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Verizon Q1 Results: Hits $1.95 Billion in Revenue, Smartphones Account for 61% of Postpaid Customers

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This morning, Verizon’s Q1 results are in, showing good growth in the wireless sector. To kick it off, Big Red showed a 68 cent EPS (earnings per share) growth, a very nice 15.3% increase over last year’s first quarter. In total operating revenue, Verizon posted a 4.2% year-over-year increase up $1.6 billion.

Smartphones have been a big part of Verizon’s success, as they now account for 61% of Verizon’s postpaid customer base, up from the previous quarter’s 58%. Verizon also touched on their 4G LTE network, stating that the service is live in 491 markets, covering a total of 287 million people.

To catch the full Q1 report, check below. 

Verizon Posts Strong Earnings Growth in 1Q 2013

Verizon Wireless Expands Margins; Continued Strong Customer and Revenue Gains Reported for Wireless, FiOS and Global Enterprise Strategic Services

1Q 2013 HIGHLIGHTS

Consolidated Earnings

  • 68 cents in earnings per share (EPS), a 15.3 percent increase compared with 59 cents per share in 1Q 2012.
  • 4.2 percent year-over-year increase in total operating revenues; cash flow from operating activities up $1.6 billion, or 26.4 percent, from 1Q 2012.

Wireless

  • 8.6 percent year-over-year increase in both service revenues and retail service revenues in 1Q 2013; 32.9 percent operating income margin and 50.4 percent segment EBITDA margin on service revenues (non-GAAP), both record highs.
  • 677,000 retail postpaid net additions, up 35 percent year over year; low retail postpaid churn of 1.01 percent; 98.9 million total retail connections, 93.2 million total retail postpaid connections.
  • 4G LTE service now available to 287 million people in 491 markets across the U.S.

Wireline

  • 188,000 FiOS Internet and 169,000 FiOS Video net additions, with continued increased sales penetration for both services; FiOS revenues up 15.1 percent year over year, to $2.6 billion.
  • 4.3 percent year-over-year increase in consumer revenues; consumer ARPU up 9.5 percent year over year, to $107.15.
  • 6.0 percent year-over-year increase in revenues for global enterprise strategic services.

NEW YORK – Verizon Communications Inc. (NYSE, Nasdaq: VZ) today reported strong first-quarter 2013 earnings growth, driven by record margins at Verizon Wireless and continued strong cash flow and year-over-year revenue increases for wireless, FiOS and strategic enterprise services.

Verizon reported 68 cents in EPS in first-quarter 2013, a 15.3 percent increase compared with first-quarter 2012 earnings of 59 cents per share. There were no adjustments in either quarter.

“Verizon is off to an excellent start in 2013,” said Lowell McAdam, Verizon chairman and CEO. “Our strategic investments in wireless, wireline and global networks have given us the platforms to sustain momentum and take advantage of growth opportunities in key markets for broadband, video and cloud services. With ongoing improvements in operating efficiency, we expect continued growth in free cash flow and earnings as we move through the year.”

Strong Cash Flow and Consolidated Revenue Growth

In first-quarter 2013, Verizon’s consolidated results were highlighted by continued strong cash flow and revenue growth.

Consolidated Highlights 

Total operating revenues in first-quarter 2013 were $29.4 billion, a 4.2 percent increase compared with first-quarter 2012.
Operating income grew 19.8 percent, to $6.2 billion in first-quarter 2013, compared with $5.2 billion in first-quarter 2012. Operating income margin was 21.1 percent in first-quarter 2013, compared with 18.4 percent in first-quarter 2012.

Consolidated EBITDA (non-GAAP, earnings before interest, taxes, depreciation and amortization) grew 12.1 percent year over year, totaling $10.3 billion in first-quarter 2013. EBITDA margin (non-GAAP) expanded to 35.1 percent in first-quarter 2013, up 240 basis points year over year.

Cash flow from operating activities grew $1.6 billion, or 26.4 percent, compared with first-quarter 2012. Capital expenditures in first-quarter 2013 were $3.6 billion, flat year over year. Free cash flow (non-GAAP, cash flow from operations less capex) in first-quarter 2013 increased $1.5 billion, or 64.3 percent, compared with first-quarter 2012.

