Verizon's stock rises as the company posts surprise subscriber growth under new CEO

By Emily Bary

The company has made progress in acquiring customers at a lower cost, without 'expensive promotions and free phones'

Verizon posted 55,000 postpaid phone net additions in the first quarter.

There were a lot of moving parts in Verizon Communications' first-quarter earnings report as the company dealt with the impacts of a recently closed acquisition and a network outage.

Investors, though, looked past the noise and saw plenty of bright spots, sending shares up 1.6% in Monday's trading action.

Among the positives: The company posted total postpaid phone net additions of 55,000, while analysts tracked by FactSet were anticipating a net loss of 88,000 subscribers on this metric, which tracks customers who pay for mobile service after a billing period is up.

Verizon (VZ) now expects full-year postpaid phone net addition to come in at the top half of its previously issued range of 750,000 to 1 million subscribers.

CFO Tony Skiadas said that Verizon has been able to lower its costs of acquiring and retaining subscribers. The company can now "attract customers with better economics" without relying on "expensive promotions and free phones and things like that," he told MarketWatch. Verizon is also using artificial intelligence to target retention offers.

With that in mind, the company is making progress on the profit front. Adjusted earnings per share came in at $1.28, up 7.6% from a year before and above the $1.20 FactSet consensus. The company said this represented its best quarterly growth rate since 2021.

Verizon now expects $4.95 to $4.99 in adjusted EPS for the full year, up from a prior range of $4.90 to $4.95. "Transformation efforts and strong first-quarter performance give Verizon the confidence" to move to this new guidance, the company noted in its release.

See also: AT&T earnings show the company's fiber push is paying off

Under CEO Dan Schulman, who took over in October, Verizon has cut costs through layoffs. The company has also tried to eliminate friction for customers through simplified plans. "This disciplined approach is already delivering healthier economics, lower churn and the first positive first-quarter postpaid phone net adds we've seen in over a decade," Schulman said in a release.

Revenue, though, fell short of expectations for the first quarter. Verizon posted $34.4 billion on the top line, up 2.9% from a year before, while the FactSet consensus had called for $34.8 billion.

"This result was driven in part by the company's disciplined approach to promotional spending and the resulting moderated upgrade activity, which impacted wireless-equipment revenue," Verizon noted in its release.

Wireless-equipment revenue is generally less important to investors than mobility and broadband revenue, which was up 1.6% to $22.9 billion. But Verizon disclosed an 80-basis-point negative impact to that service growth rate stemming from customer credits issued in the wake of a January network disruption.

Verizon closed its acquisition of Frontier, a fiber operator, earlier this year, and results from this unit are reflected in Verizon's financials from Jan. 20 onward.

An enhanced fiber footprint opens up various opportunities for Verizon. For one, the company increasingly looking to bundle internet and wireless service, with Skiadas noting that Verizon currently "underindexes" in wireless in some of Frontier's markets.

The company is also capitalizing on the need for fiber connectivity in AI data centers. "The revenue will continue to ramp as time goes on, but there's a lot of demand out there right now," Skiadas said.

And while Verizon is adding fiber capacity, it's also leaning on fixed-wireless access, which leverages its mobile network to provide home-internet services in markets that don't justify the cost of a fiber buildout.

"It can be deployed very efficiently, and it's simple for customers," Skiadas said.

Don't miss: Verizon is coming off its best quarter in 15 years. Can it sustain that momentum?

-Emily Bary

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

04-27-26 1708ET