The Stock of Verizon Slips Due to Pressure on a Key Subscriber Metric

Verizon Communications Inc. reaffirmed its full-year financial outlook on Tuesday, despite the ongoing macroeconomic uncertainty. However, the telecom giant reported weaker-than-expected performance in its core wireless retail postpaid phone business during the first quarter.

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In total, Verizon lost a net 289,000 postpaid phone subscribers during the quarter. This figure was worse than the 218,000 losses anticipated by analysts surveyed by S&P Global Visible Alpha. The decline was driven primarily by losses in Verizon’s consumer segment, though the business unit saw comparatively stronger results.

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Verizon had already flagged this softness back in March. At an investor conference, company leadership warned about an increasingly competitive landscape impacting postpaid subscriber trends. Postpaid customers—those who are billed monthly after using the service—typically represent a more stable and lucrative segment for wireless carriers compared to prepaid users, who pay in advance.

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Despite the shortfall in subscriber additions, Verizon’s leadership struck an optimistic tone. CEO Hans Vestberg, in prepared comments tied to the earnings report, said the company concluded the quarter with positive sales momentum that extended into April. Chief Financial Officer Tony Skiadas added that gross additions in consumer postpaid phones rose by a mid-single-digit percentage in March compared to the prior year, and April’s performance had continued to be strong.

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Nevertheless, investors were unimpressed. Verizon’s shares fell 4% in premarket trading Tuesday as the market reacted to the results.

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In a press release, Vestberg highlighted some of the initiatives Verizon has implemented to attract and retain customers, such as a three-year price lock and a free phone offer for those trading in existing devices.

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He emphasized that these efforts, combined with Verizon’s network quality, financial strength, and loyal customer base, put the company in a solid position to keep innovating and investing in long-term growth.

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There was some good news in Verizon’s prepaid business, which saw its best core retail net additions—137,000—since the company acquired TracFone in 2021. The company also added 339,000 net broadband subscribers in the quarter.

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Wireless service revenue came in at $20.8 billion, which was a 2.7% year-over-year increase and slightly above analysts’ consensus estimate of $20.4 billion. Overall operating revenue totaled $33.5 billion, up 1.5% from the year-ago period and narrowly beating the $33.3 billion forecasted by analysts.

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Verizon reported adjusted earnings of $1.19 per share, an increase from $1.15 in the same quarter last year and ahead of the consensus estimate, which was also $1.15.

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Looking ahead, the company maintained its full-year guidance, which includes expectations for wireless service revenue to grow between 2% and 2.8%, and free cash flow to range from $17.5 billion to $18.5 billion. However, the company acknowledged that this outlook does not account for potential impacts from new or evolving tariffs.

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Telecom companies like Verizon are often seen as relatively shielded from economic downturns, as wireless services are viewed by many consumers as essential. Although some customers may delay upgrading their phones in uncertain economic times, analysts have pointed out that selling new equipment isn’t a major profit driver for companies like Verizon.

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Vestberg emphasized this point in his prepared remarks, stating that Verizon has repeatedly proven its resilience during challenging periods. He noted that during uncertain times, the company’s key differentiators and structural strengths become even more apparent, helping to protect its business and support consistent financial performance.

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In summary, Verizon’s first-quarter results were a mixed bag. While the company fell short on postpaid subscriber additions, it delivered better-than-expected revenue and earnings and maintained a steady outlook for the year. Executives expressed confidence in Verizon’s ability to navigate a challenging environment and remain competitive, thanks to strong fundamentals, customer incentives, and ongoing investments in growth areas.

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