VERIZON COMMUNICATIONS INC Quarterly Report for Q1 Ended Mar 31, 2020

Summary

Verizon Communications Inc. reported a decrease in total operating revenues for the first quarter of 2020, down 1.6% year-over-year to $31.61 billion. This decline was primarily driven by a 1.7% decrease in the Consumer segment and a 0.5% decrease in the Business segment, reflecting impacts from the COVID-19 pandemic. Net income also fell to $4.29 billion from $5.16 billion in the prior year period. The company experienced increased capital expenditures, up 23.6% to $5.3 billion, largely due to investments in its 4G LTE and 5G networks. Despite the revenue decline and increased spending, Verizon generated strong operating cash flow and free cash flow, demonstrating resilience in its core operations.

Key Highlights

• 1Total operating revenues decreased by 1.6% to $31.61 billion compared to the prior year quarter.
• 2Net income attributable to Verizon decreased to $4.16 billion ($1.00 per diluted share) from $5.03 billion ($1.22 per diluted share) in the same period last year.
• 3Capital expenditures increased significantly by 23.6% to $5.3 billion, driven by investments in 4G LTE and 5G network development.
• 4The company reported a substantial pre-tax loss of $1.2 billion related to a spectrum license auction.
• 5Operating expenses increased by 2.5% primarily due to a significant rise in selling, general, and administrative expenses, largely influenced by the spectrum license loss and an increased allowance for credit losses due to COVID-19.
• 6Cash and cash equivalents increased substantially to $7.0 billion from $2.6 billion at the end of the prior year, reflecting a strategic decision to maintain higher liquidity amidst COVID-19 uncertainties.
• 7Free cash flow increased by 26.1% to $3.55 billion, demonstrating strong operational cash generation despite revenue pressures.

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