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Verizon Beats Q3 Earnings Estimates on Strong Margins, Revenues Miss
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Key Takeaways
VZ's Q3 earnings rose 8.3% to $1.31 per share, beating estimates, while revenues missed expectations.
VZ added 406,000 postpaid phone subscribers as adjusted EBITDA rose 8% to a record $13.80 billion.
Verizon raised its 2026 EPS outlook to $5.04-$5.06 and postpaid phone additions forecast to 1.1M-1.2M.
Verizon Communications Inc. (VZ - Free Report) reported adjusted earnings of $1.31 per share in the third quarter of 2026, up 8.3% year over year and ahead of the Zacks Consensus Estimate of $1.27 by 3.15%.
Total operating revenues increased 1.5% year over year to $34.31 billion but missed the consensus mark of $34.81 billion by 1.43%. Strong service revenue growth, improved operating efficiency and robust subscriber additions supported profitability. Verizon delivered 406,000 postpaid phone net additions, its strongest third-quarter performance in five years.
Verizon Communications Inc. Price, Consensus and EPS Surprise
Service revenues and other increased 3.5% year over year to $29.20 billion, supported by improving mobility and broadband trends. Wireless equipment revenues declined 9% to $5.12 billion, reflecting reduced upgrade activity and disciplined promotional spending.
Mobility and broadband service revenues reached $23.5 billion, increasing 2.9% year over year compared with 2.8% growth in the preceding quarter. Management attributed lower equipment sales to customers retaining devices longer and its strategy of reducing handset subsidies.
Consumer Segment Benefits From Service Growth
Consumer operating revenues increased 1.3% year over year to $26.43 billion. Mobility and broadband service revenues rose 3.6% to $19.78 billion, while wireless equipment revenues declined 10.3% to $4.28 billion. Other revenues grew 6% to $2.38 billion.
Consumer operating income improved 5.6% to $8.09 billion, with the operating margin expanding to 30.6% from 29.4%. Segment EBITDA increased 6.5% to $11.97 billion, while the corresponding margin improved 230 basis points to 45.3%.
Business Segment Records Higher Profitability
Business operating revenues rose 2.6% year over year to $7.02 billion. Mobility and broadband service revenues declined 0.8% to $3.71 billion, while wireless equipment revenues fell 1.6% to $839 million. Other revenues increased 10% to $2.47 billion.
Business operating income climbed 19.4% to $855 million, supported by lower selling, general and administrative expenses. Segment EBITDA advanced 13% to $1.94 billion, with the corresponding margin expanding to 27.6% from 25.1%.
Margins Expand Through Cost Discipline
Total operating expenses declined 0.2% year over year to $25.66 billion. Selling, general and administrative expenses decreased 3.5% to $7.48 billion, while wireless equipment costs fell 10.2%. However, depreciation and amortization expenses increased 10.3% to $5.10 billion.
Operating income rose 6.7% to $8.65 billion. Consolidated net income increased 5.2% to $5.32 billion, while net income attributable to Verizon improved 5% to $5.20 billion. Adjusted EBITDA increased 8% to a record $13.80 billion, with the adjusted EBITDA margin expanding 240 basis points to 40.2%. Interest expenses increased 17.2% to $1.95 billion.
Wireless Gains Offset Slower Broadband Additions
Verizon added 137,000 postpaid accounts, its best quarterly performance in more than a decade. Retail postpaid phone churn improved four basis points year over year to 0.94%, while Consumer postpaid phone churn declined to 0.87%.
Broadband net additions totaled 314,000, down from 322,000 a year earlier. Fiber broadband additions reached 155,000, while fixed wireless access contributed 159,000. Total broadband connections reached 17.4 million. The company also announced an agreement valued at more than $2 billion with Amazon Web Services to support AI infrastructure.
Cash Flow Strengthens Shareholder Returns
Third-quarter operating cash flow increased 2.2% year over year to $11.52 billion, while free cash flow improved 12.1% to $7.80 billion. Capital expenditures totaled $3.72 billion, compared with $4.31 billion a year earlier.