Verizon Wireless Delivers Record Profitability, Strong Customer and Revenue Growth

In first-quarter 2013, Verizon Wireless delivered strong growth in retail postpaid net additions and revenues; an increase in smartphone penetration; and the highest segment EBITDA margin on service revenues (non-GAAP) in the company’s history — surpassing the previous high in third-quarter 2012.

Wireless Financial Highlights

Total revenues were $19.5 billion in first-quarter 2013, up 6.8 percent year over year. Service revenues in the quarter totaled $16.7 billion, up 8.6 percent year over year. Retail service revenues also grew 8.6 percent year over year, to $16.2 billion.

Retail postpaid ARPA (average revenue per account) increased 6.9 percent over first-quarter 2012, to $150.27 per month. As customers continue to add multiple devices to accounts following the introduction of the Share Everything Plan last June, Verizon Wireless has been reporting ARPA instead of ARPU (average revenue per user) on a postpaid basis since customers can share data among multiple devices.

In first-quarter 2013, wireless operating income margin was 32.9 percent and segment EBITDA margin on service revenues was 50.4 percent, setting record-highs.

Wireless Operational Highlights 

Verizon Wireless added 677,000 retail postpaid net connections, out of a total 720,000 net retail connections, in the first quarter. These additions exclude acquisitions and adjustments. Last year, net additions for retail postpaid connections increased sequentially each quarter, and Verizon expects a similar pattern of accelerating customer growth in 2013.

At the end of the first quarter, the company had 98.9 million retail connections, a 6.4 percent increase year over year — including 93.2 million retail postpaid connections.
Verizon Wireless had 34.9 million retail postpaid accounts at the end of the first quarter, a 1.1 percent increase over first-quarter 2012, and an average of 2.7 connections per account, up 5.1 percent year over year.

At the end of the first quarter, smartphones accounted for more than 61 percent of the Verizon Wireless retail postpaid customer phone base, up from 58 percent at the end of fourth-quarter 2012.

Retail postpaid churn was 1.01 percent in the first quarter, up 5 basis points year over year. Retail churn was 1.30 percent in the first quarter, up 6 basis points year over year.

Verizon Wireless continued to roll out its 4G LTE mobile broadband network, the largest 4G LTE network in the U.S. As of today (April 18), Verizon Wireless 4G LTE service is available to 287 million people in 491 markets across the U.S., covering more than 95 percent of Verizon’s current 3G network footprint.

The company continued to enhance its 4G LTE device lineup with smartphones, tablets and other devices. In the first quarter, Verizon Wireless launched the Samsung ATIV Odyssey, the BlackBerry Z10, the Samsung Galaxy Note 10.1 tablet, the Verizon 4G LTE USB Modem UML295 by Pantech, and the Verizon Jetpack 4G LTE Mobile Hotspot MiFi 5510L by Novatel Wireless. Earlier this month, the company launched the Lucid 2 by LG and the Verizon 4G LTE Router, an Internet solution that connects both wired and Wi-Fi-enabled devices.

Wireline Reports Continued Strong FiOS Customer and Revenue Growth

Verizon’s Wireline segment reported continued strong FiOS customer, market share and revenue growth in first-quarter 2013, leading to overall growth in consumer revenues. In enterprise and wholesale, increased sales of global enterprise strategic services continued to help mitigate lower revenues resulting from secular and global economic impacts.

Wireline Financial Highlights

Consumer revenues were $3.6 billion, an increase of 4.3 percent compared with first-quarter 2012. Consumer ARPU for wireline services increased to $107.15 in first-quarter 2013, up 9.5 percent compared with first-quarter 2012.
FiOS revenues grew 15.1 percent, to $2.6 billion in first-quarter 2013 compared with $2.3 billion in first-quarter 2012. ARPU for FiOS customers continued to be more than $150 in first-quarter 2013.
Sales of strategic services to global enterprise customers increased 6.0 percent compared with first-quarter 2012 and represented 55.6 percent of total enterprise revenues. Strategic services include Verizon Terremark cloud and data center services, security and IT solutions, advanced communications, and strategic networking.

Wireline Operational Highlights

Verizon added 188,000 net new FiOS Internet connections in first-quarter 2013, marking the third consecutive quarter of sequential growth in net customer additions. The company also added 169,000 net new FiOS Video connections in the quarter. Verizon had a total of 5.6 million FiOS Internet and 4.9 million FiOS Video connections at the end of the quarter, representing year-over-year increases of 12.0 percent and 12.5 percent, respectively.

