Check out the latest Verizon earnings call transcript.
Telecommunications giant Verizon Communications (VZ 2.85%) reported fourth-quarter earnings on Jan. 29, and the results were mixed, as the company continued to add subscribers in the core wireless business while ongoing challenges in the Oath media unit weighed on results. Verizon warned last quarter that Oath would not be able to achieve the target of $10 billion in revenue by 2020, foreshadowing the $4.6 billion impairment the company said in December that it would take related to the segment.
Big Red also forecast profitability to be roughly flat for 2019.
Image source: Getty Images.
Verizon Communications results: The raw numbers
|
Metric |
Q4 2018 |
Q4 2017 |
Year-Over-Year Change |
|---|---|---|---|
|
Total operating revenue |
$34.3 billion |
$34 billion |
1% |
|
Adjusted earnings per share |
$1.12 |
$0.86 |
30% |
|
Total retail wireless connections |
118 million |
116.3 million |
1.5% |
|
Retail postpaid churn |
1.08% |
1% |
8 basis points |
|
Retail postpaid average revenue per account |
$135.11 |
$135.78 |
(0.5%) |
|
Fios video subscribers |
4.45 million |
4.62 million |
(3.6%) |
Data source: Verizon.
What happened with Verizon Communications this quarter?
Verizon reported 1.2 million retail postpaid net additions in the fourth quarter, including 873,000 postpaid smartphone net additions. The company also added 11,000 tablet connections and 556,000 other connected devices, mostly wearables. On a GAAP basis, Verizon posted net income of just $2 billion, or $0.47 per share, due to the writedown.
- Verizon Media revenue fell 6% to $2.1 billion, but was up sequentially due to seasonality.
- The company recognized a $4.6 billion goodwill impairment charge related to Verizon Media.
- Verizon Media announced earlier this month that it was laying off 7% of its employees, impacting about 800 workers.
- Capital expenditures were $2.3 billion in the fourth quarter, bringing full-year capital spending to $16.7 billion.
- Verizon says it is on track to generate $10 billion in cumulative cash savings by 2021, a goal set in 2017, in order to fund dividend payouts. The company has saved $2.3 billion so far through 2018.
- Fios revenue grew 2.5% when excluding the impact of new revenue recognition standards, thanks in part to adding 54,000 net Fios internet connections.
- Verizon lost 46,000 Fios video connections due to cord-cutting.
What management had to say
"Verizon finished 2018 by delivering solid financial and operational performance, as evidenced by our strong wireless service revenue and earnings growth," CEO Hans Vestberg said in a statement. He continued:
2018 was a remarkable year full of 5G firsts, including being first in the world to commercially deploy 5G with our 5G Home product. As we head into 2019 and the 5G era, we're beginning a period of transformational change. We are laser focused on delivering customers a best-in-class and game-changing experience on our networks.
When asked about the company's outlook for Verizon Media revenue, CFO Matt Ellis acknowledged ongoing declines but expressed optimism for 2019, saying, "The assumption, as we head into this year, is that we'll make progress on the [Verizon Media] revenue line."
Verizon will expand its commercial launch of 5G in 2019.
Looking forward
In terms of guidance, Verizon expects full-year 2019 revenue to grow by a low-single-digit percentage on a GAAP basis. Adjusted earnings per share, which excludes the impact of new lease accounting standards, will be "similar" to 2018. The company's effective tax rate should be 24% to 26%, with cash taxes in 2019 expected to be $2 billion to $3 billion higher than 2018, as Verizon realized certain one-time tax benefits last year.
Capital expenditures are forecast to rise as the company invests in 5G, with full-year capital spending expected in the range of $17 billion to $18 billion.
