Original source：J.P. MorganFirst published on Unhidea：Original source date：
Key takeaway
Verizon’s third-quarter subscriber growth, profit and cash flow exceeded JPMorgan’s expectations, but lower-than-expected service revenue, declining revenue per account and a slowdown in fixed wireless broadband continue to put pressure on the quality of growth.
Why did phone subscriber growth exceed expectations?
In the third quarter of 2026, Verizon added a net 406 thousand postpaid phone subscribers, above JPMorgan’s forecast of 220 thousand. New account openings rose 10% year over year, compared with the bank’s previous forecast of 2% growth.
Postpaid phone churn was 0.94%, an improvement of 4 basis points year over year, but above the bank’s forecast of 0.92%; retail postpaid accounts increased by a net 137 thousand, also exceeding its forecast of 75 thousand.
As subscriber numbers increased, restated postpaid average revenue per account was 168.08 dollars, down 1.9% year over year, a steeper decline than the 1.7% fall in the second quarter. Ahead of the earnings call, JPMorgan was focused on the reasons for this change and whether growth could resume in the fourth quarter.
Where were service revenue and broadband growth weak?
Third-quarter mobility and broadband service revenue was 23.49 billion dollars, up 2.9% year over year but below JPMorgan’s forecast of 23.58 billion dollars. Consumer revenue was 19.78 billion dollars, up 3.6% year over year and broadly in line with expectations; business revenue was 3.71 billion dollars, down 0.8% year over year and below the bank’s forecast.
Total broadband net additions were 314 thousand, below the bank’s forecast of 360 thousand, with the shortfall mainly coming from fixed wireless access (FWA). FWA net additions were 159 thousand, below the expected 200 thousand and also below 193 thousand in the second quarter and 261 thousand a year earlier; fiber net additions were 155 thousand, unchanged from the second quarter.
Why were profit and cash flow stronger despite revenue missing expectations?
Consolidated revenue was 34.31 billion dollars, below JPMorgan’s forecast of 34.92 billion dollars; however, adjusted EBITDA was 13.8 billion dollars, above the forecast of 13.74 billion dollars. The EBITDA margin was 40.2%, above the bank’s forecast of 39.4%. Adjusted earnings per share were 1.31 dollars, also above the forecast of 1.29 dollars.
Free cash flow was 7.8 billion dollars, above the bank’s forecast of 6.54 billion dollars, helped in part by lower-than-expected capital expenditure: actual spending was 3.72 billion dollars, compared with a forecast of 4.15 billion dollars.
How much was full-year guidance raised?
The company raised its 2026 guidance for retail postpaid phone net additions to 1.1 million–1.2 million, from the upper half of the previous range of 750 thousand–1 million; JPMorgan had previously forecast net additions of 999 thousand.
Adjusted earnings per share growth guidance was raised from 6%–7% to 7%–7.5%, equivalent to approximately 5.04–5.06 dollars. Free cash flow growth is expected to be close to 12%, compared with the previous range of 9%–10%; full-year capital expenditure guidance remains at 16 billion–16.5 billion dollars.
The company expects full-year mobility and broadband service revenue growth to fall in the upper half of the 2.5%–3.0% range; JPMorgan had previously forecast 3.0%. The bank rates Verizon neutral.
