Story
Verizon Boosts Full-Year Profit Forecast on Strong Subscriber Growth
Summary
The telecommunications giant raised its adjusted profit and free cash flow guidance after adding more wireless subscribers than anticipated in the second quarter, driven by new mobile plans.
Verizon Communications Inc. on Friday raised its full-year forecasts for adjusted profit and free cash flow after its revamped mobile plans helped it attract significantly more new wireless subscribers than expected in the second quarter. The positive outlook sent the company's shares up 3% in premarket trading.
Subscriber Gains Outpace Expectations
Verizon gained 184,000 monthly-bill paying wireless subscribers in the second quarter, a figure that far surpassed the 103,900 additions analysts polled by FactSet had anticipated. The company attributed the growth to a strategic shift under new CEO Dan Schulman, which includes simplified mobile plans and new bundled offerings.
Recent initiatives like the "Simplicity" unlimited plan and the "Verizon One" bundle, which combines wireless with home internet, are designed to improve customer retention and growth. "We are gaining subscribers and earning long-term retention based on real value rather than subsidized promotions," CEO Schulman said in a statement.
Upgraded Financial Outlook
Buoyed by the strong subscriber performance, Verizon now expects a more profitable year than previously forecast. The company updated its full-year guidance as follows:
Ad- Adjusted Profit: Expected to be between $4.99 and $5.04 per share, up from a prior range of $4.95 to $4.99.
- Free Cash Flow: Now projected to grow between 9% and 10%, an increase from the previous estimate of 7% or more.
Mixed Quarterly Results
The upgraded outlook was issued alongside mixed results for the June quarter. While adjusted profit of $1.30 per share beat the LSEG consensus estimate of $1.27, helped by cost controls and lower spending on device subsidies, revenue fell short of expectations.
Second-quarter revenue came in at $34.3 billion, below analysts' estimate of $35.16 billion. Verizon cited a decline in equipment revenue, a trend reflecting customers holding onto their smartphones for longer periods and slowing upgrade activity.
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