For the first nine months, free cash flow increased 14.3% to $18.01 billion. Verizon returned $12.8 billion to shareholders through dividends and repurchases. Net unsecured debt stood at $123.72 billion, down from $128.68 billion in the preceding quarter. Net unsecured debt to adjusted EBITDA improved sequentially to 2.3 times.
VZ Raises 2026 Earnings and Subscriber Outlook
Verizon raised its 2026 adjusted earnings guidance to $5.04-$5.06 per share, implying 7%-7.5% year-over-year growth, compared with its previous projection of 6%-7%.
The company increased its postpaid phone net additions forecast to 1.1 million-1.2 million. Mobility and broadband service revenue growth is expected in the upper half of the 2.5%-3% range, while free cash flow growth is projected to approach 12%. Capital expenditure guidance remains unchanged at $16-$16.5 billion.
Arista Networks Inc. (ANET - Free Report) is scheduled to release third-quarter 2026 earnings on Nov. 3. The Zacks Consensus Estimate for earnings is pegged at $1.08 per share, suggesting growth of 44% from the year-ago reported figure.
Arista has a long-term earnings growth expectation of 22.8%. Arista delivered an average earnings surprise of 8.9% in the last four reported quarters.
Akamai Technologies, Inc. (AKAM - Free Report) is slated to release third-quarter 2026 earnings on Nov. 5. The Zacks Consensus Estimate for earnings is pegged at $1.67 per share, indicating a 10.2% decline from the year-ago reported figure.
Akamai has a long-term earnings growth expectation of 5.9%. Akamai delivered an average earnings surprise of 4.8% in the last four reported quarters.
GLOBALFOUNDRIES Inc. (GFS - Free Report) is set to release third-quarter 2026 earnings on Nov. 4. The Zacks Consensus Estimate for earnings is pegged at 51 cents per share, implying a rise of 24.4% from the year-ago reported figure.
GLOBALFOUNDRIES has a long-term earnings growth expectation of 21.2%. GFS delivered an average earnings surprise of 10.9% in the last four reported quarters.
View the Zacks #1 Rank List
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Verizon Beats Q3 Earnings Estimates on Strong Margins, Revenues Miss
Key Takeaways
Verizon Communications Inc. (VZ - Free Report) reported adjusted earnings of $1.31 per share in the third quarter of 2026, up 8.3% year over year and ahead of the Zacks Consensus Estimate of $1.27 by 3.15%.
Total operating revenues increased 1.5% year over year to $34.31 billion but missed the consensus mark of $34.81 billion by 1.43%. Strong service revenue growth, improved operating efficiency and robust subscriber additions supported profitability. Verizon delivered 406,000 postpaid phone net additions, its strongest third-quarter performance in five years.
Verizon Communications Inc. Price, Consensus and EPS Surprise
Verizon Communications Inc. price-consensus-eps-surprise-chart | Verizon Communications Inc. Quote
Service Revenues Grow Despite Equipment Weakness
Service revenues and other increased 3.5% year over year to $29.20 billion, supported by improving mobility and broadband trends. Wireless equipment revenues declined 9% to $5.12 billion, reflecting reduced upgrade activity and disciplined promotional spending.
Mobility and broadband service revenues reached $23.5 billion, increasing 2.9% year over year compared with 2.8% growth in the preceding quarter. Management attributed lower equipment sales to customers retaining devices longer and its strategy of reducing handset subsidies.
Consumer Segment Benefits From Service Growth
Consumer operating revenues increased 1.3% year over year to $26.43 billion. Mobility and broadband service revenues rose 3.6% to $19.78 billion, while wireless equipment revenues declined 10.3% to $4.28 billion. Other revenues grew 6% to $2.38 billion.
Consumer operating income improved 5.6% to $8.09 billion, with the operating margin expanding to 30.6% from 29.4%. Segment EBITDA increased 6.5% to $11.97 billion, while the corresponding margin improved 230 basis points to 45.3%.
