Q: Can we talk about churn?

A: Churn transitory, abating; Verizon Value Guarantee, C-Band expansion, convergence model, and better customer experience will help get back to industry-leading churn by second half of year.

Q: Talk about March and April gross adds improvement and competitive environment.

A: March had mid-single-digit growth in gross adds, April saw double-digit growth due to Verizon Value Guarantee; competing well in competitive market with strong propositions.

Q: Comment on EBITDA guidance for the year.

A: 4% EBITDA growth in Q1 sets up well; expenses down, team working on efficiency; volumes and discipline support service revenue, EBITDA, and free cash flow guidance.

Q: Any impact of tariffs on consumer behavior?

A: No major consumer behavior shifts seen; payments remain stable; handsets saw some uptick due to Verizon Value Guarantee.

Q: Update on postpaid phone industry growth and immigration policy impact.

A: Market likely to grow 8-8.5 million postpaid phones, but little impact to Verizon; prepaid performance strong despite lower immigration in lower end segments.

Q: Thoughts on marketing and FWA pressure on CapEx?

A: Verizon Value Guarantee contemplated in 2025 guidance; levers to drive wireless service revenue growth; FWA rollout managed with BAU C-Band deployment, no pressure in multiyear plan.

Q: EBITDA in Q1 and SG&A spend?

A: 4% EBITDA growth, disciplined approach; SG&A spend managed, Verizon Value Guarantee launched from financial strength; confident in EBITDA growth.

Q: MVNO relationship with cable operators and spectrum position?

A: Can't deep dive MVNO relationships, but strategy is to build network and have profitable connections; strong spectrum position with C-Band and millimeter wave, important for US competitiveness long term.

Q: Tariffs impact and broadband performance?

A: Small portion of CapEx exposed to tariffs; broadband performing well, Fios and fixed wireless access strong, churn low on Fios, sequential improvement on FWA.

Q: March/April gross add strength and MDU solution for fixed wireless?

A: March/April strength due to offerings; MDU solution launched in over 15 markets, rolling out over year, different technology solutions for speed tiers, gating factors include landlord acceptance and technical rollout.