Why did profit beat market expectations?

  • In the third quarter of 2026, Verizon reported adjusted EBITDA of 13.8 billion dollars, in line with Goldman Sachs’ estimate and above the market consensus of 13.7 billion dollars. Adjusted earnings per share were 1.31 dollars, also above the consensus of 1.27 dollars.
  • Margins were boosted by reduced device subsidies. Goldman Sachs measured the subsidy gap as wireless equipment revenue minus equipment costs; it was 707 million dollars, below 864 million dollars a year earlier and 835 million dollars in the previous quarter.
  • Revenue was weaker: quarterly operating revenue was 34.3 billion dollars, below the market consensus of 34.8 billion dollars. Mobility and broadband service revenue was 23.49 billion dollars, also slightly below the consensus of 23.55 billion dollars.

Strong subscriber growth: at what cost?

  • Third-quarter postpaid phone net additions were 406 thousand, above Goldman Sachs’ estimate of 221 thousand and the market consensus of 209 thousand. Postpaid account net additions were 137 thousand, returning to growth and also exceeding both estimates.
  • Average revenue per wireless retail postpaid account was 168.08 dollars, down 1.9% year over year and below the 172.15 dollars and 170.73 dollars expected by Goldman Sachs and the market, respectively. Goldman Sachs believes declining revenue per account continues to help the company attract new customers.
  • Broadband growth did not beat expectations across the board: FiOS internet net additions were 155 thousand, above Goldman Sachs’ estimate but below market consensus. Fixed wireless net additions were 159 thousand, below Goldman Sachs’ estimate of 170 thousand and consensus of 201 thousand.

How much was full-year guidance raised?

  • Verizon raised its 2026 postpaid phone net additions guidance to 1.1 million–1.2 million, from the upper half of the previous range of 750 thousand–1 million. Goldman Sachs noted that the upper end of the new guidance was raised by 200 thousand, the same amount by which actual third-quarter net additions exceeded its estimate.
  • The company raised its full-year adjusted earnings per share guidance from 4.99–5.04 dollars to 5.04–5.06 dollars. Free cash flow is expected to be close to 22.54 billion dollars, compared with the previous range of 21.937 billion–22.139 billion dollars. Third-quarter free cash flow was 7.8 billion dollars, above the market consensus of 6.2 billion dollars.
  • Full-year mobility and broadband service revenue growth guidance was narrowed from 2.5%–3.0% to the upper half of that range. Fourth-quarter year-over-year growth is still expected to be about 4.0%, above the third quarter’s 2.9%. Capital expenditure guidance remained at 16 billion–16.5 billion dollars.
  • Goldman Sachs also noted that the company’s latest press release did not reiterate its expectation that wireless service revenue would be flat year over year in 2026; the company had reiterated that expectation in the second quarter.

How should AI connectivity orders and valuation be assessed?

  • Verizon signed an agreement worth more than 2 billion dollars with Amazon Web Services to provide high-capacity fiber connectivity for AI workloads. The company had previously signed a related agreement worth more than 1 billion dollars with Google in the second quarter.
  • Goldman Sachs expects the EBITDA and postpaid phone net additions beats, together with improved full-year guidance, to drive the share price higher. The firm has a Buy rating and a 12-month price target of 51 dollars, based on a forward EV/EBITDA multiple of 6.5.