Verizon reports increased 5G adoption and record 2Q performance
21 Julio 2021 - 6:00AM
Verizon Communications Inc. (NYSE, Nasdaq: VZ) reported
second-quarter earnings today highlighted by an increase in 5G
phone adoption, customer and sequential wireless service revenue
growth, and superior network reliability. Based on its strong
results, Verizon revised its revenue and adjusted EPS guidance*
upward for the full year.
"We are executing on our multipurpose network strategy and
producing positive results in each of our five growth vectors,
recording strong second quarter results. With more connections on
our network than anyone else, our already excellent network
performance improved in the quarter and was recognized by
RootMetrics as the best overall network performance for the 16th
time in a row. We are also expanding our 5G Ultra Wideband and 5G
Home markets," said Verizon Chairman and CEO Hans Vestberg. "We are
excited about our momentum leading into the second half of the
year. We are on track to close both the Tracfone and Verizon Media
transactions, and will continue to bring value and choice to our
customers."
For second-quarter 2021, Verizon reported EPS of $1.40, compared
with $1.13 in second-quarter 2020. On an adjusted basis*,
second-quarter 2021 EPS, excluding special items, was $1.37,
compared with adjusted EPS of $1.18 in second-quarter 2020.
Second-quarter 2021 EPS included a net pre-tax gain from special
items of $182 million, consisting of a pre-tax gain of
approximately $1.3 billion related to a pension remeasurement
credit, and a pre-tax loss of $1.1 billion from early debt
redemption costs.
In second-quarter 2021, Verizon announced an agreement to sell
Verizon Media to Apollo funds, with an expected close date in
second-half 2021. After the announcement, certain assets of the
Verizon Media business were classified as an "Asset Held for Sale."
As a result, Verizon no longer depreciated or amortized these
assets, which resulted in a partial quarter benefit of 3 cents per
share in the second quarter. This benefit will continue until the
deal closes.
“Second quarter results were exceptional, both financially and
operationally,” said Verizon Chief Financial Officer Matt Ellis.
“Our strong first half performance and the momentum in our business
gives us the confidence to raise our total wireless service revenue
growth guidance to between 3.5 percent and 4 percent, an update
from prior guidance for 2021 total wireless service revenue growth
of at least 3 percent. We are also raising our adjusted EPS
guidance* to the range of $5.25 to $5.35, an update from prior
guidance for 2021 adjusted EPS* of $5.00 to $5.15."
Consolidated results
- Total consolidated operating
revenues in second-quarter 2021 were $33.8 billion, up 10.9 percent
from second-quarter 2020, and an increase of 5.3 percent from
second-quarter 2019. This increase was the result of wireless
revenue growth, strong Fios and Verizon Media results, and
increased wireless equipment revenue.
- First-half 2021 cash flow from
operations totaled $20.4 billion, a decrease from $23.6
billion year over year, primarily driven by higher cash taxes and
higher working capital requirements due to greater volumes. The
cash tax impact was the result of a one-time benefit received in
second-quarter 2020, as well as a pandemic-related postponement of
payments in second-quarter 2020.
- Capital expenditures in first-half
2021 were $8.7 billion. Capital expenditures continue to support
the growth in traffic on the company's 4G LTE network and the
continued expansion of the company's 5G Ultra Wideband and 5G
Nationwide networks. Capital expenditures related to C-Band were
more than $160 million in first-half 2021.
- Verizon's unsecured debt balance
increased year over year by $39.4 billion to $141.6 billion at the
end of second-quarter 2021, but improved by approximately $6.0
billion sequentially from the end of first-quarter 2021. The
company’s net unsecured debt* as of the end of second-quarter 2021
increased by $42.5 billion year over year to $136.8 billion, and
its net unsecured debt to adjusted EBITDA ratio* was approximately
2.9 times.
Consumer results
- The company continues to provide
new and existing consumers with more value in upgraded offerings;
seven entertainment options, including gaming; and more choice
through its Mix and Match pricing in both wireless and home
broadband plans.
