Verizon Communications Inc. Misses Earnings By 2 Cents, But Beats Revenue Estimate

Verizon Communications Inc. Misses Earnings By 2 Cents, But Beats Revenue Estimate

Verizon has reported a loss of 54 cents per share for 4Q. However, the company’s CEO has boasted high quality subscriber additions

By Usman Farooq on Jan 22, 2015 at 9:01 am EST

As expected, Verizon Communications Inc. (NYSE:VZ) missed the earnings per share (EPS) estimate but beat the consensus revenue estimate. The carrier reported EPS of $0.71, missing consensus estimate of $0.73 by 2 cents. However, on a non-adjusted basis, it posted a loss of 54 cents per share in the fourth quarter (4Q), compared to an EPS of $1.76 in the comparable period last year. The loss is attributed to non-operational items. Meanwhile, revenues of $33.2 billion beat analysts’ consensus estimate of $32.66 by $530 million.

For the full year 2014, Verizon reported adjusted EPS of $3.35, missing consensus estimate of $3.4. It reported consolidated revenues of $127.1 billion, representing a year-over-year (YoY) growth of 5.4%. Analysts, on the other hand, had expected revenues of $126.55 billion. Verizon had previously provided a revenue growth guidance of 4% for 2014.

Verizon stock, which closed at $48.25 yesterday, is down 0.99% in pre-market trading today.

Segment Performance

Wireless revenues for the year stood at $87.6 billion, up 8.2% YoY, while wireless EBITDA margin fell from 42.2% in 2013 to 40.2% in 2014, as the company had previously predicted.

The carrier added 2.1 million retail subscribers in 4Q, including retail postpaid net additions of 1.98 million, which included 67,000 lucrative postpaid phone users. In comparison, T-Mobile US Inc added 1.28 million postpaid subscribers, while Sprint Corporation added 30,000.

However, despite the high subscriber additions, the postpaid churn was 1.14%, higher both on a sequential and YoY basis. In 3Q, Verizon had a postpaid churn of 1%, up from 0.96% in the comparable period last year.

Average revenue per account for 4Q stood at $162.98, falling 0.6% sequentially from $163.93 in 3Q, but rising 3.5% YoY.

But while the company’s margins were hit, Verizon CEO Lowell McAdam touted the high quality subscriber growth. He stated: “Verizon posted another year of consistently high operating and financial performance in 2014, with strong cash generation and the return of $7.8 billion to our shareowners. I am confident that Verizon’s assets and market momentum position us to continue to drive profitable growth in 2015.”

Verizon’s telematics and connected devices bet is paying off. The carrier stated: “New revenue streams from the Internet of Things and telematics totaled approximately $585 million in 2014, with an annual growth rate of more than 45 percent.”

In the wireline segment, Verizon saw a YoY growth of 4.1% in consumer revenues, which totaled $4 billion for 4Q. The segment EBITDA margin for 2014 stood at 23.2%, rising from 22.4% in 2013.

FiOS continued to be the shining star in the wireline segment, with FiOS revenues rising 11.6% YoY to $3.08 billion, and accounting for around 77% of all consumer revenues. During 4Q, Verizon added 145,000 FiOS Internet users, 116,000 FiOS video users, and 59,000 net broadband connections.

comments powered by Disqus