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7,600 | V | 1 | 2,025 | 2025-01-30 17:00:00 | Visa Inc. | 38,043,467 | Operator: Welcome to Visa's Fiscal First Quarter 2025 Earnings Conference Call. All participants are in a listen-only mode until the question-and-answer session. Today's conference is being recorded. If you have any objections, you may disconnect at this time. I would now like to turn the conference over to your host, Ms. Jennifer Como, Senior Vice President and Global Head of Investor Relations. Ms. Como, you may begin.
Jennifer Como: Thank you. Good afternoon, everyone, and welcome to Visa's fiscal first quarter 2025 earnings call. Joining us today are Ryan McInerney, Visa's Chief Executive Officer, and Chris Suh, Visa's Chief Financial Officer. This call is being webcast on the Investor Relations section of our website at investor.visa.com. A replay will be archived on our site for 30 days. A slide deck containing financial and statistical highlights has been posted on our IR website. Let me also remind you that this presentation includes forward-looking statements. These statements are not guarantees of future performance and our actual results could differ materially as a result of many factors. Additional information concerning those factors is available in our most recent annual report on Form 10-K and any subsequent reports on Forms 10-Q and 8-K, which you can find on the SEC's website and the Investor Relations section of our website. Our comments today regarding our financial results will reflect revenue on a GAAP basis and all other results on a non-GAAP nominal basis unless otherwise noted. The related GAAP measures and reconciliation are available in today's earnings release and related materials available on our IR website. And with that, let me turn the call over to Ryan. |
7,601 | V | 1 | 2,025 | 2025-01-30 17:00:00 | Visa Inc. | 38,043,467 | Ryan McInerney: Good afternoon, everyone. Thank you for joining us. Before we begin, I'd like to take a moment to acknowledge last night's tragic air collision in Washington, DC. Our hearts go out to all those affected by this terrible event, particularly the families and friends of the victims. Turning now to our results. We had a strong start to our fiscal year with $9.5 billion in net revenue, up 10% year-over-year, and EPS up 14%. Our key business drivers improved from the fourth quarter. In constant dollars, overall payments volume grew 9% year-over-year, US payments volume grew 7%, and international payments volume grew 11%. Cross-border volume excluding Intra-Europe rose 16% in constant dollars, and processed transactions grew 11% year-over-year. Our strategy across consumer payments, new flows, and value-added services continues to resonate with our clients and is reflected in our business results. Back in February 2020, when we articulated our strategy, our total first quarter volume on our network had just crossed $3 trillion. Just five years later, our total quarterly volume was above $4 trillion. At the same time, CEMEA and Latin America had more volume from people using their cards to get cash than to make payments. Five years later, as a result of double-digit constant dollar payments volume growth in both regions, the situation has flipped and we now have more than 60% of our volume from digital payments. I'm looking forward to our Investor Day next month to discuss our strategy and our plans for future growth. For now, let's look at some of the quarterly highlights that have helped to deliver this impressive progress. In consumer [payments] (ph), we now have 4.7 billion credentials, up 7% year-over-year, and 12.6 billion tokens, up 44% year-over-year. We continue to grow our credentials in an increasingly digital world. Interest in our Visa Flexible Credential continues to grow. We have now launched with the Affirm Card in the US, expanded the funding options with SMCC in Japan by adding small |
7,602 | V | 1 | 2,025 | 2025-01-30 17:00:00 | Visa Inc. | 38,043,467 | to grow. We have now launched with the Affirm Card in the US, expanded the funding options with SMCC in Japan by adding small business cards and announced a multi-currency solution with fintech Liv in the UAE. Tap to Add Card is now live in the US for nearly 60% of all Visa consumer credit and debit cards. Since the launch, millions have added their cards to their wallets by tapping, eliminating the overwhelming majority of provisioning fraud as compared to manual entry into a phone. And 74% of all face-to-face transactions are now Tap to Pay. A few countries I would like to call out: Japan, where Tap to Pay penetration grew 20 percentage points since last year to 44%; Argentina, where Tap to Pay penetration was up 22 percentage points to 78%; and the US, where it was up 13 percentage points to 57%. Several key initiatives contributed to the growth in these countries, including targeted marketing campaigns, the launch of transit acceptance in certain cities, and increased issuance of Tap to Pay-enabled credentials. Finally, Tap to Phone is now live in 118 markets, and in the last year, the number of phones enabled has more than doubled and the number of transactions has more than tripled. Now, let me turn to a few deal highlights from across the globe. First, in Mainland China, we renewed our partnership with ICBC, the largest bank in the world in terms of assets and the biggest credit card issuer in Mainland China in terms of number of cards. In India, we renewed our long-standing credit agreement with ICICI Bank, SBI Card and Kotak Mahindra Bank, three of our largest issuers in the country with a focus on growing affluent and cross-border volume. We also renewed our debit agreement with Kotak Mahindra Bank. Also in our Asia-Pacific region, we signed a long-term renewal with Bank of New Zealand, one of the largest banks in the country across consumer debit, consumer credit and business credit. In Argentina and Uruguay, we renewed our portfolios with Santander for a long-term agreement with a focus on growing |
7,603 | V | 1 | 2,025 | 2025-01-30 17:00:00 | Visa Inc. | 38,043,467 | credit. In Argentina and Uruguay, we renewed our portfolios with Santander for a long-term agreement with a focus on growing affluent. Also in Latin America, we have deepened our partnership with BAC to grow acceptance with a goal to enable 300,000 nano and small merchants and to grow in new verticals. We also won the issuance of their largely cross-border credit portfolio, Millas Plus, offering our expertise and value-added services. Similarly, in Brazil, we extended our partnership with digital bank Neon, which includes the launch of a new credit portfolio. We are also pleased to have renewed a pan-European agreement with BNP Paribas, which also includes the winning of additional portfolios in France and Belgium. When we talk about the total addressable opportunity in consumer payments, we often talk about the opportunity to win share from domestic networks. And we are continuing to have success converting credentials from domestic networks to Visa. In Bangladesh, we secured nearly 6 million credentials with Dutch-Bangla Bank from their closed-loop system. And Banco Popular de Puerto Rico, the largest issuer and acquirer in Puerto Rico, renewed a multi-year credit and debit partnership with Visa that aims to expand digital penetration in the country through the launch of new products, including a co-badge card with a local network. And we've renewed our business with RBC Royal Bank in 10 countries across the Caribbean, and we also expanded our relationship to include the transfer of debit credentials in the Dutch Caribbean to Visa and are supporting the development of new credit and commercial products. And co-brand cards remain a key area of strength for us and this quarter was no exception. In India, we launched two very important cards. First, the Times Black ICICI Bank credit card, catering to high-net-worth individuals with travel and lifestyle benefits. Second, the HSBC Taj credit card, India's first premium co-branded hospitality credit card. In our CEMEA region, we signed with real estate developer, |
7,604 | V | 1 | 2,025 | 2025-01-30 17:00:00 | Visa Inc. | 38,043,467 | card, India's first premium co-branded hospitality credit card. In our CEMEA region, we signed with real estate developer, investor and manager Aldar for a co-brand card for its Darna Rewards by Aldar loyalty program in the UAE with issuing bank Emirates NBD. We also launched a new co-brand card in Saudi Arabia with Alrajhi Bank, and Marriott Bonvoy, the global travel program by Marriott International. In the airline category, we won the portfolio for EGYPTAIR, Africa's second largest airline. We also expanded our business in the SWISS card Miles & More program. And in the retail segment, we signed with Casas Bahia, one of the top retailers in Brazil for co-brand cards, and with Bolt, a leading ride-hailing and food delivery operator in Ukraine. So, through traditional issuance, winning share from domestic networks, and leveraging our brand, products and innovation to secure important co-brands, our consumer payments business is strong. Now to new flows, where revenue grew 19% year-over-year in constant dollars. Visa Direct has now crossed the 10 billion transaction mark over the last 12 months with nearly 3 billion transactions this quarter. We continue to expand Visa Direct in several ways, one of which is building and deepening partnerships directly with issuers and fintechs. We are excited to partner with X Money for their much-anticipated launch of the X Money account, including P2P payment functionality set for later this year. Through the partnership, X Money will utilize Visa Direct to enable secure and instant funding of their X Wallet with a user's debit card. Users will also have the option to instantly transfer funds back into their bank account via the same debit card. This quarter, we signed an agreement with OnePay, a fintech company with more than 3 million monthly active users for Visa Direct as the engine for wallet loads. In Ecuador, Banco Pichincha, one of the country's largest issuers, will begin using Visa Direct for cross-border remittance payments. Our broad and deep cross-border |
7,605 | V | 1 | 2,025 | 2025-01-30 17:00:00 | Visa Inc. | 38,043,467 | country's largest issuers, will begin using Visa Direct for cross-border remittance payments. Our broad and deep cross-border capabilities continue to be important differentiators, and this quarter, Libra Internet Bank in Romania launched a real-time multi-currency FX service for their business customers utilizing our Currencycloud solution. In Asia-Pacific, OCBC has launched a cross-border P2P solution on the OCBC app, allowing their customers in Singapore to send money to Chinese wallets using Visa Direct, all they need is the recipient's China national ID name and mobile number. Now, moving to commercial, where volumes were up 6% year-over-year this quarter in constant dollars, we had some notable progress in specific verticals. First, in the food and grocery delivery vertical, we had two recent wins. In the US, we are pleased that DoorDash's shopper card program will soon be using Visa Virtual Commercial credit cards to enable Dashers to pay for customer orders at physical merchant outlets. This is in addition to our Visa Direct relationship with DoorDash in the US, Australia and Canada to enable Dasher payouts. In Brazil, we signed a commercial business card deal for commercial customers of iFood Pago, the fintech for the largest food delivery platform in the country. In the healthcare vertical, we reached a virtual card agreement with an insurtech company in France, mySofie, offering medical policyholders an easy way to pay for their healthcare. In the T&E vertical, we recently renewed and deepened our partnership with Airwallex, a global financial platform enabling more than 150,000 businesses to manage payments and money movement across borders. Today, Visa and Airwallex have live card programs in Australia, Hong Kong, the UK, United States, Canada, Netherlands and Singapore to enable businesses to easily make digital card payments around the world, and soon, we will be expanding to new geographies across our use cases in expense cards and B2B travel. In both Visa Direct and commercial, we continued to |
7,606 | V | 1 | 2,025 | 2025-01-30 17:00:00 | Visa Inc. | 38,043,467 | to new geographies across our use cases in expense cards and B2B travel. In both Visa Direct and commercial, we continued to develop innovative new solutions and use cases that helped us retain and secure business. Now to value-added services, where in the first quarter, revenue grew 18% in constant dollars. Across our solutions, we continue to grow revenue as we enhance Visa payments, enable services for all types of payments, and go beyond payments. We often partner with acquirers who utilize Visa's Acceptance Platform to offer their merchant clients compelling solutions. When this happens, we generate revenue on both Visa and non-Visa transactions. Three examples this quarter are European acquirer emerchantpay, Guatemalan acquirer NeoNet, and Paraguayan acquirer Bancard, who will all offer Cybersource to their merchants. We are also partnering with Fiserv to include our Cybersource gateway as a solution for their acquirers and merchants in Europe and Asia-Pacific. This is in addition to Fiserv expanding their use of cardholder authentication from CardinalCommerce to further extend our global partnership into additional Fiserv platforms. In our risk solutions, in 2024, we launched Visa Protect for A2A payments, with plans to expand to 10 new RTP networks in 2025. Powered by AI-based fraud detection models, this new service provides a real-time risk score that can be used to identify fraud on account-to-account payments. We are now piloting the solution with five significant players in Brazil, who represent more than 20% of Pix transactions. We are also very pleased to have closed our acquisition of Featurespace, enabling us to provide an expanded set of fraud prevention tools to our clients and protect consumers in real time across various payment methods. In advisory services, we continue to see strong demand. One example of a recent project is with Alrajhi Bank, where we are expanding our advisory relationship into risk, digital enablement, and data analysis across their portfolios. So, across our |
7,607 | V | 1 | 2,025 | 2025-01-30 17:00:00 | Visa Inc. | 38,043,467 | expanding our advisory relationship into risk, digital enablement, and data analysis across their portfolios. So, across our value-added services portfolio, we are innovating with new solutions and deepening our partnerships with clients to drive growth. To wrap it up, we began our fiscal year with strong performance, an ever-growing obsession for our clients, and a focus on continued innovation as we build the future of payments. I look forward to seeing you in February at our Investor Day. And now, over to Chris. |
7,608 | V | 1 | 2,025 | 2025-01-30 17:00:00 | Visa Inc. | 38,043,467 | Chris Suh: Thanks, Ryan. Good afternoon, everyone. Our first quarter results reflected improving underlying drivers and effective execution of our business. In constant dollars, global payments volume was up 9% year-over-year, and cross-border volume, excluding Intra-Europe, was up 16% year-over-year. Processed transactions grew 11% year-over-year. Fiscal first quarter net revenue was up 10%, higher than our expectations, primarily due to strong international transaction revenue and value-added services revenue. Net revenue was up 11% in constant dollars. EPS was up 14% year-over-year and 15% in constant dollars, higher than expected, primarily due to revenue outperformance and a lower-than-expected tax rate. Now, let's go into the details. In the US, total payments volume grew 7% year-over-year, up 2 points from Q4. Credit grew 7% and debit grew 8%. The US benefited from a strong holiday shopping season, which is the period from November 1st through December 31st and the lapping of the impact of Reg II implementations, which had a modest drag in Q1 of last year. In the US, consumer holiday spending growth was in the upper mid-single digits on a year-over-year basis. The consumer categories with the strongest growth were discretionary categories, such as retail, travel and entertainment. Focusing on retail, holiday spending growth was a couple of points higher than last year, and retail spending growth on key shopping days from Thanksgiving to Cyber Monday was several points higher. E-commerce was a higher share of retail holiday spending versus last year. In key countries around the globe, we saw similar trends with consumer retail holiday spending growth improving from last year. Moving to international markets, total payments volume was up 11% in constant dollars, up from Q4. In most of our regions, payments volume year-over-year growth rates in constant dollars were strong for the quarter, with Latin America up 22%, CEMEA up 18%, and Europe up 13%. Asia-Pacific payments volume growth saw a slight improvement |
7,609 | V | 1 | 2,025 | 2025-01-30 17:00:00 | Visa Inc. | 38,043,467 | with Latin America up 22%, CEMEA up 18%, and Europe up 13%. Asia-Pacific payments volume growth saw a slight improvement from Q4 in constant dollars to just above 1% year-over-year for the quarter, reflecting a still somewhat muted macroeconomic environment. Now to cross-border volume, which I'll speak to in constant dollars and excluding Intra-Europe transactions. Total cross-border volume was up 16% year-over-year in Q1, 3 points above Q4. E-commerce, measured as card-not-present volume ex travel and cross-border travel volume, were both up 16% year-over-year for Q1. E-commerce volumes continued to benefit from the strength in retail in part due to the strong holiday shopping season. Travel volumes performed well across our regional corridors due to broader strength in both consumer and commercial spending. Outbound Europe and Asia-Pacific travel volume growth also benefited from solid performance of client portfolios. For the US, both outbound e-commerce and travel volume growth were also helped by the strong dollar. Now, let's review our first quarter financial results. I'll start with the revenue components. Service revenue grew 8% year-over-year versus the 8% growth in Q4 constant dollars payments volume. Data processing revenue grew 9% versus 11% processed transaction growth, due largely to the back-half loaded 2025 pricing impact that was included in our initial guidance. Had pricing been more evenly spread across the year, as in the prior year, these two growth metrics would have been more in line for the first quarter. International transaction revenue was better than expected, benefiting from higher cross-border volumes and higher currency volatility than we expected. Year-over-year growth was up 14%, below the 16% increase in constant dollar cross-border volume, excluding Intra-Europe due primarily to foreign exchange and lapping higher currency volatility from last year. Other revenue grew 32%, primarily driven by better-than-expected consulting and marketing services growth and select pricing |
7,610 | V | 1 | 2,025 | 2025-01-30 17:00:00 | Visa Inc. | 38,043,467 | Other revenue grew 32%, primarily driven by better-than-expected consulting and marketing services growth and select pricing modifications. Client incentives grew 13%, reflecting a strong renewal quarter. Now, to our three growth engines. Consumer payments revenue growth was driven by improving payments volume, cross-border volume and processed transaction growth. New flows revenue grew 19% year-over-year in constant dollars, driven by better-than-expected commercial cross-border performance across all regions and Visa Direct transaction growth. Commercial payments volume rose 6% year-over-year in constant dollars, mainly driven by favorable days mix impact as well as strong cross-border volumes. Visa Direct transactions grew 34% year-over-year, helped by growth in Latin America for interoperability among P2P apps. Value-added services revenue grew to $2.4 billion, a growth rate of 18% in constant dollars, led by strong growth in consulting and marketing services, issuing solutions, and risk and identity solutions. Operating expenses grew 11%, in line with our expectations, driven by increases in personnel and general and administrative expenses. In our GAAP results, we had $213 million in severance costs related to changes to our workforce, reflecting our efforts to focus investment on the highest growth opportunities for our business as well as accelerating our innovation to better serve our clients. Our tax rate was 17.7%, better than expected due to various items, including a change in our geographic mix of earnings. EPS was $2.75, up 14% over last year, with an approximately 1-point drag from exchange rates and an approximately 0.5-point drag from acquisitions. In Q1, we bought back approximately $3.9 billion in stock and distributed $1.2 billion in dividends to our stockholders. At the end of December, we had $9.1 billion remaining in our buyback authorization. Now, let's move to what we've seen so far in Q2. Through January 28th, driver trends have remained strong. US payments volume was up 8%, with debit |
7,611 | V | 1 | 2,025 | 2025-01-30 17:00:00 | Visa Inc. | 38,043,467 | we've seen so far in Q2. Through January 28th, driver trends have remained strong. US payments volume was up 8%, with debit up 9% and credit up 7% year-over-year. Processed transactions grew 11% year-over-year. For constant dollar cross-border volume, excluding transactions within Europe, we saw total volume grew 17% year-over-year, travel-related cross-border volume grew 17% year-over-year, and cross-border card-not-present ex-travel volume grew 16%. Now, on to our expectations. Remember that adjusted basis is defined as non-GAAP results in constant dollars and excluding acquisition impacts. You can review these disclosures in our earnings presentation for more detail. For the second quarter, we expect adjusted net revenue growth to be in the high-single-digits to low-double-digits. I would note that the primary difference between Q1 and Q2 adjusted net revenue growth is the lapping of leap year. We expect second quarter adjusted operating expense growth to be in the high-single to low-double-digits. Non-operating income in the second quarter is expected to be negligible. And our tax rate in the second quarter is expected to be around 17.5%. As a result, we expect second quarter adjusted EPS growth to be in the high-single-digits. We have now closed the acquisition of Featurespace and lapped the impact of Pismo in January. For acquisition impacts, we expect a minimal impact to net revenue growth and approximately 1.5-point contribution to operating expense growth and an approximately 0.5-point headwind to EPS growth in the second quarter. Now, let's cover our full year expectations. We now expect full year adjusted net revenue growth to be in the low-double-digits. There are no material changes to our adjusted operating expense growth and non-operating income expectations for the full year. Based on our lower-than-expected tax rate in Q1 and an updated view for the rest of the year, we're lowering our expected tax rate to be between 17.5% and 18%. Taking all of this together, we now expect adjusted EPS growth |
7,612 | V | 1 | 2,025 | 2025-01-30 17:00:00 | Visa Inc. | 38,043,467 | lowering our expected tax rate to be between 17.5% and 18%. Taking all of this together, we now expect adjusted EPS growth to be in the low teens. Featurespace and Pismo are expected to have a minimal impact on full year net revenue growth and approximately 1 point contribution to operating expense growth and an approximately 0.5-point headwind to EPS growth. In summary, we're off to a strong start to the year. We remain focused on the execution of our growth strategy for the rest of 2025 and look forward to Investor Day in a few weeks. And now, Jennifer, it's time for some Q&A. |
7,613 | V | 1 | 2,025 | 2025-01-30 17:00:00 | Visa Inc. | 38,043,467 | Jennifer Como: Thanks, Chris. And with that, we're ready to take questions.