- With Verizon's company-operated
retail stores fully opened and consumer behavior closer to
pre-pandemic levels, Consumer built momentum throughout the quarter
and timed its promotions to take advantage of the economic recovery
and increased customer activity. This increased activity and
Consumer's differentiated customer proposition drove 5G adoption
and step-ups to premium unlimited plans. Consumer ended
second-quarter 2021 with approximately 20 percent of wireless phone
customers having 5G-capable devices.
- Total Verizon Consumer revenues
were $23.5 billion, an increase of 11.2 percent year over year, and
an increase of 6.7 percent from second-quarter 2019. This increase
was primarily driven by wireless equipment revenues of
$4.7 billion, which rebounded above pre-pandemic levels.
- Consumer wireless service revenues
were $13.8 billion in second-quarter 2021, a 5.4 percent increase
year over year, and a 2.5 percent increase from second-quarter
2019. This increase was driven by customer growth, continued
adoption of wireless unlimited and premium unlimited plans,
products, such as billed content, as well as reseller and prepaid.
This growth also came despite minimal contributions from
international roaming.
- Total wireless retail postpaid
churn was 0.83 percent in second-quarter 2021. Wireless retail
postpaid phone churn was 0.65 percent, a record-low retail postpaid
phone churn outside of second-quarter 2020 and third-quarter 2020,
which were heavily impacted by the pandemic.
- In second-quarter 2021, Consumer
reported 350,000 wireless retail postpaid net additions. This
consisted of 197,000 phone net additions and 234,000 other
connected device net additions, offset by 81,000 tablet net
losses.
- The quality and reliability of the
company's Fios service continued to drive strong demand for
broadband as Consumer reported 92,000 Fios Internet net additions
in second-quarter 2021. Consumer Fios revenues of $2.9 billion in
second-quarter 2021 were the highest since the company's new
operating structure was introduced in 2019. The company's trailing
12-month total Fios Internet net addition performance is the
highest since 2015. Consumer reported 62,000 Fios Video net losses
in second-quarter 2021.
- In second-quarter 2021, Consumer
segment operating income was $7.5 billion, an increase of 6.1
percent year over year, and segment operating income margin was
31.9 percent, a decrease from 33.5 percent in second-quarter 2020.
Segment EBITDA* totaled $10.4 billion in second-quarter 2021, an
increase of 4.9 percent from second-quarter 2020. Segment EBITDA
margin* was 44.3 percent in second-quarter 2021, a decrease from
47.0 percent in second-quarter 2020, primarily resulting from
higher activations.
Business results
- During second-quarter 2021, as the
economy reopened, Business customers took advantage of promotions
and an advanced communications, security and video collaboration
product portfolio, creating strong momentum in Small and Medium
Business and the first quarter of Global Enterprise growth since
the onset of the pandemic.
- Total Verizon Business revenues
were $7.8 billion, up 3.7 percent year over year, and relatively
flat from second-quarter 2019.
- Business wireless service revenues
were $3.1 billion in second-quarter 2021, an 8.0 percent increase
year over year, and an increase of 11.4 percent from second-quarter
2019. This increase was led by Small and Medium Business and Global
Enterprise.
- Total wireless retail postpaid
churn was 1.30 percent in second-quarter 2021, and wireless retail
postpaid phone churn was 1.07 percent.
- Business reported 178,000 wireless
retail postpaid net additions in second-quarter 2021, including
78,000 phone net additions.
- In second-quarter 2021, Business
segment operating income was $856 million, a decrease of 9.5
percent year over year, and segment operating income margin was
11.0 percent, a decrease from 12.6 percent in second-quarter 2020.
Segment EBITDA* totaled $1.9 billion in second-quarter 2021, a
decrease from $2.0 billion in second-quarter 2020. Segment EBITDA
margin* was 24.1 percent, a decrease from 26.2 percent in
second-quarter 2020, driven by higher wireless equipment volumes
and wireline pressure.
Media results
- Total Verizon Media revenues were
$2.1 billion in second-quarter 2021, an increase of approximately
50 percent from second-quarter 2020, and an increase of
approximately 13 percent from second-quarter 2019. Media continued
its recent trends and delivered strong performance driven by high
customer engagement with its brands and demand for its advertising
platforms.
Outlook and guidance
Verizon is updating financial guidance for full-year 2021.