FiOS penetration (subscribers as a percentage of potential subscribers) continued to increase. FiOS Internet penetration was 38.2 percent at the end of first-quarter 2013, compared with 36.4 percent at the end of first-quarter 2012. In the same periods, FiOS Video penetration was 34.1 percent, compared with 32.3 percent. The FiOS network passed 17.8 million premises by the end of first-quarter 2013.

Broadband connections totaled 8.9 million at the end of first-quarter 2013, a 1.4 percent year-over-year increase. Overall, net broadband customers increased 99,000 in the first quarter, as FiOS Internet net customer additions more than offset fewer subscribers for DSL-based High Speed Internet services.

Verizon has been replacing high-maintenance portions of its residential copper network with fiber optics to provide enhanced services and to reduce ongoing repair costs. In first-quarter 2013, Verizon migrated 83,000 homes to fiber, toward a target of 300,000 migrations within FiOS markets in 2013.

Verizon Enterprise Solutions completed agreements with and began deploying innovative business technology solutions for a variety of corporations and organizations in the quarter, including the Commonwealth of Pennsylvania, Ocean Exploration Trust, Quest Diagnostics and Synchronoss Technologies (Nasdaq: SNCR).

  • Patrick T

    Verizon needs to start sending out thank you cards.

  • Pedro

    I’ve already taken my 3 lines elsewhere.
    Final ETF was paid yesterday.

  • http://twitter.com/armus75 Armus

    They make that much money and want to complain about unlimited data plans. Bitch please…

    • Keith Black

      It’s not about profits, it’s about bandwidth. There is not an unlimited amount of bandwidth. 2 years ago, only 5% of Verizon’s customers were tying up >40% of the network’s available bandwidth when the majority of the network was still 3G. And the faster the speeds, more bandwidth is taken up. So it comes down to quality control, allowing all users to have a consistent experience. The majority of customers do not and will not understand this.

      • http://twitter.com/armus75 Armus

        you cannot offer 4g phones with faster processors for cheap and not expect people to use them. With this much of a profit, I would expect greater infrastructure development to handle the traffic. It is entirely possible today to buy a phone with a 2gb monthly limit and blow that limit before you even leave the store. What good is a service that can’t be used! If actual bw is the issue, then petition the FCC for more. They have no right to post profits like that while conducting a major campaign to stop people using their network because it can’t handle the usage.

        • Keith Black

          I totally understand your viewpoint and logic, but it’s not really that simple at all. That’s why I said the majority will never understand certain policies and decisions some companies make. The infrastructure is, in fact, being built up right now. It is not complete. LTE has massive potential, but its development and buildout is incredibly expensive and time consuming. Cheaper to maintain than our 3G network, yes, but difficult and expensive to implement initially.

          In regards to your statement about 2gb being used so quickly, that’s why there are higher tier options. You can use higher quantities, for which you will pay a premium. I don’t expect you to like any of this, and I can totally identify with that, but anyone of reasonable intelligence should be able to comprehend the “why” behind it.

          • http://twitter.com/armus75 Armus

            This isn’t like you having to share two cookies with your brother because there are only two cookies available. Mama knew when she had your brother that he’d want a cookie too. Now everyone has to suffer for mama’s poor planning, except mama who just posted one hell of a profit.

            VZw shouldn’t be reducing service to all just because there are more people. (T-Mo of course is increasing service because it’s losing people) in a short-term that may be acceptable – growing too fast to keep up – but you know as I do that these reductions are permanent. Unlimited data will never return because it’s more profitable and people have accepted it. I ask you to look at data in a real world sense. Computers handle terabytes of information with ease. A few gigabytes is nothing today and even less so tomorrow. There is no excuse for vzw plans being so restrictive. (They were after all based on a survey of data needs done more than 7 years ago when everyone had 3g)

            Rest assured that vzw will have competition one day and may even lose it’s edge because of its greed.

  • Doug Wing

    Considering how many Droid Life-ers are “dropping Verizon” it looks like a lot more people are dropping other carriers and coming to Verizon. Perhaps they are willing to pay more to get rid of dropped calls and dead data spots even in Chicago.

    677,000 retail postpaid net additions, up 35 percent year over year;
    low retail postpaid churn of 1.01 percent;
    98.9 million total retail connections, 93.2 million total retail postpaid connections.

  • droidftw

    Revenue and and cash flow are two different things. Their were 29.4 billion and on that 29.4 they added another 1.6 billion in cash to their coffers.