Operator: Thank you. [Operator Instructions] Sanjay Sakhrani with KBW. Please go ahead.
Sanjay Sakhrani: Thank you. I had a question on the improved outlook. Obviously, the volumes did better and they accelerated. Does the improved outlook assume the growth rate sort of sustain themselves, or maybe you could just go through sort of what the drivers are? Thanks.
Chris Suh: Yeah. Hi, Sanjay. Thanks for the question. Yeah, we feel great about the Q1 results. As I indicated [Technical Difficulty] one quarter in the year, and we'll have more of an update on half two as we get closer to it.
Jennifer Como: Next question, please?
Operator: Thank you. Will Nance with Goldman Sachs. Please go ahead.
Will Nance: Hey, guys. I appreciate you taking the question. I also wanted to follow up on some of the stronger spending results that you've seen. You called out the strong results. That's been pretty evident in the -- in some of the prints so far this quarter. I just wanted to know if there's anything kind of -- when you peel back the onion in some of the data that you guys have, if there's anything obvious that you would attribute this acceleration over the past couple of months toward? I know you called out some things around holiday spending and obviously, there's been a lot of days mix things going on, but we spent, I think, a year talking about ticket size being a headwind. So, I'm wondering how much of this is sort of a new run rate and lapping kind of tougher comps over the last couple of years versus kind of an outright acceleration and kind of spending above trend. Curious if you have any thoughts on that. Thanks. |
7,614 | V | 1 | 2,025 | 2025-01-30 17:00:00 | Visa Inc. | 38,043,467 | Chris Suh: Yeah, thanks for the question, Will. Well, let's try to break down -- unpack a little bit, you had a few things in there. We talked about strength in the US and international markets. The strength in the US, we did have a strong holiday. I gave some of those numbers in the prepared comments that you heard about. It also helped discretionary categories, retail, travel, entertainment, and then the lapping of Reg II. That was really the step up that we saw in the US, we feel really good about that. And then, like, we talked about as well across the regions. And so, from a payment volume standpoint, feel really good about that. Cross-border, maybe the added commentary on cross-border was, if you look at e-commerce, e-commerce was up 1 point from Q4, cross-border e-commerce, benefiting from the stronger retail and holiday, and then travel though did step-up by 4 points from Q4, and not just Q4, but maybe the last two quarters, which had been around that same level. We're seeing strong travel results from across all the regions. And so, again, we feel really good about that. But all that said, it's a quarter into the year and we're going to obviously wait to see how Q2 plays out, but we feel pretty good about the outlook into the second quarter.
Jennifer Como: Next question, please?
Operator: Thank you. Darrin Peller with Wolfe Research. Please go ahead. |
7,615 | V | 1 | 2,025 | 2025-01-30 17:00:00 | Visa Inc. | 38,043,467 | Jennifer Como: Next question, please?
Operator: Thank you. Darrin Peller with Wolfe Research. Please go ahead.
Darrin Peller: Guys, thanks. Just a couple of two-parts to a question. But first one is really to do with the underlying trends we're going to see through the year with regard to the moving parts on some of your easier lapping given that there were some business as you talked about that should -- that had come off last year that lapse. How does that impact your volume trajectory in the US as the year progresses, we can think about that? Obviously, Reg II started to help already. And then, maybe just a quick follow-up on rebates incentives. I know you talked about this being the higher quarter that we were going to start the year off at. Maybe just if you could help us -- was this in line with your expectations in terms of the results that we saw, or is anything changing around timing on it, or did it really come in as expected? Thanks again, guys. |
7,616 | V | 1 | 2,025 | 2025-01-30 17:00:00 | Visa Inc. | 38,043,467 | Chris Suh: Yeah. Okay. Let me try to tackle all three of those things, Darrin. In terms of the full year guide, you are recalling correctly, when we started the year, we talked about sort of the dynamics in half-one and half-two and why we anticipated growth to be accelerating throughout the course of the year. Incentives was part of that story. We are, as we said before, as expected, this is going to be a big year for renewals with more than 20% of our payment volume impacted and starting really meaningfully with that renewal cycle in the first half of the year, that has occurred. You saw incentives grow 13% in Q1 versus the 6% we saw in Q4, that will continue. We anticipate Q2 incentives growth will continue to reflect that renewal cycle. You mentioned Reg II. I think we've covered that. We are lapping what was modest impact from a year ago. And then, there are some lapping benefits from portfolio as well that are more centered towards the second half of the year as well. That all said, again, I just have said it before to the last question when Will asked, it's a quarter into the year. We've reflected the Q1 upside and adjusted our Q2 outlook to reflect that and we'll certainly talk about half-two as we get closer to it.
Jennifer Como: Next question?
Operator: Thank you. Andrew Jeffrey with William Blair. You may go ahead.
Jennifer Como: Andrew, are you there? Operator, maybe we can go to the next caller and come back to Andrew in a bit.
Operator: One moment, please. Andrew, you may go ahead, sir.
Andrew Jeffrey: Hi, thank you. Can you hear me now?
Jennifer Como: Yes. Now we can. |
7,617 | V | 1 | 2,025 | 2025-01-30 17:00:00 | Visa Inc. | 38,043,467 | Andrew Jeffrey: Hi, thank you. Can you hear me now?
Jennifer Como: Yes. Now we can.
Andrew Jeffrey: I apologize for that. I'm sorry. I wanted to ask on value-added services, given the recent closure of Featurespace and I think some emphasis in Pismo. Can you talk, Ryan, has there been a philosophical change or a change in emphasis perhaps in Visa's value-added services initiatives? And going forward, as we think about greater opportunities in that area, should we think about Visa maybe emphasizing some more security offerings versus processing and gateway? Just trying to frame that up. |
7,618 | V | 1 | 2,025 | 2025-01-30 17:00:00 | Visa Inc. | 38,043,467 | Ryan McInerney: Yeah. We continue to be very excited about the progress that we're making in value-added services across the board. There's no change in emphasis as it relates to the priority or the prioritization of kind of the areas where we've been building products and serving clients. So, we continue to be very focused on delivering solutions to merchants and acquirers, very focused on delivering solutions to issuers, very focused on delivering fraud and risk solutions broadly across the ecosystem, as well as our advisory business, I talked about some examples in my prepared remarks. We have had some great acquisitions. The way that we think about acquisitions is we're constantly, kind of, looking for companies around the world that we can bring into our ecosystem, accelerate their growth, accelerate our kind of, products that we're bringing to our clients, and Pismo and Featurespace are two great examples of those. In terms of Pismo, we're having real good success, kind of, with our sales pipeline all around the world. We're having conversations with clients that I don't think Pismo ever would have had certainly not this early in their evolution. And the reason we're able to do that is we're bringing, kind of, the amazing capabilities that Pismo offers together with the deep relationships and partnerships that we have as well as kind of our long track record of delivering resilient solutions to our clients and partners. Featurespace is early, but we're already having a ton of success. I got a ton of great client and partner feedback once we closed that acquisition. We've known Featurespace for many, many years. We partnered with them. We also competed against them. We know their capabilities really, really well. One of the things that you're seeing from us is that we're continuing to take the amazing capabilities that we have at Visa, whether that's our fraud capabilities, our network capabilities, our processing capabilities, we're unbundling those from the Visa stack, we're enhancing them, and then we're |
7,619 | V | 1 | 2,025 | 2025-01-30 17:00:00 | Visa Inc. | 38,043,467 | capabilities, our processing capabilities, we're unbundling those from the Visa stack, we're enhancing them, and then we're delivering them to a broader array of clients and partners, many times unrelated to Visa transactions or the VisaNet platform itself. So we continue to focus on all those areas in value-added service. We continue to have good success. And you'll continue to see us kind of move down this, kind of, program of unbundling our capabilities, enhancing them and delivering them to a much broader set of clients. |
7,620 | V | 1 | 2,025 | 2025-01-30 17:00:00 | Visa Inc. | 38,043,467 | Andrew Jeffrey: Helpful, thank you.
Jennifer Como: Next question, please?
Operator: Thank you. Harshita Rawat from Bernstein. You may go ahead.
Harshita Rawat: Good afternoon. So, Ryan, I want to follow up on your comments on kind of this unbundling of the capabilities and ask about Visa A2A. You talked about 10 new RTP network partnerships. What are you hearing from your issuer and merchant customers, Bill Pay is probably an obvious use case. How should we think about the roadmap of use cases, monetization models and also the dynamics vis-a-vis debit in terms of cannibalization? Thank you. |
7,621 | V | 1 | 2,025 | 2025-01-30 17:00:00 | Visa Inc. | 38,043,467 | Ryan McInerney: Yeah. You're right. And this notion of unbundling our capabilities is very relevant in the value-added services space for some of the reasons that I mentioned. It's also very relevant in the consumer payment space and Visa Account-to-Account is a great example. A great example where we've unbundled, kind of, our brand and acceptance, our rules in terms of chargebacks, disputes, and returns, and how things work, as well as kind of our risk management capabilities. We've unbundled that from the Visa stack and now we're delivering that to our partners initially in the UK with Visa A2A and then more broadly across Europe and other places over time. We still are on track to launch Visa A2A in early 2025. After we announced it, we've done what we always do, which is have a bunch of great conversations with clients and partners and regulators in the UK. As you mentioned, the initial use case is targeted at Bill Pay, and what we found through those conversations is there's a real need. There is a real need to add the types of processes and rules and the trusted brand that we have to account-to-account payments starting in Bill Pay to give consumers more confidence to use it, merchants more reason and confidence to offer it, and we're excited about it. I mean, obviously, Bill Pay in UK is just the start, but we think that the power of, kind of, taking some of these Visa capabilities into the account-to-account space is going to be a great benefit for our clients and our partners in the ecosystem. You mentioned Visa Account-to-Account, it's a similar story, kind of, on what we've been doing in Account-to-Account Protect, where we've taken our kind of decades of risk experience, our data, our scoring algorithms and unbundled that from, kind of, the Visa stack and we're delivering that to, as I said in my prepared remarks, we're targeting up to 10 RTP networks during the course of this year. I mentioned the banks we're now working with in Brazil to reduce fraud on Pix transactions. We've had great success |
7,622 | V | 1 | 2,025 | 2025-01-30 17:00:00 | Visa Inc. | 38,043,467 | this year. I mentioned the banks we're now working with in Brazil to reduce fraud on Pix transactions. We've had great success with Pay.UK in the UK, reducing fraud on account-to-account transactions. And you're going to hear a lot more on -- from other partners and other networks around the world. These two examples are both driven by client needs. I mean that is what drives our innovation agenda, that's what drives our product delivery agenda. We've been hearing from clients all around the world that they're looking for Visa to help them with these types of challenges, both driving account -- safe and secure account-to-account payments around the world. So, very excited about it, and you'll continue to hear more from us on it. |
7,623 | V | 1 | 2,025 | 2025-01-30 17:00:00 | Visa Inc. | 38,043,467 | Jennifer Como: Next question?
Operator: Thank you. Our next caller is Timothy Chiodo with UBS. Please go ahead, sir.
Timothy Chiodo: Great. Thank you. I want to dig a little bit into the mix components of the cross-border business. So, you've said in the past that roughly about 60% of it is travel and the other roughly 40% is e-commerce. And I know that evolved a little bit throughout COVID and now into the recovery period. But when we think about the e-commerce component, I believe that some of the Visa Direct-related pieces are sitting there. So, whether it be the remittances that are cross-border or the marketplace payouts. I was hoping you could dig into those two or that broader bucket. If there's any rough growth rates or growth contribution or sizing? And if not, just any general comments around that aspect of the cross-border business?
Chris Suh: Yeah. Thanks for the question, Tim. Yeah, let's unpack that as well. We've been doing some unpacking here. In terms of e-commerce, you had the mix that you shared is the mix that we've shared in terms of travel and e-commerce, with e-commerce having sustained slightly better over the last few quarters. Obviously, this quarter, the two growth rates converged. That was good to see. And within that, Visa Direct does have a cross-border component, Visa Direct cross-border -- we talked about Visa Direct transactions growing 34%. The cross-border portion of that is growing much faster. It's obviously a small portion of the total transactions. It's growing much faster than that. And so, we continue to appreciate that Visa Direct in total, the momentum is great and continues to be a really good opportunity. But yeah, when you add it all together, we're seeing great growth across e-commerce and cross-border. And as you know, the yields are accretive as well. |
7,624 | V | 1 | 2,025 | 2025-01-30 17:00:00 | Visa Inc. | 38,043,467 | Ryan McInerney: Yeah. The only thing I'd add is like in the very big scheme of things, with all the success we're having in cross-border Visa Direct, which is great and we are having great success, it's still a very small portion of our cross-border transactions and payment volume around the world in the big scheme of things.
