Shares of Verizon Communications Inc. (VZ) fell 3.15% to $43.25 despite stronger quarterly revenue and another increase in the company's full-year guidance. The stock lost $1.41 during the session as selling erased early gains and pushed trading toward session lows. The decline came even as Verizon reported third-quarter 2026 revenue of $34.3 billion, alongside its strongest postpaid phone customer growth in five years.

Postpaid and Broadband Growth Reach Multi-Year Highs

Verizon added 406,000 postpaid phone customers during the quarter, an increase of more than 820% from the year-earlier period — a percentage that reflects a comparatively small base in the year-ago quarter — and its best third-quarter performance in five years. The company also added 137,000 postpaid accounts, its strongest quarterly result in more than a decade. Subscriber counts and churn are the metrics carriers and market watchers track most closely, because monthly service billing — the core recurring revenue of the wireless business — depends on keeping and adding customers in a market where carriers compete for the same pool of switchers.

Postpaid phone churn improved four basis points to 0.94%, while consumer churn came in at 0.87%. Churn, which measures the rate at which customers leave a carrier, is a key retention indicator in the competitive U.S. wireless market. Promotional acquisition costs fell 41%, reflecting reduced spending on customer incentives.

Broadband net additions totaled 314,000, including 159,000 fixed wireless customers and 155,000 fiber subscribers. Fixed wireless access, which delivers home internet service over mobile network capacity, has become an increasingly important growth engine for U.S. carriers. Verizon ended the quarter with 17.4 million broadband connections and maintained its fiber expansion targets. These additions supported service growth, although the shares remained under pressure throughout the session.

Revenue, Earnings and Cash Flow All Higher

Total operating revenue rose 1.5% year over year to $34.3 billion, supported by expanding mobility and broadband services. Service revenue climbed 2.9% to $23.5 billion, while equipment revenue declined 9% as fewer customers upgraded devices. Equipment revenue often fluctuates with the timing of device upgrade cycles.

Quarterly net income increased 5.2% to $5.3 billion. Adjusted EBITDA rose 8% to $13.8 billion, setting a company record, with the adjusted EBITDA margin improving to 40.2%. Adjusted earnings per share climbed 8.3% to $1.31, compared with reported earnings per share of $1.25. Adjusted figures strip out items a company treats as outside its core operations, and Verizon frames its full-year earnings outlook on this adjusted basis.

Operating cash flow reached $11.5 billion, and free cash flow increased 12.1% to $7.8 billion. Over the first nine months of the year, Verizon generated $18 billion in free cash flow and returned $12.8 billion to shareholders. The company also reduced net unsecured debt to $123.7 billion, a balance-sheet measure closely followed at capital-intensive telecommunications operators.

Third Consecutive Guidance Raise and $2 Billion AWS Agreement

Verizon raised its annual postpaid phone net additions forecast to a range of 1.1 million to 1.2 million. It also lifted adjusted earnings guidance to $5.04–$5.06 per share for the full year 2026, marking the third consecutive quarterly guidance increase even as the stock traded lower.

The company now expects annual free cash flow growth approaching 12%, up from its previous forecast of 9%–10%. It also projects operating cash flow growth of 3.5%–5% and maintained its capital spending plans of $16–$16.5 billion. Capital expenditures fund network maintenance and expansion, including the company's ongoing fiber build-out. Together, the updated targets — subscriber additions, adjusted earnings, cash flow and capital spending — provide concrete markers against which Verizon's remaining 2026 results can be assessed.

Separately, Verizon signed an agreement with Amazon Web Services (AWS) valued at more than $2 billion to support distributed computing for advanced AI workloads. The framework leverages Verizon's network infrastructure to help meet growing business computing demands. The deal reflects a broader pattern of telecommunications providers partnering with cloud companies to supply computing capacity for AI workloads.

Shares finished the session lower despite the AWS agreement and the company's stronger financial targets.

Source: Blockonomi