10-QPeriod: Q1 FY2012

VERIZON COMMUNICATIONS INC Quarterly Report for Q1 Ended Mar 31, 2012

Filed April 26, 2012For Securities:VZ

Summary

Verizon Communications Inc. reported solid financial results for the first quarter of 2012, demonstrating revenue growth driven primarily by its robust Verizon Wireless segment. Total operating revenues increased by 4.6% year-over-year to $28.24 billion, with Verizon Wireless revenues showing an impressive 8.2% rise to $18.27 billion. This growth was fueled by strong demand for smartphones and data services, which now constitute a significant portion of wireless service revenue. The company also saw positive trends in its Wireline segment, particularly in strategic services and broadband adoption, despite overall revenue decline in this segment. Net income attributable to Verizon increased to $1.69 billion, or $0.59 per diluted share, up from $1.44 billion, or $0.51 per diluted share, in the prior year's quarter. These results reflect Verizon's ongoing strategic focus on higher-margin and growing areas like wireless data and wireline data services.

Financial Highlights

50 data points
Beta

Revenue

$28.24B

59.9% Gross Margin

Net Income

$1.69B

6.0% Net Margin

EPS (Diluted)

$0.59

Total Assets

$222.92B

Cash & Equivalents

$5.91B

Free Cash Flow

$5.96B

Financial Statements
Beta
Revenue$28.24B
Cost of Revenue$11.32B
Gross Profit$16.92B
SG&A Expenses$7.70B
Operating Expenses$23.05B
Operating Income$5.20B
Interest Expense$685.00M
Net Income$1.69B
EPS (Basic)$0.59
EPS (Diluted)$0.59
Shares Outstanding (Basic)2.84B
Shares Outstanding (Diluted)2.85B

Key Highlights

  • 1Total operating revenues grew 4.6% to $28.24 billion, primarily driven by Verizon Wireless.
  • 2Verizon Wireless revenue increased 8.2% to $18.27 billion, with data revenue accounting for 42.9% of service revenue.
  • 3Net income attributable to Verizon was $1.69 billion, or $0.59 per diluted share, up from $1.44 billion ($0.51/share) in Q1 2011.
  • 4Capital expenditures decreased to $3.56 billion from $4.36 billion in the prior year, contributing to a significant increase in free cash flow.
  • 5Free cash flow increased substantially to $2.39 billion from $0.67 billion in Q1 2011, demonstrating improved operational cash generation.
  • 6The company continues to invest in its 4G LTE network, with deployment in 230 markets covering over 200 million people.
  • 7Long-term debt decreased to $48.48 billion from $50.30 billion at year-end 2011, while debt maturing within one year also decreased.

Frequently Asked Questions

Verizon reported a 4.6% increase in total operating revenues for the first quarter of 2012, reaching $28.24 billion. This growth was predominantly driven by the Verizon Wireless segment, which saw an 8.2% revenue increase.

Verizon Wireless experienced strong revenue growth driven by increased demand for smartphones and data services. Data revenue constituted 42.9% of wireless service revenue, and the company's 4G LTE network expansion contributed to this performance.

The Wireline segment's revenues saw a slight decrease of 2.0% to $9.95 billion. However, strategic services within this segment showed an 11.6% increase, and broadband services, including FiOS, also grew. The overall decline was influenced by decreased revenues in Global Wholesale and Core services.

Verizon's financial health appears strong. Long-term debt decreased, and capital expenditures were lower than the previous year, leading to a significant increase in free cash flow to $2.39 billion. The company also maintained compliance with its debt covenants and had substantial unused borrowing capacity under its credit facility.