Jennifer Como: Next question, please?
Operator: Thank you. James Faucette with Morgan Stanley. Please go ahead.
James Faucette: Hi, thanks. I wanted to just follow up a little bit on the cross-border question. How much benefit -- in the past, we've seen different periods when cryptocurrencies have done well, that also helped the cross-border kind of e-commerce component. I wonder how much of an uplift you saw from that. And I guess tied in with that, as we've seen kind of growth rates decelerate a little bit here in January, what's your current visibility on particularly travel and what are you seeing around bookings there? Any color you can provide on those two things would be great. Thanks.
Ryan McInerney: Hi, James. Crypto. So, how and where does crypto impact our business? Well, there are a few ways that crypto can show up in our underlying drivers, but typically, when we see an impact, we do see it in our cross-border e-commerce volumes. I talked about some of the drivers of that this quarter relative to Q4. But obviously, given the recent demand and sort of activity around crypto, it is a modest benefit, I would say, to our cross-border e-commerce, but it's one of the smaller benefits. I talked about sort of the other things that impact that. And so that's where we do see it typically.
Jennifer Como: Next question, please?
Operator: Thank you. Jason Kupferberg with Bank of America. Please go ahead. |
7,625 | V | 1 | 2,025 | 2025-01-30 17:00:00 | Visa Inc. | 38,043,467 | Jennifer Como: Next question, please?
Operator: Thank you. Jason Kupferberg with Bank of America. Please go ahead.
Jason Kupferberg: Thank you, guys. I wanted to touch on tokenization for a minute. I think you said number of tokens were up 44% in the quarter. Obviously, a pretty robust number. So, if you can just give us a general update on tokenization strategy and any potential timing or magnitude of actual monetization opportunity from tokenization? Obviously, understanding the benefits of it from a fraud and security perspective, but just wondering if there's any direct monetization we should be thinking about. |
7,626 | V | 1 | 2,025 | 2025-01-30 17:00:00 | Visa Inc. | 38,043,467 | Ryan McInerney: Happy to talk about tokens. You did get the number right and we agree that it's significant. Let me just step back and maybe put the whole token kind of roadmap in perspective. Visa network tokens have been and will be one of our most important investment priorities across the company. We -- in many ways, we led the wave of token innovation and adoption. It's been -- I think it's been about a decade since we issued the first Visa token. And I remember, I think in 2020, we got to 1 billion tokens. And that was a big milestone. But in hindsight, like we were really just approaching the beginning of the steep part of the S-curve. You go back to what you said about 44% growth. So, we've now got more than 12.5 billion tokens across the ecosystem. We got 8,400 issuers around the world that are issuing them in 200-plus markets around the world. And we've got a third of all Visa transactions that are now tokenized. We did 21 billion, 22 billion token transactions in the last quarter. And as you alluded to, the adoption is proliferating because the performance improvement is meaningful. If you just look at e-commerce, on tokenized transactions, we have 6 percentage point higher approval rates. That is significantly higher sales for our merchant partners, and 30% reduction in fraud rates, which is good for everybody in the ecosystem. It's also -- tokens have become one of our most important platforms for enabling innovation. For example, I think it was last quarter I talked about in Europe, we're using tokens to simplify the e-commerce checkout experience. We've embedded FIDO pass keys via Visa tokens into Click to Pay, and we're making e-commerce checkout as easy as it is that you and I unlock our phone with our face or fingerprint. So that's an example of tokens being a platform to drive innovation around the world. They're also a critical enabler of our value-added services. And those we deepen relationships with our partners and we also grow revenue. To your question around monetization, what would be |
7,627 | V | 1 | 2,025 | 2025-01-30 17:00:00 | Visa Inc. | 38,043,467 | those we deepen relationships with our partners and we also grow revenue. To your question around monetization, what would be a couple of examples? We've got merchants that are using our token credential enrichment service. So, we embed this in Visa tokens, so that we continually update Visa credentials for merchants that subscribe to this service, and then they don't have to worry about consumers updating their credentials when their cards expire, so they don't miss a subscription renewal or a sale, and we are revenue for that service. We also offer a service, if you think about on the issuer side, that allows our issuers to create a heatmap of all their consumers' tokens across the entire ecosystem. And they pay for this service from us so that they can enable their customers to add, view and manage their Visa cards across merchants that they use in their daily lives. So, we have a vast array of services that we both ship and that we're building and plan to ship built on our tokens. And the revenue that we generate from these token-enabled services is meaningful, and it will be even more meaningful going forward. |
7,628 | V | 1 | 2,025 | 2025-01-30 17:00:00 | Visa Inc. | 38,043,467 | Jennifer Como: Next question, please?
Operator: Thank you. Bryan Keane with Deutsche Bank. Please go ahead.
Bryan Keane: Hi, thanks for taking my question. Ryan, I just want to ask about X Money. How long does a project like that take for you guys to implement with X? Any kind of idea on how fast and how much volume that might ramp? And any thoughts on economics? I assume it's just kind of Visa Direct type transactions. Thanks.
Ryan McInerney: Yeah, I think the X partnership is a great example in what's been a kind of long list of fintech and big tech, crypto, digital wallets, social messaging apps and the like that have looked around at their options and concluded that the Visa platform, the Visa network and the Visa network of networks is kind of the best, most reliable, biggest money movement platform that's really engineered to enable their developers to quickly implement the types of solutions that they're looking to implement. And it's another great step in that journey that we've been taking. As you said, the partnership is built on the Visa Direct platform. It's going to allow the 600 million or so active monthly users of X to fund their X Money accounts, so they move money into it. They're going to be able to transfer funds back to their bank account instantly from their X Money account. There's going to be creators on the X platform that can now get paid much faster when they use Visa Direct to move money back into their bank accounts. So just -- it's a great credit to the partnership between our team and the X Money team and building out those use cases and we're just excited to continue to expand the number of use cases on our platform.
Jennifer Como: Next question, please?
Operator: Thank you. Dominick Gabriele from Compass Point. You may go ahead, please. |
7,629 | V | 1 | 2,025 | 2025-01-30 17:00:00 | Visa Inc. | 38,043,467 | Jennifer Como: Next question, please?
Operator: Thank you. Dominick Gabriele from Compass Point. You may go ahead, please.
Dominick Gabriele: Hey, thanks so much for taking my question. I was actually just curious if you heard through your partners on either the consumer or commercial side, if the threat of tariffs pushed up any commercial spending or consumer spending and if you've tracked that in the past? Thanks so much.
Ryan McInerney: Yeah. We haven't seen anything directly related to that. And I think just like, I guess, broadening the question a bit. I think on tariffs broadly, we're going to have to wait and see what happens. I think it's going to be very difficult to predict what's going to get implemented, where it's going to get implemented. And as we see these things potentially get implemented, we'll have a better sense on what impact it has for our business and we can let you know then.
Jennifer Como: Next question, please?
Operator: Thank you. Bryan Bergin with TD Cowen. Please go ahead.
Bryan Bergin: Hi, good afternoon. Thank you. I wanted to ask on commercial. I think I got 6% growth, so 1 point improvement there quarter-on-quarter. Can you talk more about the trends in commercial spend in 1Q and further improvement expected or I guess, sustainable here in the '25 outlook relative to what you saw in '24? |
7,630 | V | 1 | 2,025 | 2025-01-30 17:00:00 | Visa Inc. | 38,043,467 | Chris Suh: Thanks for the question. You got the numbers right. Commercial volumes were up from Q4, a little over 1 point. And that Q1 growth was aided by a couple of things, favorable days mix in the US and internationally, which was the inverse of what I talked about in Q4 where days mix was a little bit of a headwind. I also referenced stronger commercial cross-border volumes as well. And maybe the third one, it's small, but there was less of a drag from ATS as it continues to evolve. I also referenced strong results from client portfolios that helped cross-border volumes in Europe and AP that also benefited commercial. This all contributed nicely to our strong new flows revenue performance. That is a trend that we -- in terms of commercial volumes, that is embedded into -- our expectations are embedded into our Q2 guidance. We anticipate they remain steady, stable, and strong through the remainder of the year.
Jennifer Como: Next question, please?
Operator: Dan Perlin with RBC Capital Markets. Please go ahead.
Dan Perlin: Thanks. I was wondering if you could just speak to the point around the strength of the dollar and really like the purchasing power parity associated with that. So for -- I guess it plays into cross-border, obviously for outbound US, but higher for people to come into the United States, but also just in terms of just spending patterns. I mean, obviously, this is going to be a strong period for a little while. And I'm just wondering to what extent there is a proportional benefit to your business. Thank you. |
7,631 | V | 1 | 2,025 | 2025-01-30 17:00:00 | Visa Inc. | 38,043,467 | Ryan McInerney: Yeah. I mean clearly, the dollar has strengthened meaningfully and quickly. You got it right, which is all else equal with a stronger dollar, you have stronger purchasing power for Americans outside of America. In kind of historical periods where we've had a stronger dollar, we have ultimately seen that lead to some travel patterns for outbound from the US. The opposite of that is, obviously, it's more expensive for people to travel to the US. In kind of again historical periods of relatively stronger dollars, we've seen some shift in travel patterns of people who might otherwise have traveled to the US going to other places around the world. Having said that, it's still early. This particular situation we're going to have to monitor. And even though in past times, you have seen some changes in travel corridors as a result of a strengthening dollar, we typically have seen the travel spending overall remain consistent. People just plan their holidays in different places around the world, but that takes time. We're only -- we're a pretty short period into this stronger dollar period so far. So, assuming we stay at this point, we'll be able to give you more insight next quarter and future quarters.
Jennifer Como: Next question, please?
Operator: Andrew Schmidt with Citi Global Markets. Please go ahead.
Andrew Schmidt: Hey, Ryan. Hey, Chris. Thanks for taking my questions. I just wanted to ask on the regulatory environment in the US. Obviously, a new regulatory regime here. Wondering just your view on that and just conversations maybe you've had with issuers or other parties, just trying to get a better sense. I know there's a few things going on in the US obviously. I'm curious how you're feeling. Thanks so much. |
7,632 | V | 1 | 2,025 | 2025-01-30 17:00:00 | Visa Inc. | 38,043,467 | Ryan McInerney: Yeah. We're optimistic. Our clients are optimistic. And I think what we've heard so far is that the administration wants to move quickly to reduce and simplify regulations and they're doing it kind of with a goal of spurring economic growth, efficiency, innovation, all very good things. So, we're optimistic that these changes are going to reduce the regulatory burden for businesses in general in America, which is good for America and ultimately should be good for Visa. We're optimistic as our clients are that they're going to reduce the regulatory burden, specifically in the financial sector, which will in turn help our FI clients accelerate digital payments and, in general, run their businesses more efficiently and more effectively, which is very good for them, which is in turn good for us. So, we're optimistic, but again, it's early and we just have to see what gets implemented, where it gets implemented, and how quickly it does.
Jennifer Como: Next question, please?
Operator: Craig Maurer with FT Partners. Please go ahead.
Craig Maurer: Yeah, hi. Thanks for taking the question. I wanted to go back to some of the big deal renewals you discussed early in the call and ask about the interplay of the different revenue lines in these renewals. What I'm trying to understand is, you're obviously making pricing concessions when you make these large -- when you enter into these large renewals or deal expansions. To what degree are you able to make-up for that with other revenue or VAS being sold into these issuers? And I know this is complicated, but how much is that accounting for the expansion we're seeing in some of the other revenue? Thanks. |
7,633 | V | 1 | 2,025 | 2025-01-30 17:00:00 | Visa Inc. | 38,043,467 | Ryan McInerney: Yeah. First, just reflecting on this quarter, the last quarter, as you've seen, we've just been having great tremendous success with clients all over the world. And they continue to choose Visa because of our brand, because of our products, because of our innovation, because of our people, but increasingly because of our value-added services and because of our CMS or new flows capabilities. And I guess, I would answer your question this way. When we engage and our teams engage with partners on these types of renewal extension, new business deals that you're talking about, it is vastly different than it was three or four years ago. The types of conversations that we're having with our clients are much more multifaceted. They're very rich conversations about a broad array of services that we can provide them, one of which is, of course, network services for their debit cards and credit cards. But in a much more significant way, we're having conversations about processing, about services, about fraud and risk services, about ways that as part of a multifaceted agreement we can expand from historical relationships in consumer payments to small-business cards, commercial cards, fleet-specific priorities -- I'm sorry, specific priorities around fleet, for example, or around agricultural verticals or different types of B2B verticals. It's just a -- it's a very different sales motion. It's a very different type of negotiation, but importantly, as you alluded to, it involves a lot of different revenue levers than we historically would have had. So, it varies from client to client and market to market and what's important to them, but our teams are increasingly having success building on deep relationships historically in consumer payments and taking the opportunity of these renewals to really expand our partnerships, especially into new flows opportunities, into VAS opportunities, deepening our relationship with those partners and creating new revenue growth opportunities. |
7,634 | V | 1 | 2,025 | 2025-01-30 17:00:00 | Visa Inc. | 38,043,467 | Jennifer Como: Next question, please?
Operator: Jeff Cantwell with Seaport Research Partners. Please go ahead.
Jeff Cantwell: Great. Thank you. Does the news this week on DeepSeek influence how you're thinking about your business strategy, possibly in terms of whether you're thinking about stepping up the usage of AI to help with managing internal cost or maybe in terms of whether you're thinking about using AI as a tool to support your growth and unlock new revenue opportunities? Because it does appear from an outsider's perspective, AI potentially could help improve operating efficiency and might even perhaps support some of your revenue areas like authorization or fraud prevention. So, wanted to ask you for your view on what DeepSeek and the rise of AI generally means for Visa as far as strategy and where do you see opportunity going forward? Thanks. |
7,635 | V | 1 | 2,025 | 2025-01-30 17:00:00 | Visa Inc. | 38,043,467 | Ryan McInerney: Yeah, we agree with you. Everything that's happening in the world, whether it's DeepSeek or the many, many things that have happened before or will happen after it, all are examples of opportunities for us broadly across Visa. We were very early adopters of artificial intelligence and we continue to drive hard at the adoption of generative AI as we have for the last couple of years. So, we've been working to embed AI and AI tooling into our company's operations, I guess, broadly we've seen material gains in productivity, particularly in our engineering teams. We've deployed AI tooling in client services, sales, finance, marketing, really everywhere across the company. And we were a very early adopter of applied AI in the analytics and modeling space. Very early by like decades, we've been using AI in that space. So, our data science and risk management teams have, at this point, decades of applied experience with AI and they're aggressively adopting the current generations of AI technology to enhance both our internal and our market-facing predictive and detective modeling capabilities. Our product teams are also aggressively adopting GAI to build and ship new products. I think I talked last quarter about data tokens, that's a great example. And just as the Internet itself fundamentally changed the way that we all shop and buy and the way commerce works itself, we deeply believe that AI is going to be a driving force that is going to change the way digital commerce works. And we have an amazing team of people that are working really hard to ensure that Visa plays a central and sustainable role in the next version of digital commerce, and I think we'll have more to say about that in future quarters.
Jennifer Como: Last question, please?
Operator: Thank you. Tien-Tsin Huang from JPMorgan. You may go ahead. |
7,636 | V | 1 | 2,025 | 2025-01-30 17:00:00 | Visa Inc. | 38,043,467 | Jennifer Como: Last question, please?
Operator: Thank you. Tien-Tsin Huang from JPMorgan. You may go ahead.
Tien-Tsin Huang: Hey, thanks. I'll close it out with a question and a clarification, if you don't mind. Just on the question, with Asia-Pac, it looks like that's the only laggard again as a region, otherwise growth was really good. Any change in outlook for Asia-Pac? And with the usual macro versus structural question there, just curious if there's any change in thinking the region. My clarification was just on the restructuring. Was that contemplated in your prior guide and will -- I presume that the savings that you get from that will be reinvested pretty quickly. Sorry if I missed that. Thank you.
Chris Suh: Great, Tien. Okay, let me quickly get to it. Maybe the latter one first, just to clear it, restructuring, it reflects -- we took -- we recorded a charge this quarter. It's reflected in the guide for the full year. It's really focusing our expenses. We don't expect another charge this year. And sorry, remind me your first question again.
Ryan McInerney: Asia-Pac.
Chris Suh: Asia-Pacific, yeah, sorry. So, AP growth, I think you characterized it right. It is moderately up from Q4, about 1 point, a little bit more than 1 point, but it still reflects a somewhat muted environment. So, it's growing at 1% in total, moving in the right direction, but still quite muted.
