Summary
Verizon Communications Inc. reported solid top-line growth in the second quarter of 2018, with total operating revenues increasing by 5.4% year-over-year to $32.2 billion. This growth was primarily driven by a 5.5% increase in Wireless segment revenues, fueled by strong equipment sales and expanded service offerings. The Wireline segment saw a slight decline, down 3.4%, reflecting ongoing industry shifts. Net income for the quarter was $4.2 billion, or $1.00 per diluted share, a slight decrease from the prior year's $4.5 billion, or $1.07 per share. This performance indicates continued revenue expansion, particularly in the core wireless business, alongside efforts to navigate the evolving telecommunications landscape.
Financial Highlights
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Financial Statements
Beta
| Revenue | $32.20B |
| SG&A Expenses | $7.61B |
| Operating Expenses | $25.59B |
| Operating Income | $6.62B |
| Interest Expense | $1.22B |
| Net Income | $4.12B |
| EPS (Basic) | $1.00 |
| EPS (Diluted) | $1.00 |
| Shares Outstanding (Basic) | 4.13B |
| Shares Outstanding (Diluted) | 4.14B |
Key Highlights
- 1Total operating revenues grew 5.4% to $32.2 billion in Q2 2018, driven by strong Wireless segment performance.
- 2Wireless segment revenue increased by 5.5% to $22.4 billion, with equipment revenue showing significant growth (17.4%).
- 3Net income for the quarter was $4.2 billion, resulting in diluted EPS of $1.00, down slightly from $1.07 in the prior year.
- 4Operating income decreased by 17.5% to $6.6 billion, impacted by increased operating expenses.
- 5The company adopted new revenue recognition standards (Topic 606) starting January 1, 2018, which reclassified revenue between equipment and service, impacting comparability with prior periods.
- 6Capital expenditures were $7.8 billion for the first six months of 2018, up from $7.0 billion in the prior year, reflecting continued investment in network infrastructure.
- 7Free cash flow for the first six months of 2018 significantly increased to $8.6 billion from $2.3 billion in the prior year, primarily due to improved working capital and earnings.
Frequently Asked Questions
The primary driver of Verizon's revenue growth in the second quarter of 2018 was its Wireless segment, which saw a 5.5% increase in total operating revenues to $22.4 billion. This growth was particularly strong in equipment revenues, which increased by 17.4%, and other revenue streams. The overall company revenue grew by 5.4% to $32.2 billion.
Verizon adopted new revenue recognition standards (Topic 606) effective January 1, 2018. This adoption reallocated revenue between wireless equipment and service. For the three months ended June 30, 2018, this led to an increase of $144 million in total operating revenue compared to what would have been reported under the old standards. Specifically, equipment revenue was higher, and service revenue was lower.
Verizon continues to invest in its network infrastructure, with capital expenditures of $7.8 billion for the first six months of 2018, an increase from $7.0 billion in the same period of 2017. The company reported a significant increase in free cash flow for the first six months of 2018, reaching $8.6 billion, up from $2.3 billion in the prior year. This improvement was attributed to better working capital management, increased earnings, and changes related to discretionary employee benefit contributions.
The Wireline segment experienced a revenue decline of 3.4% in the second quarter of 2018, totaling $7.5 billion. This decrease is attributed to ongoing industry trends, including declining demand for traditional voice, network, and High-Speed Internet (HSI) services, as well as competition and shifts in consumer behavior away from traditional video. While Fios Internet revenues saw growth, this was offset by declines in other areas of the Wireline business.