7 Things To Know About Verizon Q1 Earnings

Verizon posts gains in wireless, but losses in wireline and disappointing revenues for Enterprise and Partner Solutions. The carrier took to its Q1 2019 earnings call to talk about its focus on 5G and the results of its "Voluntary Separation Program" so far.

Wireless Growth, Wireline Declines

Verizon released its Q1 2019 earnings on Tuesday that were, on its face, solid. Its overall revenue for Q1 2019 was up slightly year-over-year, and wireless revenues were also on the incline. The carrier told investors on Tuesday morning that Verizon is heads-down focused on building out its 5G network. “Our ambition remains unchanged to provide the most advanced next-generation networks in the world,” Verizon CEO Hans Vestburg said.

Wireline sales, which include Verizon Enterprise Solutions and Verizon Business Markets, however, declined by nearly 4 and nearly 5 percent, respectively. Partner Solutions felt the fallout the hardest with a decline of nearly 13 percent during the quarter. Verizon also addressed its "Voluntary Separation Program," an initiative that the carrier said would cut costs by $10 billion by 2021.

From strengths in 5G and wireless, to slumps in wireline and enterprise solutions, here are seven things that solution providers should take away from Verizon's first quarter, which ended March. 31, 2019.

5G Futures

Verizon's Vestburg said that the company is leading in the 5G arena with the launch of its 5G Ultra Wide Band mobility network.

The carrier's residential offering, 5G Home, is live in select parts of four cities, including Houston, Indianapolis, Los Angeles and Sacramento, Calif. Verizon earlier this month said that it turned on its 5G internet service in Chicago and Minneapolis.

Wireline, Business Services On The Decline

Verizon's Wireline Division declined 3.9 percent to $7.26 billion during the first quarter of 2019 from $7.56 billion in the year-ago period. Verizon Enterprise Solutions dropped about 4.5 percent to $2.14 billion in revenue, compared to $2.24 billion in the year-ago quarter.

Partner Solutions revenue took a hit for the second quarter in a row, dropping 12.5 percent to $1.08 billion during Q1 2018, down from $1.23 billion in the year-ago period. Revenue for Verizon Business markets also declined 4.9 percent down to $828 million from $871 million one year ago.

Wireless Segment Strength

Total operating revenue for Verizon's Wireless Division increased 3.7 percent in the first-quarter to $22.70 billion, up from $21.90 billion a year ago. Wireless services grew 4.4 percent to $16.07 billion compared to $15.40 billion. Wireless equipment revenues, on the other hand, declined 2.2 percent to $4.93 billion, down from $5.04 billion in the same year-ago period.

Mixed Subscriber Results Anchored By IoT

Verizon said it added a net 61,000 retail postpaid subscribers over the quarterly period, including 174,000 net postpaid smartphone additions. Net phone subscribers, on the other hand, dropped by 44,000 and tablet net losses were 156,000. Verizon said these losses were offset by 261,000 other connected device net additions, which were primarily wearables.

Verizon also added 52,000 Fios Internet connections but lost a net 53,000 Fios Video connections.

‘Voluntary Separation’ Results So Far

Verizon in 2018 announced a plan to trim $10 billion in costs by 2021, which Vestburg referred to as "Verizon 2.0." The carrier said that so far, the initiative has yielded $3 billion of cumulative cash savings. By the end of its first quarter this year, Verizon said it completed the first two phases of its "Voluntary Separation Program," which included early-retirement buyouts to thousands of employees and realized approximately $180 million of expense savings.

Verizon Media Continues To Struggle

The Verizon Media division, which includes its AOL and Yahoo assets, continued to struggle during Q1 2019. Verizon Media reported revenue of $1.8 billion, which was down 7.2 percent year-over-year. The carrier blamed the decline on falling desktop ad revenue.

Verizon Media in January informed its staff that 7 percent of its global workforce across the organization -- about 800 positions -- well as certain brands and products, will be eliminated.

Overall Revenue And Net Income Gains

Overall, Verizon reported stronger-then-expected financial results for the first quarter. The carrier posted operating revenue of $32.13 billion in the quarter, up about 1 percent from $31.77 billion in the first quarter of 2018.

Verizon's net income for the quarter was $5.16 billion, up 10.6 percent from $4.66 billion during the same period last year. The carrier reported diluted earnings per share of $1.22 compared to diluted earnings per share of $1.11 during first quarter of 2018.