Verizon revenues drop 4.1% in Q3 2020

Total consolidated operating revenues in third-quarter 2020 were $31.5 billion, down 4.1 percent from third-quarter 2019. This decline was due to lower customer activity and the timing of certain device launches.

Year-to-date cash flow from operations totaled $32.5 billion, an increase of $5.7 billion year over year. This growth was a result of the continued performance and strength of the business, a non-recurring tax item in second-quarter 2020, improvements in working capital primarily due to lower volumes, and payments related to the Voluntary Separation Plan in full-year 2019 that did not repeat this year.

Year-to-date capital expenditures were $14.2 billion. Capital expenditures continue to support the growth in traffic on the company's 4G LTE network, the launch and continued build-out of the company's 5G Ultra Wideband and nationwide networks, the upgrade to its Intelligent Edge Network architecture, and the deployment of significant fiber in more than 60 markets.

In 2018, Verizon announced a goal to achieve $10 billion in cumulative cash savings by the end of 2021. This initiative has yielded $8.3 billion of cumulative cash savings since the program began and is on track to achieve its target. The company expects to continue its focus on operational efficiencies after the current target is achieved to identify additional long-term transformation initiatives and deliver the related cost savings.

Total Verizon Consumer revenues were $21.7 billion, a decrease of 4.3 percent year over year, primarily driven by a significant decrease in wireless equipment revenue due to reduced customer activity.

Throughout third-quarter 2020, Verizon gradually reopened all of its company-operated retail stores, implementing practices to reinforce social distancing such as touch-less retail, appointment scheduling, and curbside pickup. In third-quarter 2020, Consumer reported 136,000 wireless retail postpaid net additions. This consisted of 142,000 phone net additions and 113,000 tablet net losses, offset by 107,000 other connected device net additions. Postpaid smartphone net additions were 258,000.

Consumer wireless service revenues were $13.4 billion in third-quarter 2020, a 0.7 percent decrease year over year.

Total retail postpaid churn was 0.80 percent in third-quarter 2020, and retail postpaid phone churn was 0.63 percent.

Consumer reported 139,000 Fios Internet net additions in third-quarter 2020, an increase from 30,000 Fios Internet net additions in third-quarter 2019. Consumer and Business reported 144,000 total Fios Internet net additions, the most Fios Internet net additions since fourth-quarter 2014. Consumer reported 61,000 Fios Video net losses in third-quarter 2020, reflecting the ongoing shift from traditional linear video to over-the-top offerings.

In third-quarter 2020, segment operating income was $7.4 billion, a decrease of 0.7 percent year over year, and segment operating income margin was 34.2 percent, an increase from 33.0 percent in third-quarter 2019. Segment EBITDA (non-GAAP) totaled $10.3 billion in third-quarter 2020, flat year over year. Segment EBITDA margin (non-GAAP) was 47.4 percent in third-quarter 2020, up from 45.3 percent in third-quarter 2019, and included approximately 60 basis points of headwind from the deferral of commission expense.

Total Verizon Business revenues were $7.7 billion, down 1.7 percent year over year. The Business segment continues to be resilient through a challenging environment as the company provides critical solutions to customers across state and local government agencies and education providers.

Business reported 417,000 wireless retail postpaid net additions in third-quarter 2020. This consisted of 141,000 phone net additions, 86,000 tablet net additions, and 190,000 other connected device additions.

Business wireless service revenues were $3.0 billion in third-quarter 2020, a 4.9 percent increase year over year, primarily driven by Public Sector and Small and Medium Business.

The company now expects adjusted EPS growth (non-GAAP) of 0 to 2 percent, an update from prior guidance for 2020 adjusted EPS growth (non-GAAP) of -2 to 2 percent. This update includes the previously discussed accounting headwinds, impacts from COVID-19, and new device launches in fourth-quarter 2020.

The company now expects total wireless service revenue growth of at least 2 percent in fourth-quarter 2020 compared to last year. Verizon expects the following results for full-year 2020:

Capital spending to now be at the higher end of the guided range of $17.5 billion to $18.5 billion.