Verizon Communications Inc. (VZ) reported stronger-than-anticipated results for the fourth quarter and issued optimistic guidance, driven by consistent subscription growth. The company is poised to enhance its network’s capacity and reach this year as management implements growth strategies, including the completion of its acquisition of Frontier and AI advancements.
After facing significant fluctuations last year, Verizon’s stock has stabilized to match its value from one year ago. The shares have regained momentum after hitting a one-year low earlier this month. Income investors have favored VZ for its frequent dividend increases and high yield, positioning it among the leading dividend stocks in the S&P 500. The company has raised its dividend for the 18th consecutive year while maintaining efforts to reduce debt.
Results Exceed Expectations
In the fourth quarter, Verizon’s adjusted earnings grew slightly to $1.10 per share, up from $1.08 per share in the same period in fiscal 2023, surpassing market expectations. Unadjusted earnings amounted to $5.0 billion or $1.18 per share in Q4, a significant recovery from a loss of $2.71 billion or $0.64 per share in the previous year’s quarter.
The improvement was bolstered by a 1.6% year-over-year growth in operating revenues, reaching $35.68 billion in Q4, exceeding forecasts. Revenues from both Services and Wireless Equipment saw increases. The company attracted around 1 million new postpaid subscribers for its mobile and broadband services during the quarter, enhancing its market share despite intense competition. According to CEO Hans Erik Vestberg, Q4 FY24 marked the best quarter in approximately a decade.
Future Outlook
Leadership forecasts that for fiscal 2025, total wireless service revenues will increase between 2% and 2.8%, supported by a rise in postpaid consumer phone net additions and strong business phone volumes. Pricing strategies implemented in 2024 are expected to contribute to revenue growth in 2025 as well. The anticipated free cash flow for the full year is projected to range from $17.5 billion to $18.5 billion, assuming stable tax laws and modest growth in customer upgrades for devices and services.
“Our priorities for 2025 are clear: focus on growing service revenue, expanding adjusted EBITDA, and achieving robust free cash flow; continuing momentum in mobility and broadband while scaling private networks as we broaden our 5G Ultra-Wideband and fiber services; maintaining strong operational excellence, financial discipline, and enhancing customer experience to drive both customer and financial growth; implementing our capital allocation strategy to invest in the business, support and expand our dividend, reduce debt, and eventually engage in share repurchase; and leveraging our fiber and edge computing resources to create new revenue opportunities within the AI ecosystem,” stated Vestberg during the Q4 earnings call.
Expansion Initiatives
In response to the growing demand for network capacity and computing power, Verizon has rolled out an AI strategy aimed at hyperscalers, cloud providers, and global enterprises. Verizon AI Connect offers a range of products and solutions tailored for managing resource-intensive AI workloads at scale. Last year, the company launched satellite-based messaging services through partnerships with non-terrestrial network providers like AST SpaceMobile and Skylo. Recently, Verizon also teamed up with NVIDIA to create a solution allowing a variety of AI applications to operate over its 5G private networks using private Mobile Edge Compute technology.
Continuing its recent upward trend, Verizon’s shares saw an increase on Monday, though they remained below the 52-week average price of $41.11.