Jennifer Como: And with that, we'd like to thank you for joining us today. If you have additional questions, please feel free to call or email our Investor Relations team. Thanks again, and have a great day.
Operator: Thank you all for participating in Visa's fiscal first quarter 2025 earnings conference call. That concludes today's conference. You may now disconnect at this time, and please enjoy the rest of your day. |
7,637 | VZ | 4 | 2,024 | 2025-01-24 08:30:00 | Verizon Communications Inc. | 415,798 | Operator: Good morning, and welcome to the Verizon Fourth Quarter 2024 Earnings Conference Call. At this time, all participants have been placed in a listen-only mode and the floor will be opened for questions following the presentation. [Operator Instructions] Today's conference is being recorded. If you have any objections, you may disconnect at this time. It is now my pleasure to turn the call over to your host, Mr. Brady Connor, Senior Vice President, Investor Relations.
Brady Connor: Thanks, Brad. Good morning, and welcome to our fourth quarter 2024 earnings call and AI update. I'm Brady Connor, and on the call with me this morning are Hans Vestberg, our Chairman and Chief Executive Officer; and Tony Skiadas, our Chief Financial Officer. In addition, we have our Business Group CEO, Kyle Malady, who will be giving an update on our AI strategy, as well as our Consumer Group CEO, Sampath, who will also be joining us for Q&A. Before we begin, I'd like to draw your attention to our safe harbor statement, which can be found at the start of the investor presentation posted on our Investor Relations website. Information in this presentation contains statements about expected future events and financial results that are forward looking and subject to risks and uncertainties. Discussions of factors that may affect future results is contained in Verizon's filings with the SEC, which are available on our Investor Relations website. This presentation contains certain non-GAAP financial measures. Reconciliations of these non-GAAP measures to the most directly-comparable GAAP measures are included in the financial materials posted on our website. Earlier this morning, a detailed overview of our fourth quarter and full year results was posted to our Investor Relations website. We will also be posting supplemental materials relating to today's call on our website shortly. With that, I'll turn it over to Hans. |
7,638 | VZ | 4 | 2,024 | 2025-01-24 08:30:00 | Verizon Communications Inc. | 415,798 | Hans Vestberg: Thank you, Brady. Good morning, everyone. I will begin by addressing the wildfires and the devastation that the Los Angeles area has experienced in recent weeks. Our hearts go out to everyone who has been impacted. At Verizon, we always run through a crisis, and this time is no different. Our teams are working hard to protect and restore service to affected areas, support first responders and help neighbors safeguard themselves. The Verizon Frontline Crisis Response Team is closely coordinating with federal, state and local public safety agencies as they continue wildfire response and mitigation efforts. Verizon's network is holding up strong, maintaining critical connectivity for the community, businesses and first responders. Our engineers have been working around-the-clock, restoring nearly all of the macro cell sites that were impacted and we will continue to be here for employees, customers and communities in LA. Now, let me turn to earnings. We had a successful year with great financial and operational results. We delivered on our financial guidance, with 3.1% wireless service revenue growth and 2.1% adjusted EBITDA growth, both exceeding the midpoint of our guided ranges. We generated strong free cash flow while absorbing higher taxes. We added nearly 2.5 million postpaid mobility and broadband subscribers in the year while expanding our margins. We ended the year with an industry-leading quarter wireless service revenue of $20 billion. In mobility, postpaid phone net adds were nearly 900,000 for the year. Consumer postpaid phone net adds were positive with and without the impact of our second number offering, and business postpaid phone net adds exceeded 0.5 million. Prepaid net adds, excluding SafeLink, were positive for the year and for the first time since the TracFone acquisition. This has been a great turnaround by the consumer team. On broadband, we added nearly 1.6 million subscribers and grew market share in 2024, led by continued success of fixed wireless access. We ended the year |
7,639 | VZ | 4 | 2,024 | 2025-01-24 08:30:00 | Verizon Communications Inc. | 415,798 | 1.6 million subscribers and grew market share in 2024, led by continued success of fixed wireless access. We ended the year with over 12.3 million broadband subscribers, including nearly 4.6 million fixed wireless access subscribers and over $2.1 billion on fixed wireless access revenue. We're off to a great start to hit our next milestone of 8 million to 9 million fixed wireless access subscribers by 2028. We continue to scale private networks, winning work with Xerox, Cummins, Inc., FIFA and, more recently, the U.S. Air Force. We were the only U.S. carrier to be named a leader in the first-ever Gartner Magic Quadrant for private wireless services. Gartner recognized us for our vision, the work we have done to build the market and our industry-leading execution. We drove efficiencies and continued the business transformation. We ended the year with less than 100,000 employees, down close to 20,000 over the last three years. Continued business transformation gave us more flexibility to execute on our strategy and capital allocation priorities. We continue to invest in the business and made strategic moves for long-term growth. We launched customer-first offerings such as myHome and Verizon Access, refreshed our brand and signed strategic transactions, including Frontier, the tower deal, US Cellular spectrum and satellite partnerships. We raised the dividend for the 18th consecutive year and continued debt paydown, ending the year with a net unsecured debt to adjusted EBITDA ratio of 2.3 times. We have a great year with both customer and financial growth as we continue the strategic transformation of the company. Looking forward to 2025, we will continue to focus on our three key financial metrics: wider service revenue, adjusted EBITDA and free cash flow. While Tony will provide these details, I would highlight the underlying wireless service revenue growth is expected to be nearly double the guided range when excluding promo amortization. With that, I will turn it over to Tony to say a few words about the |
7,640 | VZ | 4 | 2,024 | 2025-01-24 08:30:00 | Verizon Communications Inc. | 415,798 | double the guided range when excluding promo amortization. With that, I will turn it over to Tony to say a few words about the quarter and cover the guidance for 2025. |
7,641 | VZ | 4 | 2,024 | 2025-01-24 08:30:00 | Verizon Communications Inc. | 415,798 | Tony Skiadas: Thanks, Hans, and good morning, everyone. As we reported earlier this morning, we closed the year with strong operational and financial performance. The steps we took in 2024 to improve our execution while maintaining financial discipline continued to bear fruit. We added nearly 1 million postpaid subscribers onto our mobile and broadband platforms in the fourth quarter, our highest quarterly result in over a decade, while also delivering on our financial guidance for the full year. We delivered solid growth in postpaid mobility, with 568,000 postpaid phone net adds in the fourth quarter. This includes 426,000 consumer postpaid phone net adds, giving us positive net adds for the full year with and without our second number offering. Business had another solid quarter with 142,000 phone net adds and saw strong growth across all three customer groups. The operational rigor we implemented in prepaid continued to pay off in the fourth quarter. Prepaid net adds were 65,000 excluding SafeLink, giving us positive net adds for the full year. In broadband, we continue to take market share, delivering 408,000 net adds in the quarter. Fixed wireless access accounted for 373,000 net adds and Fios added 51,000 subscribers in the quarter, a solid result given the challenges noted by some of our competitors. Importantly, we achieved these strong operational results while delivering on all of our 2024 financial guidance. In fact, both wireless service revenue and adjusted EBITDA were above the midpoint of our guided ranges, and our adjusted EBITDA margin expanded 50 basis points for the full year. In the fourth quarter, we delivered 3.1% wireless service revenue growth, along with 2.1% growth in adjusted EBITDA as we balanced investing in customer growth with maintaining financial discipline. Finally, our free cash flow of $5.4 billion in the quarter and $19.8 billion for the full year allowed us to take meaningful steps to further reduce our debt, consistent with our capital allocation priorities and to better |
7,642 | VZ | 4 | 2,024 | 2025-01-24 08:30:00 | Verizon Communications Inc. | 415,798 | allowed us to take meaningful steps to further reduce our debt, consistent with our capital allocation priorities and to better position us for the closing of our pending acquisition of Frontier. Note that our fourth quarter free cash flow included approximately $2 billion in proceeds from the Vertical Bridge tower transaction. In addition, we made severance payments of approximately $600 million, which represents roughly half of the total payments we expect to make as part of our voluntary separation program. Turning to guidance. We entered 2025 with good operational and financial momentum, and that is reflected in our outlook. We expect total wireless service revenue to grow between 2% and 2.8%. The key drivers of this outlook are consistent with 2024, and include: improving postpaid consumer phone net additions and continued healthy business phone volumes, pricing actions taken in 2024 that carry over into 2025, continuing to scale fixed wireless access, growing adoption of myPlan and accompanying perks, and an improving prepaid revenue profile. As we shared in the fall, we expect promo amortization headwinds to peak in 2025. That said, the underlying customer economics are very healthy. Please note that beginning in the first quarter of 2025, we are reclassifying more than $2.9 billion of annual recurring device protection and insurance-related plan revenues from other revenue into wireless service revenue. As a result, our wireless service revenue guidance should be viewed in the context of growth off of a higher base of revenue. We expect consolidated adjusted EBITDA to grow 2% to 3.5% compared to 2024. This outlook reflects the expected higher wireless service revenue and benefits of ongoing cost transformation initiatives, partially offset by continued pressure in business wireline revenues. The midpoint of the adjusted EBITDA guidance range reflects an expected year-over-year increase of more than $1.3 billion, which is $300 million more of expected growth than we delivered in 2024. Full year adjusted |
7,643 | VZ | 4 | 2,024 | 2025-01-24 08:30:00 | Verizon Communications Inc. | 415,798 | increase of more than $1.3 billion, which is $300 million more of expected growth than we delivered in 2024. Full year adjusted earnings per share growth is expected to be in a range of flat to up 3%, reflecting the adjusted EBITDA growth, partially offset by higher depreciation and amortization. As we discussed in October, capital spending for the full year is expected to be between $17.5 billion and $18.5 billion. This guidance is an all-in number that includes all of our growth initiatives. This includes incremental investments to deploy C-band to 80% to 90% of plan sites, accelerating our Fios expansion to up to 650,000 to open-for-sale locations, and launching our fixed wireless MDU solution. As always, we will continue to look for opportunities to efficiently deploy capital. Regarding cash flow, we expect free cash flow in the range of $17.5 billion to $18.5 billion in 2025. This outlook assumes mid-single-digit growth in upgrades and no change to current tax legislation. Please note that our guidance excludes any impact from the pending acquisition of Frontier. We are currently working with all regulatory bodies that must approve the transaction. The process is going as planned, and we continue to expect the transaction to close by early 2026. I will now turn the call back over to Hans to go over his 2025 priorities. |
7,644 | VZ | 4 | 2,024 | 2025-01-24 08:30:00 | Verizon Communications Inc. | 415,798 | Hans Vestberg: Thank you, Tony. Looking ahead, our 2025 priorities are clear. A continued focus on wider service revenue growth, adjusted EBITDA expansion and strong free cash flow. Accelerate the mobility momentum and broadband growth while scaling private networks as we expand 5G Ultra Wideband and fiber reach. Laser focus on operational excellence, financial discipline, and customer experience to drive customer and financial growth. Execution of our capital allocation model. Investing in the business, supporting and growing our dividend, paying down debt and eventually share repurchases. And we will leverage our fiber and edge compute assets to open new revenue streams from the AI ecosystem. So, let me talk about Verizon's AI strategy now. We have worked with AI for many, many years, and we already today have several generative AI products at scale in our company. We outlined a three-pronged strategy for AI at Verizon. Let me go through them briefly. Number one, enhance experiences and drive efficiencies. This is all about employee and customer experiences, driving down costs in our operations. A good example would be FastPath, which I've talked about before, which is deployed in our mobility call centers to intelligently pair customers with the best available care representative. The second part of the AI strategy at Verizon is to personalize products and solutions. This is much more about how we can be more personalizing the service for our customers. A great product here would be Segment of Me, which is a tool that uses AI to personalize customer experience with unique offers and products. The third pillar of the AI at Verizon strategy, which we haven't talked so much about but I have promised you several times to come back to it, and that we will talk about today, is connect to the AI ecosystem. And that's the focus of today. If you think about where we are on generative AI today, today, it's large language modules that are trained at large data centers, and that requires enormous capacities. Over time, |
7,645 | VZ | 4 | 2,024 | 2025-01-24 08:30:00 | Verizon Communications Inc. | 415,798 | today, it's large language modules that are trained at large data centers, and that requires enormous capacities. Over time, that will, of course, come much closer to the edge of the network, both for application, but transport cost, and latency in some cases. This is creating an opportunity for us and has already created an opportunity as we had revenue and EBITDA impact in the fourth quarter. We are now looking into how we can use our assets and our capability to serve this market when it comes to the next step of generative AI. So, I'm very proud and excited to introduce Verizon's AI Connect today. That's our product and solution to address this market and meeting the end customers' needs in the next step of AI -- generative AI. So, by that, I will hand it over to Kyle that will talk about and discuss our opportunities and how we're addressing these markets. |
7,646 | VZ | 4 | 2,024 | 2025-01-24 08:30:00 | Verizon Communications Inc. | 415,798 | Kyle Malady: Thanks, Hans. It's a pleasure to be here this morning. Verizon AI Connect is the name of our strategy and suite of offerings that are intended to meet the growing demand for AI applications from both our ecosystem partners and end user customers. It's a vision that allows us to utilize existing assets in new ways to service this technology revolution. Whether the AI workloads are across a multi-cloud environment deployed on our customers' premise or at the edge of the networks, we have a suite of offerings that businesses can utilize to fully leverage AI capabilities. Our vision is built around best-in-class connectivity and edge compute assets. It all starts with connectivity. Over the last 20 years, we have built unmatched fiber assets, not only in our ILEC footprint via Fios, but also outside through our 71 city One Fiber buildout. Together with our industry-leading long-haul network that stitches these metros together, we can provide lit and dark fiber services to our customers over a large geographic area. We have edge to cloud connectivity and expertise, and we are ahead of the curve in this area. The investments we have made in our Converged Intelligent Edge Network over the last several years will pay dividends in this new world as users need even more bandwidth and network visibility. Our network is intelligent and programmable. Customers want to control where and when AI workloads are running. And to that, we are building new capabilities to give users more insight and control via new tools. Essentially, we are allowing them to program their network resources to optimize their operations as they see fit. And finally, edge compute. As AI shifts from training to deep deployment, the need for distributed computing will become increasingly important for real-time decisions and predictions. We have thousands of distributed telco facilities, many of which already have power space and cooling available for this compute at the edge. As we take stock of our existing assets, Verizon's ability to be |
7,647 | VZ | 4 | 2,024 | 2025-01-24 08:30:00 | Verizon Communications Inc. | 415,798 | space and cooling available for this compute at the edge. As we take stock of our existing assets, Verizon's ability to be a foundational player in the AI ecosystem is clear. The technical infrastructure required to enable AI is evolving. AI demands massive amounts of data, powerful chipsets and high-speed, secure, flexible network connectivity. Market analysts estimate there will be over $1 trillion of investment in AI infrastructure over the next 10 years, and some suggest AI network traffic will grow at 35%-plus CAGR over the next five years. Enormous investments have been announced, and we expect more to come. All of this AI infrastructure will need to be underpinned by secure network connectivity that will bridge the new distributed compute landscape. At Verizon, we see ourselves as not just participants in this AI-driven future, but as a key player enabling its success. Verizon's leadership in the enterprise connectivity market is poised to become even more crucial as AI applications become more widespread among end-users. We believe Verizon will serve as the essential link between these GenAI applications and the firms who utilize them. With growing network of over 16,000 near net enterprise locations, Verizon is positioned at the forefront of the AI deployment, providing the connectivity solutions that will enable the seamless integration of AI applications across a wide range of industries and sectors. We also have extensive connectivity of third-party data centers currently ranking a close third in the market. Data centers will continue to be crucial in this new AI-powered world, and 40% of data centers are expected to face operational constraints by 2027, which is another factor in workloads moving to the Edge. Verizon's extensive fiber and programmable networks are ready to meet these demands across key markets. And we're not alone in recognizing the opportunity. Industry analysts are seeing and predicting further significant growth in the AI market. Hyperscalers are expanding into new markets and |
7,648 | VZ | 4 | 2,024 | 2025-01-24 08:30:00 | Verizon Communications Inc. | 415,798 | analysts are seeing and predicting further significant growth in the AI market. Hyperscalers are expanding into new markets and they need high capacity connectivity. The industry is seeing a surge in cloud migration and colocation demand. Lastly, power space and cooling are the currencies that are in demand right now, and we have all three. As we look across our assets, take inventory and compare against other players in the market, we believe that we are in a leadership position when it comes to usable power and space. We have facilities across the United States that either have spare power, space and cooling or can be retrofitted. As we sit here today, we have 2 to 10-plus megawatts of usable power across many of our sites. Also, as we move through our network transformation work, we will continue to free up more resources that could be made available for AI Connect. In addition, we have between 100 and 200 acres of undeveloped land, some currently zoned for data center build and much of it in prime data center-friendly areas. This is not a theoretical discussion. We are seeing increasing demand for our AI Connect offerings. We already have a funnel of over $1 billion simply leveraging our existing infrastructure. Major players such as Google and Meta have purchased capacity in our network with the intent of using it for their AI workloads. Some of these deals are reflected in our fourth quarter results and are contributing to the margin improvements you saw in the quarter. We are working closely with industry players like NVIDIA to reimagine how telco functions can work along with AI workloads. We are starting this development at the far Edge in a private network. The applicability will go beyond that and potentially into the macro network at some point. I'm also happy to report that we have a new strategic partnership with Vultr, a leading global GPU as a service provider and cloud computing provider. Initially, Vultr will deploy their GPU as a service infrastructure in one of our data centers and tap into |
7,649 | VZ | 4 | 2,024 | 2025-01-24 08:30:00 | Verizon Communications Inc. | 415,798 | computing provider. Initially, Vultr will deploy their GPU as a service infrastructure in one of our data centers and tap into our high-capacity fiber network for distribution. We anticipate helping to broaden their reach and enable our mutual customers with AI training and inference capabilities at the Edge over time. The bottom line is we are ready to help power the AI ecosystem. We have the assets, the expertise and the vision to deliver AI solutions at scale. By unlocking the potential of our existing assets, we can further improve the financial profile of Verizon business. The team has worked hard over the last few years to help mitigate the impact of secular wireline revenue pressures. Together with continued strong results in mobility, FWA expansion and work on cost efficiencies, Verizon AI Connect positions us for success into the future. |
7,650 | VZ | 4 | 2,024 | 2025-01-24 08:30:00 | Verizon Communications Inc. | 415,798 | Hans Vestberg: Thank you, Kyle. I hope you now got more insights to how we see we can connect the AI ecosystem, both from the capability point of view and also from the assets we have, and that we already now have customers and solutions in the market. And this is just the beginning. I'm really excited of what we see right now as an opportunity for us in this area. Lastly, we had a great 2024, and I look forward to exciting opportunities and continued growth ahead. So, by that, I hand it over to Brady to handle the Q&A.
