Verizon Communications Inc. became the second major US wireless carrier to disappoint with earnings this week as the company lowered its full-year financial guidance on Friday.
Shares lost nearly 5% in premarket trading.
The company reported net income of $5.32 billion, or $1.24 per share, in the second quarter, compared to $5.94 billion, or $1.40 per share, in the year-ago quarter. On an adjusted basis, Verizon VZ returned -6.25% for earnings per share of $1.31 versus $1.37 a year ago and a penny below the FactSet consensus of $1.32. Verizon said earnings for the most recent quarter included a $435 million pretax loss on special items.
Verizon’s revenue came in at $33.8 billion, about the same as last year, while analysts tracked by FactSet were expecting $33.7 billion.
The company recorded a total of 12,000 postpaid phone network additions last quarter, but found it had 215,000 such cell phone losses in its consumer business. Verizon saw a 0.93% churn rate for retail postpaid wireless phones.
Verizon lowered its full-year outlook and now expects wireless service revenue to grow 8.5% to 9.5% and earnings per share to be in the range of $5.10 to $5.25.
During its first-quarter report, Verizon said it expects to come in toward the “lower end” of previously provided guidance ranges for revenue and adjusted earnings per share. Those guidance ranges called for revenue growth of 9% to 10% and adjusted earnings per share of $5.40 to $5.55.
Verizon’s results came after competitor AT&T Inc. T, -2.35% provided a mixed report a day earlier. AT&T reported strong growth in postpaid phone additions and signaled that pricing changes had had a positive impact, but management also flagged changing consumer behavior amid deteriorating economic conditions, and the company lowered its free cash flow guidance .
Read: AT&T’s earnings were ‘actually good’ despite stock sale, says analyst
AT&T said some customers were slowing down with their phone payments given the economic downturn, a factor that contributed to the reduced free cash guidance. At the same time, AT&T said its bad debt spending isn’t significantly higher than it was before the pandemic, noting management that the company expects customers to continue paying their bills, even if it’s been growing at a bit slower than AT&T was used to in economically healthier times in the past year.
Verizon’s stock is down 8% over the past three months, while the S&P 500 SPX is down +0.05% -6%.