By
Steve Muchoki
December 14th, 2023
Telecom giant Verizon saw a 3.5% revenue in Q4 2022 even as the company struggled with dwindling 5G equipment sales.
Verizon Communications (NYSE: VZ) recently posted its Q4 2022 earnings report, which met adjusted earnings estimates but missed the 2023 earnings outlook. On Tuesday, the American multinational telecoms conglomerate reported $1.19 earnings per adjusted share. This figure, excluding items, represents a 10% year-over-year (YoY) decline.
Verizon also reported Q4 2022 revenue as $35.3 billion, marking a 3.5% rise from the $34.1 billion revenue the company realized a year earlier. Verizon’s stock also shot up amid expectations that more aggressive wireless promotions would impact its profit for this year. Such aggressive promotions primarily include smartphone subsidies.
Verizon Q4 2022 Outing Impacted by Consumer Wireless Constraints
Verizon’s financial report for the period that ended December 31st came amid consumer wireless struggles. The boom in wireless customer growth due to the pandemic has tapered out as inflation bites hard. In addition, Verizon has also been carrying out heavy investments in 5G technology amid rising global costs and waning equipment sales. The telecoms giant was once an industry pioneer in postpaid customers but lost subscribers in 2022 to its fast-growing rivals. Other telecommunication mainstays such as AT&T Inc (NYSE: T) and T-Mobile (NASDAQ: TMUS) offered customers more affordable or better 5G services.
The subscriber loss also hammered Verizon stock, with investors and analysts doubtful about a return to growth amid tight competition. The company’s stock rose 2% to close at 40.42 after initially falling on the earnings release. At the time of the release, VZ was up 1.63% year-to-date (YTD).
For the fourth quarter of last year, Verizon added 217,000 postpaid wireless phone subscribers compared to analysts’ estimates of 201,000. These consensus estimates also included consumer and business subscribers and were less than half the 558,000 customers the company onboarded last year. For Q4 2022, Verizon added 41,000 consumer subscribers following a massive loss of 89,000 consumer lines in the preceding quarter.
Earnings per Share Guidance
Verizon gave adjusted earnings per share guidance of $4.70 for 2023 but did not provide a total revenue outlook. However, the telecoms company forecasted wireless revenue growth of 3.5% compared to the consensus estimate of 2.5%. Furthermore, Verizon also expects adjusted profit of between $4.55 a share and $4.85 a share this year. Meanwhile, Verizon stock analysts had their 2023 earnings per share estimates at $4.96, with a 1.2% increase in revenue.
Weighing in on the Verizon guidance development, Goldman Sachs analyst Brett Feldman explained:
“For context, VZ’s guidance implies that adjusted EPS will decline to levels last reported in 2018 ($4.71).”
Verizon stock is at a 20% drawdown since Hans Vestberg assumed the chief executive role in August 2018. Vestberg also recently warned that the New York-based telecoms company would move away from promotions. The projected shift is because the “current promotion incentives are not sustainable for the industry in the long run.”
Ericsson Q4 2022 Report
In other related news, Swedish multinational telecoms company Ericsson recently released its fourth-quarter earnings report. Just like Verizon, Ericsson’s quarterly revenue took a hit due to waning 5G equipment sales.