Verizon Communications Inc. (VZ Quick QuoteVZ - Free Report) outlined improving subscriber trends, accelerating service revenue growth and tighter cost controls during its third-quarter 2026 earnings call. Management emphasized that customer acquisition is becoming more profitable as promotional spending declines.

The discussion also highlighted higher annual guidance, expanding broadband capabilities and new artificial intelligence infrastructure contracts, positioning these initiatives as key growth drivers beyond 2026.

The company generated $7.8 billion in quarterly free cash flow. Adjusted earnings per share of $1.31 topped the Zacks Consensus Estimate of $1.27. Revenues of $34.31 billion missed the consensus mark of $34.81 billion. Lower equipment revenue remained a headwind.

Verizon Communications Inc. Price, Consensus and EPS Surprise

Verizon Communications Inc. price-consensus-eps-surprise-chart | Verizon Communications Inc. Quote

Verizon Raises Outlook on Stronger Operating Trends

CEO Daniel Schulman emphasized that Verizon's turnaround is gaining traction, supported by stronger customer retention and improving operational efficiency. The company raised its annual outlook for the third consecutive quarter.

Verizon now anticipates 1.1 million to 1.2 million postpaid phone net additions in 2026. Adjusted earnings per share are projected to be in the range of $5.04-$5.06, representing 7%-7.5% year-over-year growth.

CFO Anthony Skiadas also outlined expectations for free cash flow growth approaching 12%, compared with the previous forecast of 9%-10%. Mobility and broadband service revenue growth should reach the upper half of the 2.5%- 3% annual range, with about 4% growth expected in the fourth quarter.

VZ Prioritizes Profitable Subscriber Expansion

Schulman emphasized that Verizon is shifting away from aggressive subsidies toward sustainable customer acquisition. The company added 406,000 postpaid phone subscribers and 137,000 postpaid net accounts, its strongest quarterly account performance in more than a decade.

Promotional acquisition costs declined 41% year over year, while retention costs fell 30%. Overall postpaid phone churn improved four basis points to 0.94%, reinforcing management's emphasis on customer loyalty.

During the Q&A, a UBS analyst questioned whether subscriber momentum could continue into 2027. Schulman highlighted the Simplicity offering and loyalty initiatives as important differentiators. He also said targeted price increases could be appropriate when paired with additional customer value.

Verizon Expands High-Speed Broadband Ambitions

Broadband remains central to Verizon's convergence strategy. The company added 314,000 broadband customers, including 155,000 fiber connections and 159,000 fixed wireless access additions.

Schulman outlined plans to leverage Verizon's 1,700 megahertz of millimeter-wave spectrum to introduce gigabit fixed wireless connectivity across metropolitan markets. The technology is expected to expand high-speed coverage beyond the company's fiber footprint.

Responding to a Morgan Stanley analyst, Schulman described a medium-term ambition to reach 50 million to 65 million premises with gigabit-plus capabilities. Deployment begins in the fourth quarter and expands through 2027, with management emphasizing lower deployment costs than traditional fiber construction.

VZ Builds Momentum in AI Infrastructure

Verizon's AI Connect business emerged as a significant discussion point. Schulman announced a dark fiber agreement with Amazon Web Services valued above $2 billion, complementing an earlier Google agreement.

Management disclosed approximately $4 billion in signed contracts spanning fiber connectivity and edge computing. Schulman expects these arrangements to begin contributing revenue in 2027, with attractive margins and modest incremental capital requirements.

A Goldman Sachs analyst pressed management on contract economics and pipeline visibility. Skiadas said that agreements are customized to each customer's requirements. Executives highlighted continuing demand from hyperscalers, neocloud providers and enterprise customers.

Verizon Targets Further Margin and Cash Flow Gains

Skiadas attributed improving profitability to disciplined promotions, lower device upgrades and operating efficiencies. Adjusted EBITDA increased 8% to $13.8 billion, while the adjusted EBITDA margin reached 40.2%.

Verizon's $9 billion operating and capital cost transformation remains on track. Management also expects Frontier integration synergies to exceed $1 billion in annual operating savings by 2028.

VZ Maintains Its Focus on Disciplined Growth

Management's overarching message centered on improving customer economics rather than pursuing subscriber growth through increasingly expensive promotions. Executives also emphasized network differentiation, broadband convergence and operational simplification.

Schulman expressed confidence in Verizon's competitive positioning during discussions about potential satellite-based wireless competition. The company's priorities remain sustained service revenue growth, disciplined investment and expanding AI infrastructure opportunities.

Verizon's Zacks Rank and Style Scores Signal

Verizon currently carries a Zacks Rank #3 (Hold), indicating a neutral near-term outlook under the Zacks ranking framework. Its Value Score of A reflects favorable valuation characteristics, while its Momentum Score of A indicates stronger price momentum characteristics. The Growth Score of C points to a comparatively moderate growth profile. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The stock's VGM Score of A reflects an attractive combined assessment of value, growth and momentum factors. However, the Zacks framework generally favors combining strong Style Scores with a Zacks Rank #1 or 2 (Buy). Verizon's current Hold ranking warrants a balanced interpretation, especially since earnings estimate revisions after the latest results could change its Zacks Rank.