Verizon’s Q3 EPS tops expectations at $0.77 on $30.3 billion in sales
Following solid earnings in the second quarter that narrowly topped the Street’s expectations, Verizon Communications on Thursday reported its third-quarter results ahead of the bell. Analysts polled by FactSet expected the nations largest carrier to post a profit of $0.74 per share for the September quarter, and their revenue consensus sat at $30.15 billion. Verizon beat expectations, however, reporting earnings of $0.77 per share — or $2.23 billion, up more than 20% — on $30.3 billion in sales. In the same quarter last year, Verizon earned $0.64 per share on revenue that totaled $29.01 billion. The carrier said that at the end of the third quarter it was home to 101.5 million total retail connections, including 95.2 million retail postpaid connections. Verizon added 927,000 net retail postpaid connections in the quarter and postpaid churn was 0.97%. Verizon’s full press release follows below.
Verizon Posts Double-Digit Earnings Growth and Continued Strong Operating Performance in 3Q
3Q 2013 HIGHLIGHTSConsolidated
Wireless
Wireline
NEW YORK - Verizon Communications Inc. (NYSE, Nasdaq: VZ) today reported year-over-year double-digit percentage growth in operating income and earnings per share for the third consecutive quarter. Third-quarter 2013 results showed continued high customer demand for Verizon Wireless, FiOS and strategic enterprise services.
Lowell McAdam, Verizon chairman and CEO, said: “These strong third-quarter results reflect Verizon’s long-term investment in reliable, high-quality networks to deliver value to customers. Our unwavering focus on wireless, FiOS and strategic enterprise services has produced consistent performance, and we’ve delivered double-digit earnings growth in six of the past seven quarters. Verizon’s strategic networks form a powerful distribution platform for future growth and innovation.”
Verizon reported 78 cents in EPS in third-quarter 2013, compared with 56 cents per share in third-quarter 2012. Third-quarter 2013 results include a non-operational gain of 2 cents per share related to the sale of wireless spectrum, partially offset by 1 cent per share in incremental interest expense related to the financing of Verizon’s planned purchase of Vodafone Group PLC’s 45 percent stake in Verizon Wireless.
Adjusted third-quarter 2013 earnings of 77 cents per share increased 20.3 percent, compared with an adjusted 64 cents per share in third-quarter 2012, which excluded 8 cents per share in charges related to patent-litigation settlements.
Consolidated Results Highlighted by Revenue and Cash Flow Growth
Verizon’s consolidated revenue growth increased for the third consecutive quarter, with 84 percent of third-quarter 2013 revenues generated by Verizon Wireless, FiOS and strategic enterprise services.
Consolidated Highlights
Since early September, Verizon successfully arranged the required permanent financing of the Vodafone transaction, with a $49 billion debt offering and an agreement for up to $12 billion in term loans. Also, Verizon’s Board of Directors approved a quarterly dividend increase for the seventh consecutive year.
Verizon Wireless: Strong Profitability, and Customer and Revenue Growth
In third-quarter 2013, Verizon Wireless delivered consistently strong growth in retail postpaid net additions and revenues; an increase in smartphone penetration; and continued high segment EBITDA margin on service revenues (non-GAAP).
Wireless Financial Highlights
Wireless Operational Highlights
Wireline Reports Continued Strong Consumer Revenue Growth
Verizon’s Wireline segment reported continued strong growth in consumer revenues, driven by continued strong customer demand for FiOS services. The company is on track to achieve net new customer growth targets for FiOS in 2013. In enterprise and wholesale markets, sales of global enterprise strategic services continued to increase, and constitute a larger percentage of the revenue base.
Wireline Financial Highlights
Wireline Operational Highlights
In third-quarter 2013, Verizon added 173,000 net new FiOS Internet connections, up 27.2 percent from third-quarter 2012 — and 135,000 net new FiOS Video connections, up 13.4 percent. Verizon had a total of 5.9 million FiOS Internet and 5.2 million FiOS Video connections at the end of the quarter, representing year-over-year increases of 12.6 percent for each.
FiOS penetration (subscribers as a percentage of potential subscribers) continued to increase. FiOS Internet penetration was 39.2 percent at the end of third-quarter 2013, compared with 37.0 percent at the end of third-quarter 2012. In the same periods, FiOS Video penetration was 34.9 percent, compared with 32.9 percent. The FiOS network passed 18.3 million premises by the end of third-quarter 2013.
Verizon is enriching the FiOS Video customer value proposition by adding free anytime, anywhere mobile access to nine of the most popular TV channels via the FiOS Mobile app (iPad, iPhone, select Android tablets and smartphones, and Kindle Fire HD). Customers who download the app can also buy or rent more than 45,000 on-demand movie and TV show titles from Verizon FlexView. More live TV channels will be added in the coming months.
By the end of third-quarter 2013, more than 40 percent of FiOS Internet customers subscribed to FiOS Quantum, which provides speeds ranging from 50 to 500 megabits per second, up from 35 percent at the end of second-quarter 2013.
Broadband connections totaled nearly 9.0 million at the end of third-quarter 2013, a 2.6 percent year-over-year increase. Overall, net broadband customers increased 56,000 in the third quarter, as FiOS Internet net customer additions more than offset a decline in subscribers for DSL-based High Speed Internet services.
Verizon has been replacing high-maintenance portions of its residential copper network with fiber optics to provide enhanced services and to reduce ongoing repair costs. Through the first nine months of 2013, Verizon migrated nearly 250,000 homes to fiber, on track to exceed a target of 300,000 migrations within FiOS markets in 2013. By year-end 2013, Verizon projects it will have less than 1 million remaining customers served by copper in FiOS markets.
Verizon Enterprise Solutions completed agreements with, and began deploying innovative business technology solutions for, a variety of corporations and organizations around the globe in the quarter, including the American Red Cross, General Electric, Guggenheim Partners, JetBlue, Juniper Networks, Landstar Systems, Royal Caribbean Cruises Ltd., Shangri-La Hotels, Synchronoss Technologies and the U.S. Department of the Interior.
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