Verizon Communications Inc. VZ used its second-quarter 2026earnings callto argue that lower churn, disciplined customer acquisition and broadband expansion are creating a more durable growth model.
Management raised several full-year targets while detailing a sharper shift away from handset subsidies. Adjusted earnings of $1.30 topped the Zacks Consensus Estimate of $1.27, while revenues of $34.25 billion missed the $35.31 billion consensus.
Verizon Communications Inc. Price, Consensus and EPS Surprise
Verizon Communications Inc. price-consensus-eps-surprise-chart | Verizon Communications Inc. Quote
VZ Sees a Structural Shift in Customer Economics
CEO Daniel Schulman said Verizon’s transformation is producing a meaningful change in operating performance. He emphasized that subscriber gains are coming alongside lower churn and reduced acquisition and retention spending.
Consumer postpaid phone churn was 0.84%, down 6 basis points year over year. Verizon added 184,000 postpaid phone customers, while total mobility and broadband net additions exceeded 550,000.
Schulman said promotional acquisition costs fell about 15% and retention costs declined roughly 17%. Management views this combination of stronger volumes, improved retention and lower unit costs as a central driver of earnings and cash flow growth.
Verizon Raises Its Growth Outlook
CFO Anthony Skiadas said mobility and broadband service revenues grew 2.8% to $23.4 billion, accelerating by 120 basis points from the first quarter.
Verizon raised its 2026 mobility and broadband service revenue growth outlook to 2.5-3%. Management expects growth to approach 3% in the third quarter and reach approximately 4% in the fourth quarter.
The company also raised adjusted earnings guidance to $4.99-$5.04 per share, representing 6-7% growth. Free cash flow is now expected to increase 9-10%, supported by EBITDA growth and lower equipment-related working-capital requirements.
VZ Reduces Its Reliance on Device Subsidies
Management repeatedly highlighted a strategic move away from subsidy-heavy customer acquisition. Equipment revenues declined nearly 20%, or more than $1.2 billion, as upgrade volumes fell nearly 27%.
Schulman said each new account joining the Simplicity offering is effectively subsidy-free. The plan separates device financing from wireless pricing, which management expects to improve transparency and margins.
In the analyst discussion, a Morgan Stanley representative asked how the new value proposition was affecting customer growth. Schulman said gross additions were about 16% above internal forecasts, while new account additions were 31% better than expected.
Verizon Builds on Broadband Convergence
Verizon added 348,000 broadband customers, including 193,000 fixed wireless and 155,000 fiber additions. Its broadband base reached approximately 17.1 million connections.
Schulman said 58% of broadband customers also use Verizon mobility services. Management sees these converged relationships as valuable because customers taking both products generate higher revenue and lower churn.
A UBS analyst questioned slowing fixed wireless additions and competition from satellite providers. Schulman said Verizon expects its broadband mix to shift toward fiber as coverage expands, while fixed wireless remains important in areas without fiber availability.
VZ Positions Fiber for AI Infrastructure Demand
Management introduced AI Connect as an additional long-term growth opportunity. Verizon signed an agreement valued at more than $1 billion to provide Google with dark fiber connecting data centers.
Schulman said other potential agreements could generate several billion dollars of revenues over the coming years.
Customers may purchase either dark or lit fiber, depending on whether they want Verizon to provide the supporting electronics and services.
Verizon is also converting selected central offices into edge data-center locations. Management expects AI infrastructure revenues to begin contributing in 2027, with margins equal to or above the company’s existing margin profile.
Verizon Expands Shareholder Returns
Second-quarter free cash flow increased 24.4% to $6.4 billion. First-half free cash flow rose 16% to $10.2 billion.
Verizon repurchased $1 billion of shares during the quarter, bringing first-half repurchases to $3.5 billion. Management raised its full-year repurchase target to as much as $4.5 billion.
Skiadas said net unsecured leverage improved to 2.5 times adjusted EBITDA. Verizon remains focused on investing in fiber and spectrum while reducing debt and maintaining its dividend.
VZ Management Maintains an Execution Focus
Management’s tone centered on operational discipline rather than promotional spending. Lower churn, convergence and cost reductions remain the immediate priorities.
Schulman said the second half of 2026 should outperform the first half, while 2027 should improve on 2026 as core service revenues accelerate and AI Connect begins contributing.
What Zacks Rank and Style Scores Signal
VZ currently carries a Zacks Rank #3 (Hold), indicating a neutral near-term earnings-estimate revision outlook. Value, Momentum and VGM Scores of A point to favorable characteristics in those styles, while the C Growth Score reflects a more balanced growth profile. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Style Scores are designed to complement the Zacks Rank, with stronger combinations generally associated with Zacks Rank #1 and #2 (Buy) stocks. Verizon’s Rank may change as analysts revise estimates following the reported results and updated guidance.
Research Chief Names “Single Best Pick to Double”
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.
Free: See Our Top Stock And 4 Runners Up
Verizon Communications Inc. (VZ) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
5 Stocks Our Experts Predict Could Double In the Next Year
By submitting your email, you'll also get a free pivot & flow membership. A free daily market overview. You can unsubscribe at any time.
