Verizon's Revenue Falls as Profitability Hits a Record

Verizon paired a steep revenue shortfall with record profit margins and surging cash flow, raising full-year guidance for a second consecutive quarter under CEO Dan Schulman.

Key Takeaways

• Revenue fell 0.7% to $34.3 billion, missing consensus near $35.1 billion, yet adjusted EPS of $1.30 beat estimates and grew 6.6% once one-time charges were stripped out.
• Postpaid phone net additions of 184,000 marked Verizon’s best Consumer-segment second quarter in five years, while free cash flow surged 24.4% to $6.4 billion, the strongest in years.
• Verizon raised full-year adjusted EPS guidance to $4.99-$5.04 and free cash flow growth to 9-10%, even as shares dipped on the print amid sector-wide competitive pressure.

A Smaller Company, A Stronger One

There is a particular kind of quarter that tests an investor’s instincts: one where the headline number moves in the wrong direction while nearly everything beneath it moves in the right one. Verizon delivered exactly that kind of quarter on July 24, and the market’s uncertain early reaction suggested how difficult that combination is to price.

Total operating revenue fell 0.7 percent from a year earlier, to $34.3 billion, missing the roughly $35.1 billion analysts had modeled. The shortfall was not diffuse. It was concentrated almost entirely in wireless equipment sales, which declined nearly 20 percent, or more than $1.2 billion, as customers held onto their phones longer and Verizon deliberately reduced the subsidies it once used to pull them into new contracts. Reported earnings per share fell 22 percent, to 92 cents, weighed down by $1.8 billion in pre-tax charges, chief among them a $746 million loss tied to reclassifying Verizon’s international wireline and managed network business as held for sale ahead of a planned combination with BT.

Strip away those charges, and the same quarter tells a different story. Adjusted earnings per share rose 6.6 percent, to $1.30, clearing Wall Street’s $1.27 consensus. Adjusted EBITDA climbed 7.2 percent, to $13.7 billion, a company record, and its margin expanded to 40.1 percent from 37.1 percent, also a record. Verizon generated less revenue and more profit in the same quarter, a combination rare in a capital-intensive industry, and one that speaks less to a single quarter’s fortune than to a deliberate, multi-year recalibration of what kind of growth the company is willing to pay for.

Reading the Subscriber Ledger

Beneath the headline arithmetic sits the metric that has determined Verizon’s investment case for a decade: whether it can hold and grow its subscriber base without buying that growth through unsustainable promotions. Here, the quarter offered its most unambiguous good news. Verizon added 184,000 postpaid phone customers, its strongest Consumer-segment second quarter in five years, and 73,000 core prepaid customers, extending a streak of prepaid growth now in its eighth consecutive quarter. Total mobility and broadband net additions surpassed 550,000, more than 230,000 above the prior year’s pace, pushing first-half additions past one million, more than double the total from the first six months of 2025.

Broadband, increasingly the company’s second engine alongside wireless, added 348,000 connections, up 12.3 percent, split between 155,000 fiber lines and 193,000 fixed wireless access customers. Combined fiber and fixed wireless connections now stand near 17.1 million, up 34.5 percent year over year, a figure that owes as much to the January close of Verizon’s $20 billion acquisition of Frontier Communications as to organic construction.

The quality of that growth matters as much as its size. Postpaid phone churn improved to 0.92 percent from 0.97 percent, a modest-looking shift that nonetheless represents meaningfully fewer customers leaving each month across a base of more than 90 million phone lines. Average revenue per postpaid account slipped 1.4 percent, to $168.35, the visible cost of Verizon’s retreat from device-driven upgrade cycles toward simplified, less heavily subsidized plans. It is a trade management has chosen deliberately: slightly less revenue per customer, in exchange for a customer considerably less likely to leave.

Where the Profit Came From

If subscriber retention explains why Verizon’s business is healthier, cash flow explains why investors should care. Cash flow from operations rose 16.3 percent, to $10.4 billion, and free cash flow jumped 24.4 percent, to $6.4 billion, among the strongest quarters the company has produced. Across the first half, free cash flow reached $10.2 billion, up 16 percent, comfortably outrunning a roughly 3 percent rise in capital spending, to $8.2 billion.

