10-QPeriod: Q2 FY2022

VERIZON COMMUNICATIONS INC Quarterly Report for Q2 Ended Jun 30, 2022

Filed July 28, 2022For Securities:VZ

Summary

Verizon Communications Inc. reported stable total operating revenues for the three and six months ended June 30, 2022, with a slight increase of 0.1% and 1.1% respectively, driven by strong performance in the Consumer segment which saw a 9.1% and 10.0% revenue increase. This growth was partially offset by a decline in the Business segment and Corporate and other revenues. Despite increased wireless equipment sales and the inclusion of TracFone results, the company's net income decreased year-over-year for both periods, primarily due to a significant year-over-year swing in "Other income (expense), net," largely influenced by pension remeasurement gains in the prior year. Operating expenses saw an increase, largely due to higher costs for wireless equipment and selling, general, and administrative expenses, further impacting profitability.

Financial Highlights

49 data points
Beta

Revenue

$33.79B

Net Income

$5.20B

15.4% Net Margin

EPS (Diluted)

$1.24

Total Assets

$370.15B

Cash & Equivalents

$1.86B

Free Cash Flow

$10.84B

Financial Statements
Beta
Revenue$33.79B
SG&A Expenses$7.50B
Operating Expenses$26.24B
Operating Income$7.55B
Interest Expense$785.00M
Net Income$5.20B
EPS (Basic)$1.24
EPS (Diluted)$1.24
Shares Outstanding (Basic)4.20B
Shares Outstanding (Diluted)4.20B

Key Highlights

  • 1Total operating revenues remained largely flat, increasing by 0.1% to $33.8 billion for the three months and 1.1% to $67.3 billion for the six months ended June 30, 2022.
  • 2The Consumer segment showed robust growth, with revenues increasing by 9.1% and 10.0% for the three and six-month periods, respectively, driven by service and wireless equipment revenue.
  • 3Net income attributable to Verizon decreased to $5.2 billion ($1.24 per share) for the three months ended June 30, 2022, down from $5.8 billion ($1.40 per share) in the prior year.
  • 4Operating expenses increased by 2.5% and 2.6% for the three and six months, respectively, largely due to higher costs of wireless equipment and selling, general, and administrative expenses.
  • 5Capital expenditures increased to $10.5 billion for the six months ended June 30, 2022, from $8.7 billion in the prior year, reflecting accelerated 5G deployment.
  • 6Free cash flow decreased significantly to $7.2 billion for the six months ended June 30, 2022, from $11.7 billion in the prior year, primarily due to lower operating cash flow and higher capital expenditures.
  • 7Debt levels remained substantial, with total debt at $147.6 billion as of June 30, 2022, although the effective interest rate decreased.

Frequently Asked Questions

Verizon's primary revenue growth driver in this period was its Consumer segment, which experienced significant increases in both service and wireless equipment revenues. The inclusion of TracFone's results also contributed to this growth.

Net income decreased year-over-year primarily due to a significant swing in 'Other income (expense), net.' In the prior year, Verizon benefited from substantial pension remeasurement gains, which were absent in the current period, leading to a lower net income despite relatively stable operational revenues.

Verizon continues to invest heavily in its networks, with capital expenditures increasing to $10.5 billion for the first six months of 2022, up from $8.7 billion in the same period last year. This investment is primarily focused on accelerating the deployment of its 5G network and expanding its fiber infrastructure, with the company anticipating 2022 to be a peak year for capital investment.

Verizon's total debt remained substantial at $147.6 billion as of June 30, 2022. The company is actively managing its debt by focusing on optimizing its debt footprint and borrowing costs, which has resulted in a lower effective interest rate compared to the prior year. Proceeds from asset-backed debt transactions are also used to fund operations.