  • Ihatenexus

    Seems to be a lot of people holding their ankles!

    • http://twitter.com/Milleniumlance LANCE

      i just hope they use lube

  • Austin Warren

    What was their profit?

  • ceejw

    I wish Verizon would break down which phone models are making up the majority of the 3.2 million Android phones they sold.

  • http://twitter.com/veugene veugene

    Was curious how much they charge us in average per month.

    “Total revenues were $19.5 billion in first-quarter 2013…”

    “…98.9 million total retail connections…”

    So, they charge us about $66 per line.

    • Bionic

      that seems way to low considering I ge a discount and even with that for me and my wife its 166

      • Frank Urbanski

        You still have to remember that there are regular (no-data) phones, hotspots, etc.

        • Bionic

          yeah i suppose thats true

        • EC8CH

          The rounding of billions of dollars and millions of lines also probably makes the resolution of the cost per individual line quite low.

  • http://twitter.com/ITGuy11 Shawn Villaire

    Google needs to buy verizon…

    • Austin Warren

      They can’t afford it.

    • http://twitter.com/Milleniumlance LANCE

      i wish, lower bill by a 1/3 and have fiber for home internet ….sigh one can dream

  • Bionic

    X phone

    • pappy53

      Bring it on! Quit telling me about the pain, show me the baby!

      • Bionic

        4 weeks

  • Lonepalm

    Well, they’re about to drop 0.001% of that earnings when I leave them. I can’t stand their blatant disregard for their customers. I’m tired of being a sheep and not having a voice. I know that me leaving them isn’t going to change a thing, other than add a little happiness back into my life.

    • mustbepbs

      Wow, you pay 1.6 million dollars a year to Verizon?

      You gotta watch your data usage, man.

      • LiterofCola

        I lol’d

      • http://twitter.com/LiveInTheDream Jem

        Ahhhh that is absolutely hilarious.

      • Richard

        Notice how he has the % sign after the 0.001 dropping the number down to a little under 20,000 dollars. Still a ridiculous number, but not totally implausible knowing how expensive Verizon is :p

        • Richard

          Oops, I was misled by the title which stated “1.95 billion in revenue”. I knew the figure was too low for a mega corporation like Verizon.

        • michael arazan

          There is a slight possibility that he is an employer who provides cell phones to his employees.

    • Bionic

      math fail

    • LiterofCola

      If a wireless carrier takes a “little happiness” away from your life, then it’s time to reevaluate your emotional health :/

      • cortesjues

        when i lose $20 dollar i feel annoyed, im sure people paying $300+ probably get a little unhappy too

      • michael arazan

        BiG Worm– “Playing with my money is like playing with my emotions”

        Movie Friday

    • Lonepalm

      Ok, since I’m positive everyone below my original post knows that I just threw a ridiculous number in here, I’m not even going to say that I didn’t actually do the math, I was using that number for effect….oh, well, guess I just said it! And as far as my emotional health, it’s quite great actually…I don’t know about you, but I have to work for my money, so if I can get rid of something that I feel is a money pit and not worth me paying my hard earned dollars for, it makes me quite happy. Going to a cheaper carrier for the same service is fine with me. I don’t need to have THE fastest….I’ll take unlimited minutes and slightly slower data speeds for a lot less money any day of the week. Hell, most of my data usage is *gasp* on a computer!

      • Keith Black

        Well then your personal usage of your cell phone is that of the minority, not the majority. Just because you don’t need a car that goes 180mph does not make Ferrari a bad company, it just means that you don’t need one of their cars and cannot justify the cost of one according to your needs. So why bash them?

  • Deeter

    (insert comment about how Verizon screws everyone over here)

  • pappy53

    And sold 4 million iPhones. 55% of all activated phones. Apple is not dead, it seems.:(

    • cancerous_it

      I don’t get the Chevy vs Ford mentality. I hate IOS as much as the next person on here, but IOS works for a large segment of the population: chics, teenagers, old folks and the intellectually lazy. I’m glad those people use IOS; otherwise, if they were on Android, Google would have to really dumb down Android.

      Let them stay with IOS. Let others of us enjoy the freedom and power of Android.

      • http://twitter.com/Milleniumlance LANCE

        intellectually lazy..thank you….i was looking for the right term.

      • LiterofCola

        Hahah, when you put it that way, it doesn’t seem so bad anymore.