That widening gap between cash generated and cash spent is the quiet engine behind Verizon’s other achievements this quarter, from its guidance raise to its expanded buyback. It is visible at the segment level too. Consumer operating income rose 5.1 percent, with margin expanding to 30.6 percent from 28.7 percent. Verizon Business, still absorbing the reclassification of its international wireline unit, posted a 36.9 percent increase in operating income and margin expansion to 13.9 percent from 10.4 percent, evidence that the cost discipline running through the results is not confined to the consumer side of the business.

Much of that discipline has a name: a 13,000-role reduction announced in November 2025, followed in July by further changes affecting roughly 3,000 additional positions, including the sale of 274 company-owned retail stores to franchise operators. Cost-cutting alone rarely produces durable margin gains in telecommunications, an industry where rivals can simply out-invest a company that stops spending. What distinguishes this version is that the reductions have accompanied rising subscriber volumes rather than substituting for them, suggesting the savings are structural rather than temporary relief.

A Balance Sheet Regaining Its Footing

The balance sheet has begun reflecting that same discipline. Unsecured debt fell to $136.5 billion from $142.5 billion at the end of the first quarter, and net unsecured debt declined to $128.7 billion from $130.1 billion. Leverage, measured against adjusted EBITDA, stands at 2.5 times, higher than the 2.2 times recorded at the end of 2025 because of the Frontier acquisition, though the direction within the quarter points toward continued deleveraging as free cash flow accelerates.

Verizon returned $9.4 billion to shareholders in the first half, including $3.5 billion in share repurchases, and used the quarter’s momentum to lift its full-year buyback target to as much as $4.5 billion. Management also raised full-year guidance for the second consecutive quarter, an unusual show of confidence for a company that spent much of the past several years guiding conservatively. Adjusted earnings per share growth is now expected at 6.0 to 7.0 percent, implying a range of $4.99 to $5.04, above both the prior guidance of $4.95 to $4.99 and the roughly $4.94 analyst consensus. Free cash flow growth guidance rose to 9.0 to 10.0 percent, well above the 6.8 percent originally projected. Two consecutive guidance increases, delivered against a backdrop of declining headline revenue, is the clearest signal management can send that it believes the underlying business, not the reported one, deserves the market’s attention.

Schulman’s Wager Meets a Skeptical Market

The results extend a strategy set in motion when Verizon’s board replaced longtime chief executive Hans Vestberg with Dan Schulman, the former PayPal chief executive, in October of last year. Schulman has argued, in effect, that Verizon spent years buying growth it could not afford to keep, financing subscriber additions with subsidies and promotional pricing that eroded the profitability the growth was meant to justify. Nine months into his tenure, this quarter offers the clearest evidence yet that a different trade, retention over acquisition, can expand both volume and margin at once rather than forcing investors to choose between them.

Schulman has also begun describing a second growth path that has nothing to do with phones: leasing Verizon’s fiber and wireless infrastructure to hyperscale cloud companies building the data centers behind the current artificial intelligence buildout, a business he has suggested could be worth billions of dollars once contracts are finalized in the coming months.

The market’s immediate verdict was more cautious than the numbers might justify. Shares slipped roughly 1.9 percent in premarket trading, to $42.99, a reaction likely tied to the revenue miss and the steep drop in reported earnings, compounded by a stock still recovering from its late-June removal from the Dow Jones Industrial Average and from investor unease over SpaceX’s stated ambition to offer direct-to-phone service through Starlink. Commentary published after the print took a more forgiving view, crediting the subscriber gains and reduced promotional spending with proof that Verizon is no longer the discount “hunting ground” it had become. With no sell ratings among the 26 analysts covering the stock and a consensus price target near $51, the fuller verdict on Schulman’s trade of growth for profitability will take longer than one trading session to render.