10-QPeriod: Q1 FY2022

VERIZON COMMUNICATIONS INC Quarterly Report for Q1 Ended Mar 31, 2022

Filed April 27, 2022For Securities:VZ

Summary

Verizon Communications Inc. reported total operating revenues of $33.55 billion for the first quarter of 2022, a 2.1% increase year-over-year, driven primarily by a 10.9% surge in its Consumer segment revenues to $25.3 billion. This growth in the Consumer segment was significantly boosted by the inclusion of TracFone's results and an increase in wireless equipment sales. Conversely, the Business segment experienced a slight revenue decline of 0.9%, totaling $7.7 billion. The company's net income attributable to Verizon for the quarter was $4.58 billion, a decrease from $5.25 billion in the prior year, resulting in diluted earnings per share of $1.09, down from $1.27 in Q1 2021. This net income decrease was largely influenced by significant debt extinguishment costs of $1.2 billion recorded in the current quarter. Cash flow from operations saw a notable decrease to $6.82 billion from $9.69 billion in the prior year, impacting free cash flow to $1 billion from $5.2 billion. This reduction is attributed to changes in working capital and a decrease in earnings. Capital expenditures increased to $5.8 billion, with a substantial portion allocated to the 5G network deployment, particularly C-Band spectrum. Despite the operational and financial shifts, Verizon continues to invest heavily in network infrastructure to maintain its competitive edge and drive future growth.

Financial Highlights

48 data points
Beta

Revenue

$33.55B

Net Income

$4.58B

13.6% Net Margin

EPS (Diluted)

$1.09

Total Assets

$365.72B

Cash & Equivalents

$1.66B

Free Cash Flow

$6.82B

Financial Statements
Beta
Revenue$33.55B
SG&A Expenses$7.17B
Operating Expenses$25.76B
Operating Income$7.80B
Interest Expense$786.00M
Net Income$4.58B
EPS (Basic)$1.09
EPS (Diluted)$1.09
Shares Outstanding (Basic)4.20B
Shares Outstanding (Diluted)4.20B

Key Highlights

  • 1Total operating revenues increased by 2.1% to $33.55 billion in Q1 2022, primarily driven by the Consumer segment.
  • 2The Consumer segment revenue grew by 10.9% to $25.3 billion, bolstered by wireless equipment sales and the inclusion of TracFone results.
  • 3Net income attributable to Verizon decreased to $4.58 billion from $5.25 billion in Q1 2021, with diluted EPS falling to $1.09 from $1.27.
  • 4Significant debt extinguishment costs of $1.2 billion negatively impacted net income.
  • 5Cash flow from operations decreased by $2.87 billion to $6.82 billion, leading to a substantial drop in free cash flow to $1 billion.
  • 6Capital expenditures increased by $1.3 billion to $5.8 billion, largely due to investments in 5G and C-Band spectrum deployment.
  • 7The Business segment revenue saw a slight decrease of 0.9% to $7.7 billion.

Frequently Asked Questions

The primary driver of the revenue increase was the strong performance of the Consumer segment, which saw a 10.9% rise in revenue to $25.3 billion. This growth was significantly influenced by increased wireless equipment sales and the inclusion of results from the TracFone acquisition.

Net income attributable to Verizon decreased from $5.25 billion in Q1 2021 to $4.58 billion in Q1 2022. This decrease was primarily due to a substantial charge of $1.2 billion related to early debt extinguishment costs recorded in the current quarter.

Capital expenditures increased by approximately $1.3 billion to $5.8 billion in Q1 2022 compared to Q1 2021. The company is heavily investing in its 5G network deployment, including the expansion and densification of its network and the rollout of C-Band spectrum, which is expected to be a peak investment year for these initiatives.

The acquisition of TracFone, completed in late 2021, contributed to the revenue growth in the Consumer segment, particularly in service and wireless equipment revenue. It also led to increased costs associated with integrating the business, as reflected in higher cost of services, cost of wireless equipment, and selling, general, and administrative expenses within the Consumer segment.