Verizon Communications Inc. VZ released its first-quarter results before the opening bell on April 24. The telecommunications giant reported better-than-expected earnings, but revenue fell short of expectations as the coronavirus outbreak affected its wireless business.
By the numbers
The New York-based company recorded earnings of $1.26 per share, which edged past the $1.20 per share reported in the year-ago period. Operating revenue stood at $31.6 billion, down 1.6% year over year. Analysts had projected earnings of $1.22 per share on $32.27 billion in revenue.
The revenue decline was due to weak performance in the wireless segment, which saw sales decline 0.5% to $22.6 billion.
Reflecting on the company’s performance, Chairman and CEO Hans Vestberg said:
"Verizon began 2020 with strong operational performance. In an unprecedented time, Verizon took decisive and balanced actions that will serve our stakeholders in the long term, including protecting our employees, maintaining our network quality and reliability, serving our customers, and supporting our communities.”
Performance of consumer and business divisions
Revenue in the consumer business amounted to $21.8 billion, which reflected a 1.7% decline from the prior-year quarter. Verizon recorded 525,000 retail postpaid net losses. Service revenue swelled 0.9% to $13.5 billion courtesy of a shift to high-priced plans and a rise in connections per count. The quarterly retail postpaid churn rate dropped from 1.08% from the year-ago period to 1.01%. The company added a net of 59,000 Fios internet connections.
In the business segment, the company posted revenue of $7.7 billion, down 0.5% from the prior-year quarter. The decline in demand for legacy products more than offset robust growth of VPN services as well as high-quality mobility products. The retail postpaid churn rate was 1.30%. Wireless retail postpaid net additions totalled 4,75,000, up 79.9%.
5G roll-out
The commercial launch of the 5G Ultra Wideband network across more markets in the U.S. will boost Verizon’s overall results in the upcoming quarters, given that the company has one of the most productive wireless networks in the United States.
Outlook
The company has provided guidance for full-year 2020.
Verizon anticipates adjusted earnings per share to lie in the range of down 2% to up 2%, which is lower than its previous forecasted range of a 2% to 4% increase. The company did not provide revenue guidance. Capital spending is projected to be around $17.5 billion to $18.5 billion.
Disclosure: I do not hold any positions in the stocks mentioned.
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