Brady Connor: Yeah, thanks, Hans. Brad, we're ready for the first question.
Operator: [Operator Instructions] The first question comes from John Hodulik of UBS. Your line is open, sir.
John Hodulik: Okay, great. Thanks and good morning, guys. Maybe first starting off with Kyle's commentary on AI Connect. Just any sense to -- in terms of the overall -- I know -- I realize it's early, we're getting these announcements seemingly like weekly now. But any sense in how big this opportunity could be both on the connectivity side or in terms of the space and power, would be great. Just to frame it out for us. And then, maybe more operationally, you guys showed some real momentum to end the year, both on the wireless side with gross adds up over 5%, and in the broadband side. A, could you talk a little bit about the drivers of that momentum? And have you seen that momentum continue as we started out 2025? Thanks. |
7,651 | VZ | 4 | 2,024 | 2025-01-24 08:30:00 | Verizon Communications Inc. | 415,798 | Hans Vestberg: Thanks, John. Let me start with the second question, and then we'll come back to the AI with Kyle. When it comes to momentum, both in broadband and wireless, both in the Business Group and in the Consumer Group, I think we have actually outlined quite a lot of changes in the structure, not only the people we have leading it, but also the products we have deployed, the rebranding we have done. And honestly, we see that our products are resonating. I mean this is -- as we said, when it comes to what we added in new customers in the fourth quarter, best in a decade. So we're really, really excited of what we're seeing. And if you think about the broadband side, that's, of course, fixed wireless access is doing great. I mean so we were together with fiber is over 400,000 in the quarter, continue to take share. And on the wireless, we are getting stronger and stronger now. We have several quarters of consecutive improvement. So, I think it's a lot of execution, but also that the products are right, the branding right. And then the network is just improving. I mean, you have seen our numbers from the network. Wherever we deploy C-band, premium sell-through, opening fixed wireless access and, of course, seeing the lower churn. So, all that comes together with an execution we have done over the last couple of years. And I will ask actually Sampath to comment on that, and then I will ask Kyle to talk about the AI opportunity, which we think is great with our assets. But first, Sampath. |
7,652 | VZ | 4 | 2,024 | 2025-01-24 08:30:00 | Verizon Communications Inc. | 415,798 | Sowmyanarayan Sampath: Yeah, thank you, Hans. In 2025, we expect higher for net adds than in 2024. And in the fourth quarter, we saw really strong momentum in our business. Look, we've had eight quarters of phone gross add growth, and we see that momentum continuing into 2025. A couple of reasons why. The first one is our value prop is resonating very well. I think myPlan, more than half our base is already on myPlan. And that value prop is unique in the market because we give savings to customers that others just cannot -- unable to give. So that is working very well for us. The second is a lot of the work we did in '23 and '24 on sales execution, local markets, local marketing is starting to pay off even well, and we see that continuing into 2025. The last is, there are some opportunity segments that we've tapped into, and Q4 was the start of that. The first one was Tier 1 markets. We've historically had a slightly lower presence in Tier 1 markets. That is shifting, some of our large markets, we are starting to see share market gain in those segments. Second is the Latino segment. We've had a concerted effort last couple of quarters to go after that. So, we're a financially disciplined operator. We saw growth, we saw opportunity in Q4, and we went for it. |
7,653 | VZ | 4 | 2,024 | 2025-01-24 08:30:00 | Verizon Communications Inc. | 415,798 | Kyle Malady: Hey, John, thanks for the question on AI Connect. I mean, here's -- our best guess at the moment is the TAM we can sell into with what we have is probably $40 billion-plus, but you see that the -- every single day, there's new announcements of hundreds of billions of dollars going into this ecosystem. And like I spoke about, we have a lot of assets that can play right into this. And frankly, we have well over $1 billion-plus in funnel right now, and that's really only with our services that we have today. That's not even counting the power space and cooling stuff that I talked about. So, I feel this is going to grow. Where it ends up? I think it's anybody's guess. But the investment going into here is massive, and we're going to be able to play right into it.
John Hodulik: Great. Thanks, guys.
Brady Connor: Yeah, thanks, John. Brad, we're ready for the next question.
Operator: The next question comes from Michael Rollins of Citi. Your line is open.
Michael Rollins: Thanks, and good morning. Curious if you can provide a bit more context on the upgrade environment in terms of what you saw from customer behavior during the fourth quarter. And if you could share some additional context on the drivers behind your base case for upgrades that are embedded within the 2025 guidance? And then second, just in terms of financials, if you could just share some of the additional drivers that are contributing to the faster EBITDA growth guidance for '25, as well as if you could share some of the bridge items between EBITDA guidance and free cash flow guidance for '25, including things like tax and working capital? |
7,654 | VZ | 4 | 2,024 | 2025-01-24 08:30:00 | Verizon Communications Inc. | 415,798 | Hans Vestberg: Okay. Thank you, Mike. So, when it comes to upgrades, I think that after many, many quarters of decline, we came to a slight growth on upgrade. So that's not strange after many quarters, you ultimately will get there. I think that we still have the same sort of facts behind it. I mean customers on the consumer side keep the phones very long. I mean, now we're way over 40 months. And that's, of course, contributing to this. And as we spoke about earlier, what we have seen on upgrade cycles is, of course, very much driven on new technologies and new hardware design. So, we haven't seen much of that lately. But -- and of course, the products are way better and more resilient as well. So, I think that's what you see. But I will also ask Sampath to make a couple of more comments on that. And on the EBITDA expansion, I mean, I will ask Tony to talk about it, but we have worked on the cost. I mean the initiatives we have done all the way from voluntary separation program, the outsourcing we have done with HSC with -- in Kyle's shop, the change we did in customer care, we have done a lot on the cost. And then, of course, we start to get the growth. And then the model starts getting leverage. And you see that in our cash flow. You see it in our EBITDA. Remember, we are measured on three things: wireless service revenue growth and EBITDA and cash flow expansion. We showed that in '24. Our guidance for '25 shows the same. So, this team is super committed to it. But Sampath, some -- about the upgrade environment. |
7,655 | VZ | 4 | 2,024 | 2025-01-24 08:30:00 | Verizon Communications Inc. | 415,798 | Sowmyanarayan Sampath: Yes, Hans. Look, 2024 was our lowest upgrade rate in a very long time. In Q4, we saw some modest increase, 10 basis points increase year-on-year. So, we think 2024 was the bottom of our low upgrade rate. And we're going to start seeing gradual improvements in 2025. I think mid-single-digits is what we have assumed in our plan and our guidance. And I think we're going to be quite comfortable with that. It's driven by two very important things. The first is the life of the device. It's exceeded 40 months right now. And at some point, customers will want new devices. The second is customers coming off their three-year DPP contract. We have a large cohort in 2025 coming off. So, a combination of those two give us comfort that mid-single-digit increase in upgrade is what we expect in '25. |
7,656 | VZ | 4 | 2,024 | 2025-01-24 08:30:00 | Verizon Communications Inc. | 415,798 | Tony Skiadas: Okay. Hey, good morning, Mike. Just on EBITDA, I'll start there. So, in 2024, we grew EBITDA about $1 billion. And we also, as Hans said in the prepared remarks, grew subscribers 2.5 million between broadband and mobility, and that was above the midpoint of the range. In 2025, we said our range was 2% to 3.5% growth, which implies about $1.3 billion of growth at the midpoint of the guidance. It's an acceleration, as you mentioned, in the growth rate and good operating leverage. It starts with strong service revenue growth and healthy customer economics, and you heard Hans in the prepared remarks talk about the customer economics without the promo amortization. And then, Hans mentioned the focus on cost transformation and the work we continue to do to make the business more efficient, whether it's customer care and the work that Sampath is doing, including AI, and you heard that upfront, as well as the managed services work. Joe is taking a lot of legacy network elements out, and that work is ongoing. And we also have the voluntary separation program, which took shape at the end of last year. We'll see a full year benefit this year. The guide assumes, as you mentioned, a modest increase in upgrades year-over-year. And -- but overall, we're very confident that we were able to absorb the impact of the promo amortization and have EBITDA growth acceleration. And you see the investments we're making, the strength of the network and the execution as Sampath mentioned, are positioning us for strong EBITDA performance. And then, if I move to cash flow, as Hans mentioned, the cash flow generation of the business continues to be very strong. For the full year in '24, we delivered $19.8 billion in free cash flow. And that's inclusive of the tower deal. There's about $2 billion there from the tower deal. And the results of '24 evidence, as Hans said earlier, that we can manage through significant pressures like cash taxes and still generate a very strong cash flow profile. And when you look at this in the |
7,657 | VZ | 4 | 2,024 | 2025-01-24 08:30:00 | Verizon Communications Inc. | 415,798 | significant pressures like cash taxes and still generate a very strong cash flow profile. And when you look at this in the context of the guide, we said $17.5 billion to $18.5 billion on free cash flow, we still feel very good about the cash generation. That's an all-in range and we're managing to that. And the drivers, Mike, are very similar to what we saw in 2024. It starts with EBITDA growth, and I talked about the $1.3 billion at the midpoint. We gave a range on CapEx of $17.5 billion to $18.5 billion for 2025. And as always, our network engineers do a great job and they're always going to be very efficient with our capital spending. You saw that in 2024. Interest expense continues to improve. We paid down a significant amount of debt in 2024. We're down about $7 billion in total debt. So that will continue to see improvements there. And then, on working capital, we continue to focus on driving efficiencies in working capital, and that goes beyond handsets as well. And then, with cash taxes, really no change there. We'll continue to see pressure from bonus depreciation. We'll have to see what happens in Washington with any proposed legislation. And the assumption we put in the free cash flow guide was that we'd see a mid-single-digit year-over-year increase in upgrades. And obviously, Frontier, as we said earlier, is excluded from the guidance. But look, the guidance reflects the strong cash generation that we have in the business and it allows us to continue our capital allocation priorities, whether it's investing in the business, committing to the dividend and continue to delever the balance sheet, you'll see us continue to do that in 2025. |
7,658 | VZ | 4 | 2,024 | 2025-01-24 08:30:00 | Verizon Communications Inc. | 415,798 | Michael Rollins: Thanks.
Brady Connor: Yeah, thanks, Mike. Brad, we're ready for the next question.
Operator: The next question comes from Sebastiano Petti of JPMorgan. Your line is open, sir.
Sebastiano Petti: Hi. Thank you for taking the question. Just in regards -- just a quick housekeeping question, I guess, for Tony. The $2.9 billion of device protection and insurance in 2024, how should we think about the underlying growth rate within that revenue bucket that will be reclassified? Just trying to think about apples-to-apples service revenue guide. I mean, how has that been trending, I guess, relative over the last several years and maybe expectations for contribution next year within the context of the overall service revenue guide? Another quick question on fixed wireless. I think in the third quarter, Hans, we talked a little bit about perhaps the pace of FWA growth slowing a little bit, maybe because of greater contribution from suburban and rural as C-band is deployed in those markets. Strong fourth quarter number here. And also just kind of thinking about you will be standing up an MDU solution in 2025, which should aid the trajectory in the Tier 1 markets. So, maybe any help in thinking about how you expect the MDU solution to scale or the contribution maybe within the -- I would imagine, the 76 C-band markets? And then, one last question. As you think about, I think, Sampath, you've reiterated expectations for consumer phones to improve, net adds to improve ex second lines year-over-year. Great to hear. Anything -- lots of focus on immigration growth. Maybe if you can kind of touch upon if there's any slowdown or -- beyond the normalization that we've been seeing across the ecosystem? Is there any expectations for a pronounced slowdown in immigration growth in '25? Thank you. |
7,659 | VZ | 4 | 2,024 | 2025-01-24 08:30:00 | Verizon Communications Inc. | 415,798 | Hans Vestberg: Thank you, Sebastiano. Let me start. We will end by the insurance question, and Tony will take that one. On fixed wireless access, you're absolutely right, our C-band deployment has a priority number one mobility. And that means that our secondary business case on fixed wireless access. We go to Tier 2 and Tier 3 markets like now that is less dense. The speed is the same. I mean, some in the market believe we're slowing down; we're not slowing down. You saw the numbers in the fourth quarter. The guys are doing fantastic. But of course, a little bit less opportunities going into the first half of 2025 probably. But with the MDU solution also coming in and then ramping up Fios at the same time, we're going to see a continuation of our strength in broadband. And we took market share in 2024 in broadband and I'm certain we're going to do it again with the fixed wireless access and the Fios we have. So, it's going to be a great year again for fixed wireless access. And we come with new products. We improve all the time what we're delivering. I'm going to ask Sampath to talk a little bit about that and immigration, but before we come to immigration, I think that we have been managing fantastic with our portfolio to all the customer groups, even though what we see, a slower or a less big switcher pool. We have an offering that's actually appealing to the market, and we can grow in that with the competition. So, I feel confident whatever it might -- moves in the market that we can continue. So, I will ask Sampath first to comment a little bit and then Tony will answer on the insurance question. |
7,660 | VZ | 4 | 2,024 | 2025-01-24 08:30:00 | Verizon Communications Inc. | 415,798 | Sowmyanarayan Sampath: Sebastian, good morning to you. I think on FWA and broadband more general, our value prop is resonating really well with customers. myHome is working very well and it's delivering what customers want. On one end, you have FWA, which attracts the premium service, attracts a premium client base. They like the ease and the convenience of use. On the other hand, you have fiber, which is highly reliable, very high performance. So, we were able to segment the market very well, and that's why you're seeing continued success. We are taking more than 50% of all the industry net adds. 50% of all the growth is coming to us in the market. We're going to continue to see that in 2025 as well as we've done in 2024. For the company, we're going to have between 350,000 and 400,000 broadband net adds a quarter. As Hans said, there's going to be some fluctuation across the quarters as we do because we are scaling three very big things in this space. The first is rolling out C-band in Tier 2, Tier 3 markets. They have a slightly different density, and hence, a different pace of sales as it works into it. The second is our MDU product for FWA. We've started it. We're going to see that scaling all into 2025. And the third is our expansion of Fios to 650,000 household OFSs. So, all those three things will scale through the year and -- but we are very comfortable with that 350,000 to 400,000 assuming some fluctuations. Also, we are starting to see good ARPU increase. Customers are taking more of our premium plans, gig plans on the Fios side and our premium plans on FWA. And it goes back to the resilience and the convenience of our service. On that note, let me kind of speak on behalf of the customers for the moment. For decades, most customers have had very limited choice when it comes to broadband providers. You tend to hear the same pain points over and over again. It's opaque pricing, poor reliability, and it drives low NPS. We are very clear. This is what customers want. An offering that delivers high |
7,661 | VZ | 4 | 2,024 | 2025-01-24 08:30:00 | Verizon Communications Inc. | 415,798 | poor reliability, and it drives low NPS. We are very clear. This is what customers want. An offering that delivers high performance and reliability, no gotcha pricing, no promotions that expire in 12 months, pricing that does not double in a year. They want choice, they want transparency. That is what we are delivering to them, and that's what customers like. So, on that foundation, we are very comfortable with our pacing of 350,000 to 400,000 broadband net adds every single quarter. |
7,662 | VZ | 4 | 2,024 | 2025-01-24 08:30:00 | Verizon Communications Inc. | 415,798 | Tony Skiadas: Good morning, Sebastiano. Just on the handset insurance, so just a couple of things here. So, it's recurring handset protection revenue, and it's value that our customers receive. That's very complementary to connectivity. We are going to recast the historical revenue, so we'll provide them so you have a comparable view. The impact is about $2.9 billion in 2024. So, the baseline of service revenue exiting 2024 is about $82 billion. The impact to growth rates is not significant, maybe 5, 10 basis points. And there's obviously no change to the service another category.