- The company now expects total
wireless service revenue growth of 3.5 percent to 4 percent, an
update from prior guidance for 2021 total wireless service revenue
growth of at least 3 percent. Service and other revenue for 2021 is
no longer comparable year over year as the company’s planning
assumption now includes the closing of the Verizon Media
transaction at the end of third-quarter 2021. For this reason, the
company is withdrawing its service and other revenue growth
guidance at this time.
- The company now expects adjusted
EPS* of $5.25 to $5.35, an update from prior guidance for 2021
adjusted EPS* of $5.00 to $5.15.
Additionally, Verizon continues to expect the following results
for full-year 2021:
- Adjusted effective income tax rate*
in the range of 23 percent to 25 percent.
- Capital spending to be in the range
of $17.5 billion to $18.5 billion, including the further expansion
of 5G mmWave in new and existing markets, the densification of the
4G LTE wireless network to manage future traffic demands and the
continued deployment of the company's fiber infrastructure.
Expenditures related to the deployment of the company's C-Band 5G
network will be in addition to this amount, and the company
previously announced an incremental $10 billion of capital
expenditures from 2021 to 2023, of which $2 billion to $3 billion
is expected in 2021.
*Non-GAAP financial measure. See the accompanying schedules and
www.verizon.com/about/investors for reconciliations to generally
accepted accounting principles (GAAP) for non-GAAP financial
measures cited in this document.
Verizon Communications Inc. (NYSE, Nasdaq: VZ) was formed on
June 30, 2000 and is one of the world’s leading providers of
technology, communications, information and entertainment products
and services. Headquartered in New York City and with a presence
around the world, Verizon generated revenues of $128.3 billion in
2020. The company offers data, video and voice services and
solutions on its award-winning networks and platforms, delivering
on customers’ demand for mobility, reliable network connectivity,
security and control.
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Forward-looking statements
In this communication we have made forward-looking statements.
These statements are based on our estimates and assumptions and are
subject to risks and uncertainties. Forward-looking statements
include the information concerning our possible or assumed future
results of operations. Forward-looking statements also include
those preceded or followed by the words “anticipates,” “believes,”
“estimates,” “expects,” “hopes,” “forecasts,” “plans” or similar
expressions. For those statements, we claim the protection of the
safe harbor for forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995. We undertake no
obligation to revise or publicly release the results of any
revision to these forward-looking statements, except as required by
law. Given these risks and uncertainties, readers are cautioned not
to place undue reliance on such forward-looking statements. The
following important factors, along with those discussed in our
filings with the Securities and Exchange Commission (the “SEC”),
could affect future results and could cause those results to differ
materially from those expressed in the forward-looking statements:
cyber attacks impacting our networks or systems and any resulting
financial or reputational impact; natural disasters, terrorist
attacks or acts of war or significant litigation and any resulting
financial or reputational impact; the impact of the COVID-19
pandemic on our operations, our employees and the ways in which our
customers use our networks and other products and services;
disruption of our key suppliers’ or vendors' provisioning of
products or services, including as a result of the COVID-19
pandemic; material adverse changes in labor matters and any
resulting financial or operational impact; the effects of
competition in the markets in which we operate; failure to take
advantage of developments in technology and address changes in
consumer demand; performance issues or delays in the deployment of
our 5G network resulting in significant costs or a reduction in the
anticipated benefits of the enhancement to our networks; the
inability to implement our business strategy; adverse conditions in
the U.S. and international economies; changes in the regulatory
environment in which we operate, including any increase in
restrictions on our ability to operate our networks or businesses;
our high level of indebtedness; an adverse change in the ratings
afforded our debt securities by nationally accredited ratings
organizations or adverse conditions in the credit markets affecting
the cost, including interest rates, and/or availability of further
financing; significant increases in benefit plan costs or lower
investment returns on plan assets; changes in tax laws or treaties,
or in their interpretation; and changes in accounting assumptions
that regulatory agencies, including the SEC, may require or that
result from changes in the accounting rules or their application,
which could result in an impact on earnings.
Media contacts:Kim
Ancin908.559.3227kimberly.ancin@verizon.com
Eric Wilkens908.559.3063eric.wilkens@verizon.com
Verizon Communications (NYSE:VZ)
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