10-QPeriod: Q2 FY2023

VERIZON COMMUNICATIONS INC Quarterly Report for Q2 Ended Jun 30, 2023

Filed July 28, 2023For Securities:VZ

Summary

Verizon Communications Inc. reported a decrease in total operating revenues for the second quarter and first six months of 2023 compared to the prior year, primarily driven by declines in both the Consumer and Business segments. While service revenues saw a modest increase, this was offset by a significant drop in wireless equipment revenue. Net income attributable to Verizon also decreased year-over-year for both periods. The company's strategic investments in network expansion, particularly C-Band spectrum deployment, continue, with substantial capital expenditures allocated towards these initiatives. Despite revenue pressures, Verizon maintained a strong operational cash flow and positive free cash flow, indicating a solid liquidity position.

Financial Highlights

48 data points
Beta

Revenue

$32.60B

Net Income

$4.65B

14.3% Net Margin

EPS (Diluted)

$1.10

Total Assets

$379.95B

Cash & Equivalents

$4.80B

Free Cash Flow

$9.73B

Financial Statements
Beta
Revenue$32.60B
SG&A Expenses$8.25B
Operating Expenses$25.38B
Operating Income$7.22B
Interest Expense$1.28B
Net Income$4.65B
EPS (Basic)$1.10
EPS (Diluted)$1.10
Shares Outstanding (Basic)4.21B
Shares Outstanding (Diluted)4.21B

Key Highlights

  • 1Total operating revenues decreased by 3.5% for the quarter and 2.7% for the six months ended June 30, 2023, compared to the same periods in 2022.
  • 2Net income attributable to Verizon was $4.65 billion for the three months ended June 30, 2023, down from $5.20 billion in the prior year.
  • 3Wireless equipment revenue saw a significant decline, down 22.8% for the quarter and 16.5% for the six months, largely due to lower device sales volumes.
  • 4The Consumer segment experienced a 4.1% revenue decrease year-over-year for the quarter, while the Business segment saw a 1.9% decline.
  • 5Capital expenditures for the first six months of 2023 were $10.1 billion, a slight decrease from $10.5 billion in the prior year, reflecting the completion of an accelerated C-Band capital program.
  • 6Free cash flow for the first six months of 2023 increased to $7.95 billion from $7.17 billion in the prior year, demonstrating improved cash generation.
  • 7The company reported a provision for income taxes of $1.35 billion for the quarter, a decrease from $1.54 billion in the prior year, with an effective tax rate of 22.0%.

Frequently Asked Questions

The decrease in total operating revenues was primarily due to lower wireless equipment revenues, resulting from a decrease in the volume of wireless devices sold and a reduction in upgrades. This was partially offset by an increase in service revenues, particularly within the Consumer segment.

Verizon reported total debt of $152.7 billion as of June 30, 2023. The company generated strong operating cash flow of $18.02 billion for the first six months of 2023 and a free cash flow of $7.95 billion, indicating a healthy liquidity position. Significant debt repayments and borrowings were made during the period, managed through a mix of unsecured and secured debt.

Verizon continues to invest in its network, with capital expenditures of $10.1 billion for the first six months of 2023. The company expects total capital expenditures for 2023 to be between $18.25 billion and $19.25 billion. These investments are focused on 5G network deployment, C-Band spectrum, and fiber infrastructure to enhance network capabilities and support future growth.

For the three months ended June 30, 2023, special items included $206 million in amortization of acquisition-related intangible assets and $237 million in severance charges. For the six-month period, these amounted to $414 million and $237 million, respectively, along with $155 million in asset rationalization charges. These items impacted operating expenses and overall profitability.