Sebastiano Petti: Thank you.
Brady Connor: Okay. Brad, we're ready for the next question.
Operator: The next question comes from Jim Schneider of Goldman Sachs. You may go ahead, sir.
Jim Schneider: Good morning. Thanks for taking my question. One on wireless and one on AI, if I may. On the wireless service revenue, I think, Tony, you've talked about the $2 billion step-up roughly for this year, but the growth rate essentially underlying roughly doubling when accounting for the accounting change you're introducing. So, does this sort of imply as we exit '25 and go into '26, that we're going to be able to kind of maintain that same level of pace in terms of absolute revenue dollar growth on service revenue? And then secondly, on the AI Connect, Kyle, thanks for the good detail. But can you maybe give us a sense of the $1 billion pipeline of sales? When do you think we're going to see material revenue being actually recognized in the P&L? And what's the split roughly between the connectivity business and data centers long term? |
7,663 | VZ | 4 | 2,024 | 2025-01-24 08:30:00 | Verizon Communications Inc. | 415,798 | Hans Vestberg: Okay. On the promo amortization, I'm just going to reiterate what I said on the -- on my opening remarks. I mean, we guide right now from 2% to 2.8%. Our underlying growth is nearly double. And at the end of this year, that will start to fade off basically, so that's -- and have less impact going forward. So that's where we are right now. We're not guiding for '26 at the moment, but we're in a good position. And the headwinds that we created for ourselves by investing heavily in '22 and '23, as you might remember, that was not our best years, is still impacting us. But given how the financial discipline and the work that Sampath has done, and even, of course, Kyle, during the last 12 to 18 months, that will have an impact, a positive impact for us where we're going to get less of that pressure by year-end. And that's why I have to be very clear. I mean, what we see is really a growth of nearly double than what we are guiding for in real terms, but of course, as you do the accounting, you need to follow that. On the AI, I'm going to hand it over to Kyle. |
7,664 | VZ | 4 | 2,024 | 2025-01-24 08:30:00 | Verizon Communications Inc. | 415,798 | Kyle Malady: Yeah, thank you for the question here, Jim. I think if you look at the funnel right now, it's basically entirely connectivity for web scalers, right? It's basically lit services, wave and dark fiber. But that's why we're happy today to announce that we're going to add the power space and cooling to the portfolio as well. And I see over time that we'll -- certainly we'll be selling the typical wave and dark fiber to players, but I think we'll also be selling bundles of stuff, right? So, we'll put power space and cooling together with networking, and we're going to sell it on basically a project-by-project basis, right, and make sure that we maintain our good margins and all that kind of thing. And in terms of rev rec, we already booked revenue in this regard in the fourth quarter, and that was certainly helpful for me in our EBITDA trajectory. So, we intend to drive more of that to the bottom-line going through 2025, and we look forward to driving more business here.
Jim Schneider: Great.
Brady Connor: Yeah, thanks, Jim. Brad, we're ready for the next question.
Operator: The next question comes from Ben Swinburne of Morgan Stanley. Please go ahead you're your question. |
7,665 | VZ | 4 | 2,024 | 2025-01-24 08:30:00 | Verizon Communications Inc. | 415,798 | Operator: The next question comes from Ben Swinburne of Morgan Stanley. Please go ahead you're your question.
Ben Swinburne: Thanks. Good morning. Wanted to ask you guys about ARPA growth and sort of the competitive environment, and then I'm going to come back to Kyle on the AI topic. You guys had 4% plus consumer ARPA growth in Q4 and talked about expecting healthy growth in '25. Can you just sort of talk a little bit about the competitive environment and sort of what gives you guys confidence in the ability to continue to take price selectively and some of the drivers around ARPA growth that you see ahead for the consumer business? And then, Kyle, you mentioned -- you were just mentioning dark fiber a bit. We have seen some of your competitors announced some pretty big investments in adding capacity. I'm just wondering if you could talk a little bit about how much of the AI opportunity is leveraging existing assets. And to the extent you guys are investing within your CapEx guidance into this business, would be interested in sort of where those investments are targeted? Thanks so much. |
7,666 | VZ | 4 | 2,024 | 2025-01-24 08:30:00 | Verizon Communications Inc. | 415,798 | Hans Vestberg: So, I will start on the competitive environment. I wouldn't say that there's anything new in the competitive environment. It's just that we are performing way better. I mean, I usually say that our way of competing is with the network, with the product and solutions and with the services that we're competing, and the brand. And if you look at last year, I mean, our network is just -- continue to improve. We're going to now go to C-band up to 90%, which means that we have more to go there. I think on the product side, we have heard about myHome, myPlan and what Kyle is doing. All of that is resonating. Our refresh of the brand, even though it's early after six months is really paying off as well. So, all that is really how we are competing way better in the market than before. But then, I will ask Sampath to talk a little bit about the segment, we're doing good on the ARPA growth. On the dark fiber, I will hand that to Kyle, but in general, I would say that everything is included in our guide, and there's nothing more. And usually, I would say the majority we have is assets that we already have. But Mr. Sampath? |
7,667 | VZ | 4 | 2,024 | 2025-01-24 08:30:00 | Verizon Communications Inc. | 415,798 | Sowmyanarayan Sampath: Hans, thank you. Let me build on that. At the end of the day, it comes down to value prop for us. We've built a very strong value prop with a very strong brand on the foundation of our #1 network, and that combination is what gives us confidence about ARPA. But let me use the opportunity to step back and talk about our broader service revenue options. We've always said we wanted to get to an 80-20 medium-term contribution from price and volume. It's important for a long-term sustainable business in a subscription category to be in that framework. And we are on our way to do that. 2024 was a good start for us because we saw positive volume contributions across all our businesses: mobility, FW and value, which has historically been negative for a few years for us. You're going to continue to see volume growth in postpaid and the value and sustained momentum in broadband. So that takes care of the value -- volume part of the equation. Second is on price, which is an important component. There are two types of pricing levers that we have. The first is price-ups for more value that we provide to customers. We had four major price-ups in 2024, we've had two in 2025, because we are delivering more value to our customers and they feel very comfortable with the price structure that we have. We cannot, of course, comment on future price-ups, but we will look where we see lower churn where input prices are a little higher and, more importantly, the value that we deliver to customers. For 2025, the price actions that we've already done are in the hopper, more than $1 billion-plus of our service revenue growth is already baked in just with those price-ups. And you're going to see, of course, pressure and help from the volume side. The second is customers are stepping up. It's a bigger opportunity for us as they buy more perks because we give them savings that they don't get anywhere else. They're taking more premium plans, especially as C-band gets rolled out. So, you're also starting to see a little |
7,668 | VZ | 4 | 2,024 | 2025-01-24 08:30:00 | Verizon Communications Inc. | 415,798 | else. They're taking more premium plans, especially as C-band gets rolled out. So, you're also starting to see a little bit of tailwind from that. Lastly, we've -- there are other ways to monetize the network that we've started exploring aggressively. The first one is network slicing. In Q4 '24, we launched our first network slice, and you're going to see us do more of that. And the second is enhanced satellite connectivity. We have best-in-class partnerships with Apple and Skylo. And as that scales out, you're going to start seeing more monetization in the piece. So, we have upside on network monetization as well. So, a combination of all of these gives us a lot of comfort of good ARPA growth in 2025. The market is competitive, but look, we like our playbook a lot, and I think it's hunting very well, and you'll see us execute on that similar to how we executed in 2024. |
7,669 | VZ | 4 | 2,024 | 2025-01-24 08:30:00 | Verizon Communications Inc. | 415,798 | Kyle Malady: And on the AI bit, I appreciate that the question, Ben. So, I think, yeah, some of our competitors are doing investments now, but what our game plan is here is to leverage the investments we've made over time. And as MPLS, the secular decline continues to go down there, we can reimagine the assets we have. And to Hans' point, so most of the things that we're going to be using to get into these markets, things we've already done. So, it's the assets we already have tweaked a little bit. And we do have the CapEx in there because, listen, some of these deals, what we'll have to do is spend some capital to edge out our fiber a little bit to go meet people at the right data centers and/or locations of business, and then retrofitting technical space. So, we have money in for that, but we're ready to go with that. It's all included in the envelope. So, we have -- we're just really leveraging all the work we've done over the last decade with One Fiber, Fios and IEN and all those assets that we have. We're just going to leverage them and edge out and capture market here.
Ben Swinburne: Thanks a lot, guys.
Brady Connor: Yeah, thanks, Ben. Brad, we're ready for the next question.
Operator: The next question comes from David Barden of Bank of America. Please go ahead with your question. |
7,670 | VZ | 4 | 2,024 | 2025-01-24 08:30:00 | Verizon Communications Inc. | 415,798 | Operator: The next question comes from David Barden of Bank of America. Please go ahead with your question.
David Barden: Hey, guys. Thanks so much for taking the question. I guess, first, more of a housekeeping item for you, Tony. Now that we've pulled fees out of other in 2023, now we're pulling insurance out of other in 2025, what is other? And is it now more of a pure-play representation of the monetization of your cable relationship perhaps? And then, the second question is, obviously, in the new administration, I know you guys are well aware that everybody is now thinking about big deals. And one of the bigger deals people are talking about is could Comcast and Charter come together. And I guess the question is, what would that mean? As we think about that possibility, how should we think about what it would mean for Verizon in terms of are there change of controls? Would this larger entity have more bargaining power with you the next time we have a conversation about pricing? How would it all work? Thanks.
Hans Vestberg: I'll let Tony answer the first question. I'll take the other one.
Tony Skiadas: Yeah, sure. Good morning, Dave. So, on the other -- look, what's left is really USF and other fees and also the MVNO relationships are in there, but everything -- all the other recurring revenues are up in service revenue.
Hans Vestberg: Yeah. So, first of all, I cannot speculate on whatever combination you're seeing in front of you. But again, our MVNO relationships are very important to us. They're treated like large enterprises. I think we both are very satisfied with the relationship we have and what we have built together. And remember, our strategy is to build the network once and have as many profitable connection on top of the network. And this is accretive to us, as we said before. So no, I cannot comment on any combinations that can happen. I think we're in a good position. We have the best network in the market. And I think that resonates with customers, and I think that's the most important. |
7,671 | VZ | 4 | 2,024 | 2025-01-24 08:30:00 | Verizon Communications Inc. | 415,798 | David Barden: Thanks, Hans. And if I could just do one more follow-up, Tony? Is there a specific increment in cash taxes that you've baked in that you can share with us for the cash flow number?
Tony Skiadas: So, Dave, we gave a guide this year, so -- and I gave you the puts and takes. So, we're going to manage to that guide. We delivered on our guidance for 2024 and I expect us to continue to deliver on our guidance for 2025.
Hans Vestberg: But it is a higher...
Tony Skiadas: It is higher, yeah, but we're not going to give this to [indiscernible].
Hans Vestberg: No. But clearly, we manage that with all the other puts and takes. And if you took the midpoint of this, I mean, we are being equal or better than 2024 when we take away the tower deal. So, we -- as you understand, we feel confident that will help us with our capital priorities to continue to invest in business. We have increased our dividend for 18 consecutive years. We have paid down our debt and our team has done a great job. We're on 2.3 times right now on the leverage, which is very close to the 2.25 times when we're going to consider repurchasing shares. So, that will put me and the Board in a very different situation when it comes to the optionality of doing repurchases when that happens.
David Barden: Perfect, guys. Thanks so much.
Brady Connor: Yeah, thanks, Dave. Brad, we're ready for the next question.
Operator: The next question comes from Frank Louthan of Raymond James. Please go ahead, sir.
Unidentified Analyst: Hey, guys. Good morning. This is Rob on for Frank. So, you briefly touched on this earlier, but how would you assess the opportunity to expand Fios in your legacy footprint from here? Do you expect to build faster going forward? And as a follow-up, how attractive is the bid opportunity for you guys? Any updates you can share with us on how you're feeling about that would be great. Thank you. |
7,672 | VZ | 4 | 2,024 | 2025-01-24 08:30:00 | Verizon Communications Inc. | 415,798 | Hans Vestberg: So, on the Fios, we have been on the Fios more than 20 years. The product is resonating by customers. As we outlined, our broadband strategy at the end of last year or October or whatever, we said that we're now going to increase basically 50% in open-for-sales, going to 650,000 in this year. We are -- that's scaling that is pretty easy for us. And so, we continue to scale. We see more opportunities for, two reasons. First of all, the economical situation in the country is better today, I mean purchasing power. And number two, broadband is a necessity. And we will also find out that we can deploy fiber cheaper. We outlined all of these in our broadband strategy. So, all that is playing in that we can keep our return on investment on this increase of Fios. So, we feel good about the Fios. On the bid, we will participate where it makes sense for us, where we think that we will have a good opportunity to get subsidy for building out in maybe rural areas, et cetera. So, we're going to participate. It's so far fairly little that has been out there because the states are sort of about doing it, but we will participate wherever we think it makes sense from a return on investment.
Brady Connor: Yeah, great. Thanks, Rob. Brad, we're ready for next question.
Operator: The next question comes from Sam McHugh of BNP Paribas. Your line is open.
