10-QPeriod: Q3 FY2019

VERIZON COMMUNICATIONS INC Quarterly Report for Q3 Ended Sep 30, 2019

Filed October 30, 2019For Securities:VZ

Summary

Verizon Communications Inc. reported a modest increase in total operating revenues for the third quarter of 2019, reaching $32.9 billion, up from $32.6 billion in the prior year period. This growth was primarily driven by its Consumer segment, which saw an increase in service and other revenues, partially offsetting a slight dip in wireless equipment sales. The Business segment experienced a slight revenue decline. Net income attributable to Verizon increased to $5.19 billion, or $1.25 per diluted share, from $4.92 billion, or $1.19 per diluted share, in the same quarter last year, indicating improved profitability. The company continued its strategic investments in network infrastructure, including 5G deployment, with capital expenditures remaining robust. Operationally, Verizon demonstrated effective cost management, leading to a decrease in total operating expenses. The company's financial position remains stable, with a significant portion of its debt at fixed rates, mitigating interest rate risk. The adoption of new lease accounting standards (Topic 842) significantly impacted the balance sheet, increasing both operating lease assets and liabilities. Investors should note the continued focus on network upgrades and subscriber growth within the competitive telecommunications landscape.

Financial Highlights

46 data points
Beta

Revenue

$32.89B

Net Income

$5.19B

15.8% Net Margin

EPS (Diluted)

$1.25

Total Assets

$284.88B

Cash & Equivalents

$3.02B

Free Cash Flow

$10.91B

Financial Statements
Beta
Revenue$32.89B
SG&A Expenses$7.22B
Operating Expenses$24.71B
Operating Income$8.18B
Interest Expense$1.15B
Net Income$5.19B
EPS (Basic)$1.26
EPS (Diluted)$1.25
Shares Outstanding (Basic)4.14B
Shares Outstanding (Diluted)4.14B

Key Highlights

  • 1Total operating revenues increased slightly to $32.9 billion in Q3 2019 compared to $32.6 billion in Q3 2018.
  • 2Net income attributable to Verizon increased to $5.19 billion ($1.25 EPS) in Q3 2019, up from $4.92 billion ($1.19 EPS) in Q3 2018.
  • 3The Consumer segment showed revenue growth driven by increased service and other revenues, while the Business segment experienced a slight decline.
  • 4Total operating expenses decreased by 0.9% to $24.7 billion in Q3 2019, indicating successful cost management.
  • 5Capital expenditures for the first nine months of 2019 were $12.3 billion, reflecting ongoing investment in network infrastructure, including 5G.
  • 6The company continued to manage its debt effectively, with approximately 81% of its debt portfolio at fixed rates.
  • 7Adoption of new lease accounting standards (Topic 842) resulted in a significant increase in operating lease right-of-use assets and liabilities on the balance sheet.

Frequently Asked Questions

Revenue growth was primarily driven by the Consumer segment, which benefited from increases in service and other revenues. This growth helped offset slight decreases in wireless equipment sales and revenue declines in the Business segment.

Profitability improved, with net income attributable to Verizon increasing to $5.19 billion ($1.25 per diluted share) in the third quarter of 2019, up from $4.92 billion ($1.19 per diluted share) in the third quarter of 2018.

The adoption of Topic 842 beginning January 1, 2019, led to the recognition of significant operating lease right-of-use assets and operating lease liabilities on the balance sheet. For instance, operating lease liabilities increased by $22.1 billion and right-of-use assets by $23.2 billion upon adoption.

Verizon is managing its debt by maintaining a significant portion, approximately 81% as of September 30, 2019, of its debt portfolio at fixed rates. The company also utilizes interest rate swaps as hedges to mitigate interest rate risk. The average effective interest rate on its debt remained stable at 4.8% for the nine-month period.