Earnings Call Insights: Verizon Communications Inc. (VZ) Q3 2025
Management View
- Daniel Schulman, Director & CEO, opened by acknowledging the leadership transition from Hans Vestberg and outlined a shift in strategic direction, stating Verizon is at a “critical inflection point” and emphasizing, “This is not a course correction. It is a fundamental change in our strategic approach to customers.” He highlighted a transition from technology-centric to customer-centric growth, revealing plans to leverage the network foundation through increased investment in cyber and convergence, most notably the pending acquisition of Frontier expected to close early next year.
- Schulman declared, “The only way we can drive sustainable value for our shareholders is by significantly raising our game and winning responsibly in the market.” He stressed that Verizon’s next chapter is about “serving and delighting customers by building the industry’s best overall value proposition and the best customer experience on top of it.”
- Anthony Skiadas, Executive VP & CFO, stated, “We remain on track to deliver our full year financial guidance, which includes our previously raised expectations for adjusted EBITDA growth, adjusted EPS growth and free cash flow.” He reported Consumer Mobility strong postpaid phone gross adds up 8.4% year-over-year but noted postpaid phone net losses of 7,000 due to churn. Skiadas also highlighted the 16% year-over-year increase in consumer upgrades and five consecutive quarters of positive prepaid subscriber growth.
- The CFO added, “Our third quarter performance keeps us on track to deliver on our financial guidance for the year. Third quarter consolidated revenue was $33.8 billion, up 1.5% from the prior year period.”
Outlook
- Management reiterated they are on track to meet full year guidance, including previously raised expectations for adjusted EBITDA growth, adjusted EPS growth, and free cash flow. Skiadas stated, “We reiterated our guidance for the year at $19.5 billion to $20.5 billion for 2025. And as you heard Dan in his prepared remarks, we expect to have higher cash flows in ’26 versus 2025.”
- Schulman confirmed the focus on a “customer-first culture” and cost transformation, targeting sustainable revenue and adjusted EPS growth. He committed to providing 2026 guidance in January, with progress updates quarterly.
Financial Results
- Third quarter consolidated revenue was $33.8 billion, marking a 1.5% increase year-over-year. Wireless service revenue grew 2.1% year-over-year, with over $400 million in wireless service revenue growth in the quarter.
- Wireless equipment revenue rose by 5.2% from the prior year, bolstered by higher gross adds and upgrades. Adjusted EBITDA was $12.8 billion, up 2.3% year-over-year. Adjusted EPS reached $1.21, a 1.7% increase year-over-year.
- Free cash flow for the quarter was $7 billion, nearly 17% higher year-over-year, with a year-to-date total of $15.8 billion. Net unsecured debt was $112 billion, a $9.4 billion decrease year-over-year, resulting in a net unsecured debt to consolidated adjusted EBITDA ratio of 2.2x.
- The quarter saw 306,000 broadband net adds, Fios internet achieving its best quarterly result in two years with 61,000 net adds, and Fixed Wireless Access net adds of 261,000.
Q&A
- John Hodulik, UBS: Asked about Schulman’s vision for the first 100 days and consumer volume turnaround. Schulman responded that Verizon must “shift from being a technology centric to being a customer-centric company,” with a goal to “have the lowest churn rate in the industry” and deliver “sustainable revenue growth, accelerated bottom line adjusted EPS growth.”
- Benjamin Swinburne, Morgan Stanley: Questioned the sustainability of Verizon’s reliance on price increases and openness to leveraging up for opportunities. Schulman emphasized, “Pricing is the last refuge of the marketing desperate,” and outlined plans to address churn through value perception and customer experience improvements. Skiadas stated, “We have strong cash flows… and that leverage target gives us the ability to invest for growth.”
- Michael Ng, Goldman Sachs: Asked about parallels with PayPal and the strategic importance of perks and MIPlan. Schulman explained that becoming a “customer champion” requires challenging the business model and investing in value propositions funded by cost cuts.
- Michael Rollins, Citigroup: Inquired about convergence strategy and portfolio optimization. Schulman confirmed convergence as a key focus and said Verizon will “invest appropriately and aggressively in that expansion,” while legacy businesses will be sunset or exited to improve margins.
- Sebastiano Petti, JPMorgan: Sought clarity on 2026 free cash flow growth and account declines. Skiadas affirmed “significant cost transformation” underway and confidence in free cash flow growth including the Frontier acquisition. Schulman acknowledged that account growth challenges highlight the need for “a full reboot of what Verizon means in the marketplace.”
- Michael Funk, BofA: Probed on churn reduction strategies and AI’s role. Schulman outlined using AI to predict and prevent churn, personalize offers, and improve customer experience, describing AI as “a very large opportunity.”
- Peter Supino, Wolfe Research: Asked about cost opportunities and the rationale for organic vs. external fiber expansion. Skiadas detailed capital-light partnerships for fiber expansion, while Schulman stressed that “cost reductions will be a way of life” and investments in customer value will be funded by cost savings.
Sentiment Analysis
- Analysts expressed concern about churn, volume losses, the sustainability of pricing strategies, and the need for a clear turnaround, seeking specifics on cost reductions and growth plans. The tone was probing and somewhat skeptical, especially around the shift from price-driven to value-driven strategies.
- Management’s tone was confident and forward-looking in prepared remarks, with Schulman repeatedly expressing excitement and commitment, but became more defensive and cautious during Q&A, especially when pressed for specifics, using phrases like “we are well underway,” and “this will take some time.”
- Compared to the previous quarter, the analyst tone was more urgent and focused on the need for tangible turnaround actions, while management’s tone shifted from steady assurance to a more urgent, change-driven narrative under the new CEO.
Quarter-over-Quarter Comparison
- The current quarter introduced a new CEO, Daniel Schulman, who outlined a fundamental strategic shift toward customer-centricity and operational transformation, diverging from the largely steady and incremental strategy under Hans Vestberg in Q2.
- Guidance for adjusted EBITDA, EPS, and free cash flow remains consistent with the previous quarter, but Q3 saw a stronger emphasis on cost transformation and customer retention as the levers for growth.
- Account declines and churn remained in focus, but management now explicitly commits to “aggressively sunset or exit legacy businesses” and to use AI across the organization.
- Analyst questions shifted from capital allocation and incremental operational improvements to probing the specifics and credibility of the turnaround strategy, with increased skepticism.
- Management’s confidence in the ability to drive sustainable growth and improve margins was more pronounced but also more conditional on executing the new strategy.
Risks and Concerns
- Management acknowledged that Verizon “is clearly falling short of our potential” and must address weak customer growth and high churn.
- Schulman stated, “For the past few years, our financial growth has relied too heavily on price increases,” signaling vulnerability if churn is not addressed.
- Execution risk is heightened given the scale of strategic and cultural transformation required, and the integration of the Frontier acquisition presents operational and financial challenges.
- Analysts highlighted account declines as a concern and pressed for clarity on the pace and effectiveness of cost transformation and customer retention efforts.
Final Takeaway
Verizon’s new leadership is signaling a decisive strategic transformation, shifting from a technology-led to a customer-centric model, with a commitment to aggressive cost reduction and operational simplification. The company is targeting disciplined, profitable growth in both mobility and broadband, leveraging convergence and AI-driven innovation, and reaffirming its commitment to shareholder returns through continued dividend growth and debt reduction. Management is set to provide further clarity on strategic execution and 2026 guidance in January, underscoring an urgent focus on delivering improved customer experience and sustainable financial performance.