Skip to Content
Stock Analyst Update

Verizon Bounces Back With Solid Customer Gains

The company's second quarter was the strongest in four years.

Mentioned:

Verizon Communications (VZ) posted solid second-quarter results, with customer metrics rebounding largely as expected from a soft start to the year. Revenue growth benefited from an easy comparison versus the worst of the pandemic impact a year ago and a step up in wireless customer retention efforts during the quarter. Management increased its wireless service revenue growth forecast for the full year, but Verizon continues to generally track our expectations. We don’t expect to materially change our $57 fair value estimate.

With 275,000 net wireless postpaid phone customer additions, Verizon’s second quarter was the strongest in four years, though this gain only slightly exceeded the 178,000 net loss during the first quarter. Gross customer signups have largely returned to prepandemic levels, though Verizon modestly improved customer losses versus 2018 and 2019. Its aggressive phone upgrade program, launched late in the quarter and set to end this week, likely helped this measure. Roughly 60% of new customers are choosing premium unlimited plans, pulling average revenue per account gradually higher. Versus a year ago, when the firm was waiving late fees and other charges, ARPA was up 4.6%, driving wireless service revenue up 5.9%. Total wireless revenue increased 12.5% thanks to a sharp rebound in phone equipment sales.

The revitalization of Verizon’s residential fixed-line business quietly continued during the quarter, with Fios revenue increasing 5.1% versus a year ago. This revenue stream has essentially been flat for the past three years, but demand for high-quality Internet access and a strong service offering have reignited customer growth in recent quarters. Verizon added 92,000 net residential Fios broadband customers during the quarter, expanding this customer base 7% versus a year ago.

Total revenue increased 10.9% year over year while the EBITDA margin dipped nearly 2 percentage points to 36%, thanks to the increase in low-margin equipment revenue.

Morningstar Premium Members gain exclusive access to our full analyst reports, including fair value estimates, bull and bear breakdowns, and risk analyses. Not a Premium Member? Get this and other reports immediately when you try Morningstar Premium free for 14 days.

Michael Hodel does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.

We’d like to share more about how we work and what drives our day-to-day business.

We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.

How we use your information depends on the product and service that you use and your relationship with us. We may use it to:

  • Verify your identity, personalize the content you receive, or create and administer your account.
  • Provide specific products and services to you, such as portfolio management or data aggregation.
  • Develop and improve features of our offerings.
  • Gear advertisements and other marketing efforts towards your interests.

To learn more about how we handle and protect your data, visit our privacy center.

Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.

To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.

Read our editorial policy to learn more about our process.