Sam McHugh: Thanks, guys. Two questions. On the wireless service revenue, you obviously have a few puts and takes with the promo amort and the price-ups. How should we think about the phasing of these headwinds and tailwinds through the course of 2025? Number one. And then secondly, on the business EBITDA, you mentioned some of the AI-related sales. Maybe you could elaborate on how material they are? Are we at a place now where we should be confident on this inflection point in business EBITDA and can that be enough to support this? Thanks very much. |
7,673 | VZ | 4 | 2,024 | 2025-01-24 08:30:00 | Verizon Communications Inc. | 415,798 | Tony Skiadas: Yeah, good morning, Sam. So, on the service revenue, we feel very good about the shape. It's based on $82 billion, as I said earlier. And the midpoint of the guide implies, and Sampath mentioned this earlier, about $2 billion of additional growth. We executed a number of pricing initiatives, as Sampath mentioned, that carry into 2025. We also talked about an improving volume profile in consumer, and Sampath talked about that, along with stable business volumes. We continue to see great volumes on the B2B side. And then, fixed wireless access continues to grow. We have a $2 billion base of revenue in FWA, and that continues to scale and you saw the results in the fourth quarter there. The other thing that will inflect here is prepaid. And the positive volumes and the turnaround that Sampath talked about will result in improving revenue profile towards the back half of 2025. So that headwind will become a tailwind on prepaid. And then, offsetting that, obviously, as Hans mentioned, is the promo amortization, and that we said would peak in 2025. And -- but as Hans mentioned, the customer economics are very healthy, and we said we expect the headwinds to ease towards the end of the year and into 2026. But as Sampath mentioned, we're seeking a better balance of P&Q. I think you see that across both mobility and broadband, and we expect it to continue in '25. And the actions that Sampath outlined in terms of execution are positioning us for sustainable revenue growth. |
7,674 | VZ | 4 | 2,024 | 2025-01-24 08:30:00 | Verizon Communications Inc. | 415,798 | Hans Vestberg: On the Verizon Business Group, I'm going to ask Kyle to comment on it, but we -- of course, the AI Connect is one contributor, but I think that the whole Verizon Business Group team has done a great job, with many things. I mean, the wireless growth have had the last couple of years, just keeping -- grinding between 125, 000, 150,000 new net adds every quarter, the fixed wireless access that we were, I would say, a little bit surprised by how successful fixed wireless access is in the Business Group, but then all the cost takeouts are doing, and if you saw the fourth quarter turning to a positive year-over-year improvement, I think we are onto something even though with the pressure of the secular. So, I wanted to say, that's -- Kyle doesn't need to say it, but the guys have done a terrific job. And I'm cautiously optimistic that we can continue that work. |
7,675 | VZ | 4 | 2,024 | 2025-01-24 08:30:00 | Verizon Communications Inc. | 415,798 | Kyle Malady: Thank you, Hans. And thanks for the question, Sam. I won't belabor that. I think the revenue we booked that helped with EBITDA as far as AI Connect is small. That was our first quarter that we booked revenue there. So that did have a little impact. But it's mainly due to the factors that Hans spoke about. It's relentless focus on our cost and driving efficiencies as well as finding new opportunities in the revenue line. And the team has done a good job with that. And if you could see, we've had sequential growth since first quarter. So, we've had three quarters in a row of sequential growth of EBITDA. And for the first time in a long time, we've had growth year-over-year in the fourth quarter of EBITDA. And I expect those trends to continue in 2025 given the groundwork that we've laid. And what I would say, Hans talked about FWA, that's turned into a really good news story for us. Because we have certain expectations of the product, and now that we see customers are getting much more comfortable, business customers, with using this as a primary option for them for connectivity, we continue to see great growth and great interest in the product. As a matter of fact, a lot of large customers who we were -- first, we weren't sure they would use this as a primary use case, are. We have big banks, we have big retailers, et cetera, going and doing this. And then, you just saw an announcement we made with Brightspeed, and I think this is a new area of the market that we can tap, and we call this really copper-catch. So it's using our fixed wireless access network to help people who have old kind of copper lines out there, low bandwidth lines, replace it and modernize it with FWA. And we see this as a great place that we can sell into to. And as -- we talked about private wireless and AI Connect. So, we have a lot of great things on board here, and I feel good about our trajectory into 2025.
Sam McHugh: Great. Awesome, Kyle. Thank you. |
7,676 | VZ | 4 | 2,024 | 2025-01-24 08:30:00 | Verizon Communications Inc. | 415,798 | Sam McHugh: Great. Awesome, Kyle. Thank you.
Brady Connor: Yeah, thanks, Sam. Brad, we have time for one more question.
Operator: Your final question will come from Kannan Venkateshwar of Barclays. Your line is open.
Kannan Venkateshwar: Thank you. Sampath, maybe on the consumer side, you mentioned a couple of drivers of growth, Tier 1 markets, for instance, the Latino segment and so on. And your lines have obviously grown on the postpaid side, but the account growth is still negative. So, is there an opportunity to turn account growth positive with some of these newer segments that you're targeting? And is that something that we'll start to see over the course of the year? And then secondly, on immigration, I may have missed this as a response to the prior question, but is there a way for us to -- or understand how you guys are thinking about the impact on overall volumes for the industry as a whole over the course of this year or beyond? Thank you.
Hans Vestberg: Thank you, Kannan. I will ask Sampath to answer those questions, but I think we're in a really good position with our offerings to continue regardless of, so. But, Sampath? |
7,677 | VZ | 4 | 2,024 | 2025-01-24 08:30:00 | Verizon Communications Inc. | 415,798 | Sowmyanarayan Sampath: Thank you. Hey, Kannan, good morning to you. On -- question on the overall market growth, we think postpaid is expected to grow between 8 million and 8.5 million lines in 2025 all in for Business and Consumer. It's a robust market. It's a very resilient market. And similar to 2024, pre to post migration makes up almost half of that. It's not a segment we play in on the retail side, but we leverage our wholesale channel to go after that segment aggressively. Despite there has been lower immigration in the last few quarters, yet we are seeing really strong performance in our value business. I think our refreshed value brands, our value proposition, our relationship with Walmart as well as expanded total wireless distribution is working very well. So, we can continue to grow for net adds in this environment, and we feel very comfortable with that. Now, to answer your first question on account growth, we saw account growth in Q4. You see that. But I think at the end of the day, what we are focused on is building deep relationships with our customers. If you look at the way our offering framework works is we start with connectivity. We want to offer the best connectivity products, both home and on-the-go and mobility and, of course, on the value side. And then, on that foundation of that relationship, we start selling more to those customers, whether it's some of our entertainment products with Perks, it gives you savings that others can't give, our TMTR protection products, our cloud products. So, we want to deepen our relationship with customers. And I think that's the way we see long-term growth in our business. You saw very strong ARPA growth in north of 4%, and underlying growth is, of course, much higher than that when you take care of promo amortization. So, account growth is important to us, but what is important to us is profitable customers who value quality of the network and our offering framework, we want to grow in those.
Kannan Venkateshwar: Thank you. |
7,678 | VZ | 4 | 2,024 | 2025-01-24 08:30:00 | Verizon Communications Inc. | 415,798 | Kannan Venkateshwar: Thank you.
Brady Connor: Yeah. Thanks, Kannan. Brad, that's all the time we have today.
Operator: This concludes the conference call for today. Thank you for your participation and for using Verizon Conference Services. You may now disconnect. |
7,679 | VZ | 3 | 2,024 | 2024-10-22 09:00:00 | Verizon Communications Inc. | 415,798 | Brady Connor: Good morning. Hello, everybody. Welcome to the Essex House and welcome to our event this morning, and for everybody on the webcast, thank you for listening in. We got a couple of items that I need to cover upfront first. And I'm missing the clicker. Is there a clicker? Okay, there we go. Safe Harbor statement. So, our presentation today contains things about statements that they are forward-looking and contain risks and uncertainties. Those are covered on our website with the Safe Harbor statement. A couple of items. Also, we had some non-GAAP disclosures or non-GAAP items in the presentation. The reconciliations of those are provided on the website. Next slide, please. And one administrative item for today, the camera is going to be focused on the stage during live Q&A. For the folks in the audience ask that you announce your name and your firm when called on for Q&A. With that, we're really excited for the content today. So let me hand it over to Hans and we'll get going. Hans? |
7,680 | VZ | 3 | 2,024 | 2024-10-22 09:00:00 | Verizon Communications Inc. | 415,798 | Hans Vestberg: Good morning. And welcome to Verizon Third Quarter Earnings Call as well as a Broadband Update. Very happy to see so many in the room, but of course, also happy for everyone joining on the webcast. Let me kick this off. I'm going to -- we have an agenda that is pretty simple. I'm going to talk about the highlights of the third quarter, then we're going to do some -- a little bit of strategic updates and we're going to end up with Tony talking about the results and capital allocation. So, let me start by talking about the third quarter. And maybe before I start with the third quarter, just mentioning the hurricanes that has been going through our southern part of country and had devastating impacts. Verizon, of course, has worked tirelessly to see that our communications up, is so essential that communication is working for public safety, but also for the communities that are affected. Initially, in some of the states, we had challenges, especially with power, but I think that our team did a fantastic job to get our networks up pretty quickly. So, again, this is things that are happening constantly around the world right now in hurricanes and natural disasters. For us, building the networks, as we are always doing, is extremely important to see the resilience and on the network during this time. So, starting with that, talking a little bit about the results. I have a tie today. That means it's a good a good result. It is result. I'm really pleased with what I've seen them. I've talked to you so many times that there are years when you are a CEO where you're performing better than others. And I know that 2023 wasn't the highlight of my career at Verizon, [indiscernible] what we have done great job since then. Started in 2023 in the midyear of starting changing the products and all of that and then coming around where we are right now. Looking at the financial, growing 2.7% in the wireless service revenue is great. I'm also proud to report the biggest profit EBITDA in the history of Verizon, $12.5 |
7,681 | VZ | 3 | 2,024 | 2024-10-22 09:00:00 | Verizon Communications Inc. | 415,798 | in the wireless service revenue is great. I'm also proud to report the biggest profit EBITDA in the history of Verizon, $12.5 billion in the quarter, which is really good and its multi-factors. And of course, the team sitting over there have done a great job. Proud of that. We continue to create good cash flow, $6 billion in the quarter, continue with a really strong cash flow generation as that is part of our measurement and how we measure ourselves. On the operational side, we started getting an even better balance on the postpaid side. We were 239,000 net adds positive. Sampath will talk about what happened in the consumer, but I already now going to tell him, he did a great job in the postpaid, but also in the prepaid. We were turnaround prepaid. We got a lot of questions over the years. Now we're around approximately 80,000 ex SafeLink. And of course, the business side did a great job on wireless again. Kyle and his team is consistently between 125,000 to 150,000 net adds every quarter, and I'm really pleased with that. The broadband side, I promised you now for quite a long time. As soon as I get into 4 million to 5 million fixed wireless access subscribers, are going to come back to what we're going to do after that for slides down. I will talk about that. But first of all, I'm going to take a victory lap that we're 15 months ahead of the target we outlined when we bought the C-band with our fixed wireless access. Again, a great product, great work. At the same time, for the ones that remember, we were a little bit weaker on Fios in the second quarter because there was a little bit of movements in the market with ACP and all of that. Now we're back to normal again. The team is doing great work with Fios. All-in-all, a great quarter for broadband. And we continue with the private networks and the mobile edge compute. We announced two deals this quarter, but we had way more. FIFA and MSG, Madison Square Garden Group, all are buying private networks using our capabilities in dense areas to see that they can |
7,682 | VZ | 3 | 2,024 | 2024-10-22 09:00:00 | Verizon Communications Inc. | 415,798 | MSG, Madison Square Garden Group, all are buying private networks using our capabilities in dense areas to see that they can fulfill their fans or the customers' experiences. All-in-all, we feel good about the full year financial guidance that we gave earlier in the year. We even said, if you have read the press release, which I hope that all of you have done, that when it comes to the wireless service revenue and EBITDA, we are at midpoint or above on both of them for the full year. That's how good we feel about the performance so far in the year. That's what I have to say about the third quarter. Tony will come back and go a little bit deeper. If I then come in to talk a bit about the strategy. Some of this is given for you, for me, it's a journey where we are today. It's a long journey with a lot of things, and we are very organized structure company, what we're doing. The first phase, I call it sort of building the foundation. Some of you remember the heavy investment in fiber, the Verizon Intelligent Edge Network, all of that was enormously important for today's work. I mean on the table in front of you have your consumer connection report. That's what we give out twice a year with all the stats what's happening in the network. Last time, we told you that our network, the last five years, grew 129%. If you haven't built it with our own fiber with the transport networks we have done and all these fundamentals that Kyle and Joe has built, we can't handle all these data and have the best network in the nation when it comes to wireless and broadband. So the fundamentals we did with go-to-market, with consumer and business is really paying off today. And you see it when our product has started resonating with the market is because we have Kyle and we have Sampath, both of them thinking about how to meet the customer demands and what the customer needs to have. So all-in-all, that was important. The second phase, all of you remember, we sold -- we bought a lot of assets. We sold everything in Verizon Media Group. |
7,683 | VZ | 3 | 2,024 | 2024-10-22 09:00:00 | Verizon Communications Inc. | 415,798 | The second phase, all of you remember, we sold -- we bought a lot of assets. We sold everything in Verizon Media Group. We bought the TracFone that is paying off right now. We also bought the C-Band, enormously important you're going to hear Joe talking about the C-Band, but we all know where we deploy this C-Band, we have a great financial success and customer impact. So very important movements we did in that. But we also launched a lot of new products, fixed wireless access, myPlan, myHome and a lot of other things that we now have as the base going into 2025. And now we're also extending our TAM with a couple of larger investments we're doing all the way from Frontier, but also what we want to talk to in a second. So for me, this journey is now in a moment where we have the have the right assets. We have right the right team, and we have great products for our customers. Only the last, I would say, six months, we have done all of these strategic movements in order to strengthen ourselves to continue to be clearly the number one in the market and extending that. You have seen them all, the customer-first offerings we have done, resonating with our customer. We're going to hear Sampath talk about them. The refreshed brand we did in June, that takes time to get the impact, but we see the positive movement with a refreshed brand that is supporting our new products, really happy with that. And hopefully, some of you are looking at commercials, highly digitally, or on TV, and see how we're trying to recapture and rethinking the way we're showing up for our customers. We have the plan, Frontier acquisition. We talked about that in a separate session. We're excited about that and adding to our expanded TAM. We did a tower transaction just two seconds on that. Of course, this was cash in. But more importantly, we only do the deal when we can see a deal that's actually creating more – more opportunity for us, both by having a cost level that is predictable for us, very important. I like [Indiscernible] economics in |
7,684 | VZ | 3 | 2,024 | 2024-10-22 09:00:00 | Verizon Communications Inc. | 415,798 | opportunity for us, both by having a cost level that is predictable for us, very important. I like [Indiscernible] economics in the network; and second, also creating more competition in the market. We are suddenly creating with a strategic partner in Vertical Bridge, another strong partner in the market, giving more optionality and seeing that we can have a predictable cost for our tower leases, which is one of the few things we're not having 100% ownership on. We also yesterday, I think, announced that we're buying some spectrum US Cellular. It's going to take time until that's come into fruition because it's hanging on another acquisition. So I don't think it's going to be cash out until 2026. It's just adding capacity. It's a buy versus build in that region. So we're adding capacity there. And then we will not speak so much about AI today, but I hope you're going to add some questions to Kyle, because not only even efficiencies that Sampath is talking about in the customer care and personalization, we see with our compute storage, with our power and the mobile edge compute, we see great opportunities when it comes to AI and revenues for us. And we will talk a little bit about here, but we also do it in the future, coming back a little bit more structure and talk what we're doing. But we already right now see a good tractions on what we're doing on the front end of it. All in all, that's sums it up where we are today. I think we have an unmatched value proposition all the way from our best mobility, American's best mobile networks. We created a satellite partnership recently. We have myPlan, plus all the business and business offerings, strong offering. And then on the broadband side, all the way from Fios to fixed wireless access, we're now almost 12 million broadband customers, 11.9. The fixed wireless access are generating more than $550 million per quarter in revenue started three years ago. So we can see that we can build on this network, where we build the network once and we want as many profitable |
7,685 | VZ | 3 | 2,024 | 2024-10-22 09:00:00 | Verizon Communications Inc. | 415,798 | years ago. So we can see that we can build on this network, where we build the network once and we want as many profitable connections on top of it. It started paying off without. So we're uniquely positioned in the market with onerous economics. So all that said, we’re already in the quarter, where are we going as a company? We know also that we hit sort of our targets on broadband. So we're going to talk today about what we're doing next. So our broadband targets going forward is basically going to say that we're going to double the fixed wireless access targets by 2028 to 8 million, 9 million fixed wireless access subscribers. Joe will talk a little bit what we're doing and how we continue, and I expect that Joe, our Head of Network continue to have capacity way beyond and continue to build for us so we are ready to capture this opportunity that were created. We also want to talk about our acceleration on Fios. We think that's a great opportunity for us to do that in this moment. We will, as we have closed the Frontier acquisition, have more than 30 million passings -- fiber passing. And we also see a clear path of somewhat to 35 million to 40 million passings after Frontier and what we're doing ourselves. And if you combine that with our fixed wireless access, I think in the future, we're going to cover more than 100 million households. So, clearly, the broadband, together with the mobility, together with our offerings, we are putting ourselves up to a possibility to continue to have sustainable growth on our service revenue, but also continue to expand our EBITDA and cash flow. And the ones that have been following us for time, you know those three all the things were measured on. Those are the three things that management are measured on. The Board has decided those are the three things that are actually driving the most shareholder value. And that's what we're focused on here right now. So, I will let my team now explain a little bit about where we are and how we're going to execute on these targets. And |
