Verizon cut its profit and sales outlook for the rest of the year as it posted weaker than expected Q2 earnings with flat revenue, a drop in net income and anaemic subscriber growth.
In an earnings statement, Verizon reported revenue of $33.8 billion, relatively flat year-on-year, with net income down 10.7 per cent to $5.3 billion. The company explained wireless service revenue growth and higher equipment sales were offset by fixed-line declines and the net impact of M&A activity in 2021.
Chairman and CEO Hans Vestberg said Verizon was “determined to improve our operational and financial performance for the second half of year”, while CFO Matt Ellis conceded its recent performance “did not meet our expectations”.
Service and other revenue dropped 3.9 per cent to $27.1 billion, due to sales lost from Verizon Media, offsetting incremental gains from an acquisition of Tracfone Wireless.
Wireless service revenue grew 9.1 per cent to $18.4 billion, again on the back of the Tracfone deal and progress on its premium unlimited strategy.
In total, Verizon recorded 12,000 post-paid phone net additions due to price hikes, well below analyst expectations which Bloomberg reported at more than 167,000.
It did add 256,000 fixed wireless customers during the period, a service which continues to gain traction.
As a consequence of the difficult quarter, Verizon cut its wireless service revenue growth outlook to 8.5 per cent to 9.5 per cent from 9 per cent to 10 per cent.
It also predicted reported service and other revenue could decline by 1 per cent or at best remain flat, and lowered its earnings per share expectation from a range of $5.40 to $5.55 to between $5.10 to $5.25.