Business Segment Records Higher Profitability
Business operating revenues rose 2.6% year over year to $7.02 billion. Mobility and broadband service revenues declined 0.8% to $3.71 billion, while wireless equipment revenues fell 1.6% to $839 million. Other revenues increased 10% to $2.47 billion.
Business operating income climbed 19.4% to $855 million, supported by lower selling, general and administrative expenses. Segment EBITDA advanced 13% to $1.94 billion, with the corresponding margin expanding to 27.6% from 25.1%.
Margins Expand Through Cost Discipline
Total operating expenses declined 0.2% year over year to $25.66 billion. Selling, general and administrative expenses decreased 3.5% to $7.48 billion, while wireless equipment costs fell 10.2%. However, depreciation and amortization expenses increased 10.3% to $5.10 billion.
Operating income rose 6.7% to $8.65 billion. Consolidated net income increased 5.2% to $5.32 billion, while net income attributable to Verizon improved 5% to $5.20 billion. Adjusted EBITDA increased 8% to a record $13.80 billion, with the adjusted EBITDA margin expanding 240 basis points to 40.2%. Interest expenses increased 17.2% to $1.95 billion.
Wireless Gains Offset Slower Broadband Additions
Verizon added 137,000 postpaid accounts, its best quarterly performance in more than a decade. Retail postpaid phone churn improved four basis points year over year to 0.94%, while Consumer postpaid phone churn declined to 0.87%.
Broadband net additions totaled 314,000, down from 322,000 a year earlier. Fiber broadband additions reached 155,000, while fixed wireless access contributed 159,000. Total broadband connections reached 17.4 million. The company also announced an agreement valued at more than $2 billion with Amazon Web Services to support AI infrastructure.
Cash Flow Strengthens Shareholder Returns
Third-quarter operating cash flow increased 2.2% year over year to $11.52 billion, while free cash flow improved 12.1% to $7.80 billion. Capital expenditures totaled $3.72 billion, compared with $4.31 billion a year earlier.
For the first nine months, free cash flow increased 14.3% to $18.01 billion. Verizon returned $12.8 billion to shareholders through dividends and repurchases. Net unsecured debt stood at $123.72 billion, down from $128.68 billion in the preceding quarter. Net unsecured debt to adjusted EBITDA improved sequentially to 2.3 times.
VZ Raises 2026 Earnings and Subscriber Outlook
Verizon raised its 2026 adjusted earnings guidance to $5.04-$5.06 per share, implying 7%-7.5% year-over-year growth, compared with its previous projection of 6%-7%.
The company increased its postpaid phone net additions forecast to 1.1 million-1.2 million. Mobility and broadband service revenue growth is expected in the upper half of the 2.5%-3% range, while free cash flow growth is projected to approach 12%. Capital expenditure guidance remains unchanged at $16-$16.5 billion.
Zacks Rank
Verizon currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Upcoming Releases
Arista Networks Inc. (ANET - Free Report) is scheduled to release third-quarter 2026 earnings on Nov. 3. The Zacks Consensus Estimate for earnings is pegged at $1.08 per share, suggesting growth of 44% from the year-ago reported figure.
Arista has a long-term earnings growth expectation of 22.8%. Arista delivered an average earnings surprise of 8.9% in the last four reported quarters.
Akamai Technologies, Inc. (AKAM - Free Report) is slated to release third-quarter 2026 earnings on Nov. 5. The Zacks Consensus Estimate for earnings is pegged at $1.67 per share, indicating a 10.2% decline from the year-ago reported figure.
Akamai has a long-term earnings growth expectation of 5.9%. Akamai delivered an average earnings surprise of 4.8% in the last four reported quarters.
GLOBALFOUNDRIES Inc. (GFS - Free Report) is set to release third-quarter 2026 earnings on Nov. 4. The Zacks Consensus Estimate for earnings is pegged at 51 cents per share, implying a rise of 24.4% from the year-ago reported figure.
GLOBALFOUNDRIES has a long-term earnings growth expectation of 21.2%. GFS delivered an average earnings surprise of 10.9% in the last four reported quarters.