Verizon has raised its full-year outlook for both adjusted earnings and free cash flow, crediting its new unlimited 5G plans and customer loyalty programs for driving stronger-than-anticipated subscriber growth during the April-through-June quarter.
The company’s stock climbed 3% in premarket trading on Friday following the announcement.
Verizon is currently navigating a significant strategic shift under new CEO Dan Schulman, which includes rolling out streamlined mobile plans, a fresh loyalty program, and bundled wireless-and-broadband packages — all aimed at winning back customers after the company had fallen behind competitors in subscriber growth.
During the second quarter, Verizon added 184,000 monthly-bill paying wireless customers, far exceeding the 103,900 additions that analysts surveyed by FactSet had anticipated.
Last month, the company revamped its wireless lineup with the introduction of Simplicity — an unlimited wireless plan designed to replace a more complicated set of options. The new plan features straightforward pricing, access to Verizon’s fastest 5G network, and mobile hotspot data.
Verizon also unveiled a product called Verizon One, which bundles wireless service and home internet into a single monthly bill. The offering reflects a wider trend across the telecommunications industry toward combining services to strengthen customer loyalty.
CEO Schulman commented on the company’s approach, saying, “We are gaining subscribers and earning long-term retention based on real value rather than subsidized promotions.”
Verizon now projects full-year adjusted earnings of $4.99 to $5.04 per share, an improvement over its previous guidance of $4.95 to $4.99 per share. The company also expects free cash flow to grow between 9% and 10% this year, up from an earlier estimate of approximately 7% or more.
Second-quarter total revenue came in at $34.3 billion, which fell short of the $35.16 billion analysts had expected, according to LSEG data. The shortfall was largely attributed to a drop in equipment revenue, as customers are holding onto their existing devices longer rather than upgrading.
On the earnings side, Verizon reported adjusted profit of $1.30 per share for the quarter, topping the $1.27 per share estimate, thanks in part to cost-cutting measures and reduced spending on device subsidies.
