Story Stocks^®

Verizon (VZ) is trading nicely higher after reporting its Q2 results this morning. The telecom giant delivered a narrow EPS beat, while revenue declined 0.7% yr/yr to $34.30 bln, below expectations. However, VZ raised its FY26 adjusted EPS guidance above expectations to $4.99-5.04 from $4.95-4.99 and showed continued progress under CEO Dan Schulman's turnaround plan.

• Subscriber momentum: VZ delivered 184,000 postpaid phone net additions, improving from 55,000 in Q1 and a loss of 9,000 last year. Consumer Q2 net adds were the best in five years, while overall Q2 postpaid phone gross adds were the best in eight years. Overall postpaid phone churn improved 5 bps yr/yr to 0.92%, while Consumer churn declined 6 bps to 0.84%.
• Revenue mix: The revenue decline was largely driven by a nearly 20% drop in equipment revenue as upgrade volumes fell approximately 27%, reflecting longer device replacement cycles and VZ's more disciplined approach to handset subsidies. In contrast, mobility and broadband service revenue increased 2.8% to $23.4 bln, accelerating from 1.6% growth in Q1.
• Broadband: VZ added 348,000 broadband subscribers, including 193,000 fixed-wireless and 155,000 fiber additions, bringing its total broadband base above 17.1 mln. Management also said customers combining mobility and broadband are churning materially less than single-product customers, supporting its convergence strategy.
• Profitability: Lower churn, improved customer-acquisition economics, and cost reductions drove meaningful operating leverage. Adjusted EBITDA increased 7.2% to a record $13.7 bln, while adjusted EBITDA margin reached a record 40.1%. Free cash flow rose 24% to $6.4 bln.
• Outlook: VZ reiterated its expectation for FY26 postpaid phone net additions in the upper half of its 750,000-1.0 mln range. It raised mobility and broadband service-revenue growth guidance to 2.5-3.0% from 2.0-3.0%, including growth approaching 3% in Q3 and approximately 4% in Q4. VZ also raised free-cash-flow growth guidance to 9-10%, while maintaining capex guidance of $16.0-16.5 bln.

Briefing.com Analyst Insight

VZ's Q2 results offered another encouraging sign that CEO Dan Schulman's turnaround plan is taking hold. Most importantly, VZ is improving customer growth without relying on aggressive promotions, while also generating stronger earnings and cash flow. Management noted that churn had been steadily rising quarter after quarter, making its sequential decline for two consecutive quarters a meaningful step change. VZ is also growing both customer accounts and individual lines, something management said it has not achieved in a long time. Early results from its loyalty program, Simplicity plan, and Verizon One bundle, all launched in mid-June, have also been encouraging and could support further improvement. VZ will likely need to maintain this momentum, but the Q2 results and improved guidance provide stronger evidence that Schulman's strategy is creating a healthier foundation for longer-term growth.