7,686 | VZ | 3 | 2,024 | 2024-10-22 09:00:00 | Verizon Communications Inc. | 415,798 | now. So, I will let my team now explain a little bit about where we are and how we're going to execute on these targets. And then we're going to hear Sampath and Tony talk about the financials and the situation. So by that, I'm going to hand over to Joe Russo. |
7,687 | VZ | 3 | 2,024 | 2024-10-22 09:00:00 | Verizon Communications Inc. | 415,798 | Joe Russo: Thank you, Hans. Appreciate it very much. Good morning everybody. The one thing I want to first say upfront is the is the network and technology team super confident that investments I'm going to talk about over the next few slides, coupled with the best engineers in the industry, is going to continue to deliver on the best, most reliable, highest performing networks for our customers and give that experience to more and more Americans across the country. It's easy to make claims about being the largest this or the fastest that, but that's not what my team and I are about. We're about building the best, most reliable networks. And that takes hard work and a lot of strategic investments that I'll talk a little bit about today. But that's hard work around testing and optimizing the network each and every day. It's strategic investments in things like generators and mobile assets for when there's emergencies. And this is why, as Hans said, following the Hurricanes Helena and Milton, the Verizon network outperformed rest of the industry, and I'm super proud that we were there when our customers and first-responders and businesses needed us the most. So, before I dive into the broadband plans, I first want to congratulate Kyle and Sampath for hitting our 4 million to 5 million fixed wireless access target 15 months ahead of schedule. And that took a ton of work from a lot of people within the organization. But one of the things I'm very proud of from the network and technology team is that we built the coverage and capacity well ahead of schedule for them to deliver on that target. And as we look forward to the -- here we go. As we look forward to this new doubling of our fixed wireless access subscribers, my team's objective hasn't changed. It's to build the coverage and capacity well ahead of schedule and we're already doing that. We expect that to cover another 30 million homes over the next four years on our award-winning multipurpose network, we have to do a few things. The first is will take a |
7,688 | VZ | 3 | 2,024 | 2024-10-22 09:00:00 | Verizon Communications Inc. | 415,798 | homes over the next four years on our award-winning multipurpose network, we have to do a few things. The first is will take a mobility-first approach, and I'll talk more about that in a minute. But getting to 90 million homes and businesses covered with fixed wireless access will be accomplished with three key things we're doing today. The first is our aggressive deployment of C-Band and millimeter wave, we call ultra wideband. The second is a new MDU solution that's been in trial and we'll be rolling out in 2025 to serve MDUs with up to 1 gig Internet service with our millimeter wave technology. And the third is technology advances and the use of our vast small cell network in order to add even more ultra wideband coverage and capacity between now and 2028. So I'm going to shift gears a little bit to fiber. So I'm looking forward to the pending acquisition of Frontier and bringing these two great fiber assets together. The combined wireline footprint has approximately 48 million homes and businesses of which 25 million of those are already served with fiber. And I know one thing. With our 20-year experience in building fiber across this country, that we will continue to deploy Fios in the new footprint after closing. Post close, we will take the appropriate pace to build based on the following criteria. The first is the profitability of the build. The second is the competitive environment that we see that we're operating in. And the third is our capital allocation priorities. But over time, I want to be clear. My objective is to bring Fios to 35 million to 40 million homes across the country. So I want to bring the whole network strategy together for you. The first is, we built a shared multipurpose network with owners' economics to serve as many profitable connections as possible. That strategy is built on the foundation we call the Intelligent Edge Network, which is rooted in our rich fiber assets, both in the ultra long-haul network and in the metro networks across the country. It also encompasses our |
7,689 | VZ | 3 | 2,024 | 2024-10-22 09:00:00 | Verizon Communications Inc. | 415,798 | rich fiber assets, both in the ultra long-haul network and in the metro networks across the country. It also encompasses our converged IP core and our own and operated Verizon Cloud platform and our mobile edge computing platform that serves both today's and tomorrow's technologies. This foundation gives my team and I the capability to provide that best, most reliable, highest performing network to two access technologies. The first is the radio access network. And again, as I mentioned, we take a mobility-first approach. What that means is I deploy coverage and capacity to enhance the mobile experience for our customers and to find new revenue streams. The good news is we pull through fixed wireless access when we do that. And as we've said, we've been awfully successful in that space. Customers just love that product. So we will be accelerating our ultra wideband deployment. I expect that by the end of this year, we'll have a -- we'll have covered 70% of our planned footprint and by the end of next year through acceleration, we will get to 80% to 90% of that planned footprint covered. We also have just recently launched our 100% virtualized 5G core network with stand-alone and slicing capabilities. And we'll talk a little bit more towards the end of this year, how we're going to put those to use in the market. And then finally, we are the only company in this country that's actually running virtualized RAN at scale. 40% of my C-Band sites are now virtualized in the network. Shifting over to fiber access network. So I've been building Fios for 20 years or so now. And we're on track this year to pass approximately 500,000 prems. Frontier, as you know, is on their way to pass 10 million prems by the end of 2026. And we are in 2025, targeting an expansion of our Fios build up to 650,000 prems. Post-close, I see that pace growing to up to 1 million plus prems per year. But what excites me more than anything, after 20 years of doing this, is our business case on Fios is getting better and better. And that starts |
7,690 | VZ | 3 | 2,024 | 2024-10-22 09:00:00 | Verizon Communications Inc. | 415,798 | me more than anything, after 20 years of doing this, is our business case on Fios is getting better and better. And that starts with the fact that customers demand high-quality broadband services more now than ever. So what we see is when I do a build today, we see higher and faster penetration rates than we have with prior builds. And we pulled through mobility benefits on both churn and ARPU. But I'm also finding new and creative ways to bring down the cost of deploying fiber. And that comes in three big chunks. The first is partnerships with companies like Corning and CommScope, where they're delivering technology to do both reduction in the amount of fiber I have to deploy to serve homes and the techniques and technologies that make it easier for my team to deploy. The second is, we've made with Sean Carr’s [ph] help, 20 years of systems and tools improvements through the whole process of building, designing, operating the network and we're seeing great benefits from those systems and tools enhancements in the reduction of rework, efficiency of our build and operating of the network. And then the third is, we've made some strategic decisions of how to get legacy costs out of our network without having to deploy fiber to the entire wire center. So I can use other techniques to move customers to new technologies and remove legacy equipment without having to deploy fiber across an entire footprint. But our network strategy is clear. To build and operate the best, most reliable, highest performing network to power and empower how our customers live, work and play. Let me leave you with this. My goal is to ensure more and more Americans have access to that best, most reliable network experience, by expanding the best mobile and broadband networks through a disciplined capital approach. We do that by building the best networks. And over time, that includes a 5G ultra-wideband network that will serve 300-plus million Americans with 5G advanced features for today's and tomorrow's technology. And a fixed wireless |
7,691 | VZ | 3 | 2,024 | 2024-10-22 09:00:00 | Verizon Communications Inc. | 415,798 | will serve 300-plus million Americans with 5G advanced features for today's and tomorrow's technology. And a fixed wireless access and Fios network that will serve over a 100 million homes and businesses. So I'm going to turn it over now to Sampath, who will talk through how he'll ensure more customers get access to those great network experiences. Thanks, Sampath. |
7,692 | VZ | 3 | 2,024 | 2024-10-22 09:00:00 | Verizon Communications Inc. | 415,798 | Sowmyanarayan Sampath: Joe, thank you. Very good morning to all of you. There are two things that Joe spoke about that really excites me. The first one is America's best wireless network continues to get bigger and even better. And the second one is our ability to offer broadband to 100 million homes and businesses over a period of time. So with that, let me get into how we go about this. Verizon is in a very unique position right now because we have two engines of growth: mobility and broadband. Both these segments, both these businesses have secular tailwinds, there's huge demand for both of the products. And more importantly, Verizon has a good position and a lot of opportunity to grow in front of it. Let's start with mobility. Look, in mobility, we are number one. If we look at our share position, our total revenue. And it starts with our postpaid business. We are seeing continued momentum in our postpaid business. With this quarter, we would have had seven quarters of consecutive year-on-year postpaid phone gross ad momentum that we have in the business. And why did that happen? Some of it has to do with our sales engine that we've gone and reengineered, get back to the local market structure, local sales incentives, local marketing. And the second is myPlan. myPlan, as I say, is on plan. Customers love it. They like the structure of it, they like the ability to get access to unique offerings and it's truly differentiated in the market. And you saw us, we had a strong quarter, 81,000 phone net adds in the space. We will be postpaid phone net add positive with second number, without second number, this year as well as promised in our plan to do that. Next, we turn our attention to our value business or prepaid. And we bought TracFone, we've integrated TracFone and we had really strong momentum in our business. We had 80,000 net add positive in our business, the best in many quarters, and a lot of that comes down to a core performance of our brands. We saw almost all our brands have very strong performance |
7,693 | VZ | 3 | 2,024 | 2024-10-22 09:00:00 | Verizon Communications Inc. | 415,798 | and a lot of that comes down to a core performance of our brands. We saw almost all our brands have very strong performance and momentum in this space. Two, our exclusive distribution with total wireless has scaled up really well, and you can see those stores everywhere. And third is our unique distribution position that we have within Walmart. And you're going to see continued progress and continued momentum in our value business going forward. That brings me to our third topic, which is churn. Now that we have our postpaid engine working well, our value turnaround in progress, I can turn my attention to the churn. There is nothing structurally that prevents Verizon from being an industry leader in retention and lower churn. We've been in that position before. We know how it feels. And more importantly, we know how we get there. In the short-term, we made some trade-offs, some strategic trade-offs that Hans and I feel very good about to drive shareholder value. We had some pricing actions that do drive some churn in this space. But on balance, we feel very good about how we executed those and often churn is way less than some of our business cases that had come in. The second is we are very disciplined about our retention spend. You see that in our upgrade numbers. We -- it has to be demand-led, customers have to want it, and we link our retention promotions the plans and the price plans that they have there. But over a period of time, you should expect lower churn from us from a couple of things. The first one is better experience. We are using AI significantly both at stores at our call centers. Second is myPlan and perks, as more and more and of our base gets into the myPlan construct and takes more perks that helps with churn. Third is myAccess or Verizon Access, our loyalty program, which I'll cover in a bit, that could give us traction in that. And then the last one, which is probably the biggest lever is going to be more mobile plus home customers. When those two customers come together, we see a huge |
7,694 | VZ | 3 | 2,024 | 2024-10-22 09:00:00 | Verizon Communications Inc. | 415,798 | the biggest lever is going to be more mobile plus home customers. When those two customers come together, we see a huge reduction in churn, and that's going to apply to a larger base as we expand our broadband offering more piece. The fourth is margin accretive add-on services. In form of perks, in form of adjacent services, it's a continuous growth, and it's being very innovative every time we do that. We are taking the same approach we have to mobility to our broadband space. It first starts with momentum in sales. You saw that this quarter strong momentum in sales on Fios and FWA. Similar tactics, similar promotions. But the construct is that same momentum we have and the same energy we bring to our broadband business as well. myHome has been a very successful launch. A lot of our base tends to like the perks. They are taking on our new customers when they come on board, they take on perks, and they like the ability to share their perks between mobile and home. And also sustained growth in ARPU, when you build a long-term sustainable subscription business like we've done, you have to balance P&Q. Over a period of time, I've spoken about this 80-20 contribution to service revenue because that's the big measure we measure ourselves on is service revenue. I think with a positive four net add trajectory, strong FWA and Fios performance, we are on track to get to that 80-20 mix over a period of time. Now, we are in a very unique position. I think the only the only company, carrier, who has a scaled position in both FWA and in the fiber business. And both these are top products, when you combine them together you get access to 100 million homes and businesses in the country. No other carrier offers that amount of coverage and depth that we offer in terms of serving our customers. Let's dig into each of these one by one. The first is FWA. Joe just spoke about moving from 60 million to 90 million homes and businesses covered. But what's interesting about the FWA basis, it's a quality prime customer base. Our FICO |
7,695 | VZ | 3 | 2,024 | 2024-10-22 09:00:00 | Verizon Communications Inc. | 415,798 | million homes and businesses covered. But what's interesting about the FWA basis, it's a quality prime customer base. Our FICO score on FWA is north of 700. So it's a really strong customer base. And the reason is it's a high price value equation. There's a huge segment of the market who love that. And because of that, you see very high NPS scores. I mean think about it, you could finish this. You could go to a store in five minutes, buy it, and in 10 minutes after that, you could be in your apartment connected with the 5G Verizon FWA product. It's a huge competitive advantage. High NPS is a competitive advantage. Our pricing construct is a competitive advantage. We do not like promotions that roll off. You get a customer on one price point and in two years, you -- the price changes. It's annoys customer. And that's one of the reasons why it's a huge competitive advantage for us because we continue to lead with that. And then you have fiber. Joe spoke about 20 years. He's been working a little longer than 20 years in the fiber business. Look, we are the OG fiber players. Some people think it's a new thing. We've been in this thing for 20-plus years. And every year, we find that the new cohorts that we bring on have better penetration than some of our older cohorts even because we get better. Joe gets better with the build, we get better with selling it, we're targeting it, using digital to bear in those pieces to do that. But what's interesting is it's a white-glove experience. Very, very high NPS scores that we have, very low churn. And most, a majority of our customers who come and take our Gig Plus plan. Again, that's a competitive advantage around high NPS, high customer satisfaction. So over a period of time with 100 million premises covered, we have a differentiated offering. We have an offering that is steered. We have an offer that is segmented. FWA and fiber, and customers will choose. At the end of the day, we want customers to choose what's right for them, and we're going to be very transparent on |
7,696 | VZ | 3 | 2,024 | 2024-10-22 09:00:00 | Verizon Communications Inc. | 415,798 | choose. At the end of the day, we want customers to choose what's right for them, and we're going to be very transparent on what the pricing is and what the value prop is to grow that. And talking of value prop, I want to spend some time talking about the Verizon model of convergence. The Verizon model of convergence is margin accretive. It is revenue accretive and has very attractive ROIC. And at the end of the day, it is demand led. I do not believe in giving away one product to sell the other, or giving away one product to hold on to the other. We think we have the best wireless network. We have best broadband offering. Customers want it and they're willing to pay a very fair price for it. We do have some advantages for a customer when they take both of those products together. But at the end of the day, it is demand-led, because customers want to buy the best from both us to do that. Now let me talk a little bit about how this convergence comes to life. How convergence comes to life? The first one, as you see on the page, is myHome and myPlan. It's -- we launched both, and it's not a coincidence that both the offerings look very similar. You buy a base connectivity and then you have access to these really unique books. I mean, it's becoming a pretty big business for us and customers can share perks across both those plans. The second is our app. My Verizon app, we have a single app now for both for mobility and home. So once you get a mobility customer, they see a home piece and they can try out the home and they can buy the home and then vice versa to do that. And also home Wi-Fi can control everything in a single app and it does very well. The third thing is transparent pricing. It is very clear to customers what their savings are. And we're going to keep innovating in this space. Because at the end of the day, customers want the best product, but they also want clear pricing upfront, and we do that every single time with our constructs that we have there. Fourth is distribution. We have a large |
7,697 | VZ | 3 | 2,024 | 2024-10-22 09:00:00 | Verizon Communications Inc. | 415,798 | upfront, and we do that every single time with our constructs that we have there. Fourth is distribution. We have a large distribution of stores and a digital footprint. And you can see over a period of time, we are able to distribute our Fios offering through our store network as well, and that's a huge upside to the business case. So you see that we are building the Verizon model of convergence, which is demand-led and it's accretive to us. But where does the value come for Verizon and its shareholders? Two big buckets, revenue. The first one is we will see penetration well north of 40% in our business. And as I said, every new cohort that we bring in actually gets to that a little faster than the previous cohort we do that space. And once we do that, once we acquire Frontier, and when we close on Frontier, we will we will have that as well. And then as Joe builds out new networks, we will see similar penetration levels as we do that. The second is, in some of our big markets where we have fiber, our wireless market share is 500 basis points or 5% better than if we don't have fiber. So we can cross-sell mobility to our Frontier base when we close it, to our new cohorts of fiber that are coming in, but also customers who have access to fiber, but don't have fiber today, we'll be able to cross-sell them. So two revenue upside opportunity for us as we build out our converged offering. The second is churn. A couple of data points. We see a 50% reduction in mobility churn when we bundle with fiber. And that's a huge lever for us, even broader, longer term on how we take churn down in the space. The second is a fiber churn, which is already world-class, one of the best in the world, will go down another 40% when we bundle mobility and fiber. That's a very unique position for us, and we see churn benefits on FWA as well. So what we are essentially building here is one of the world's best franchises for broadband, with FWA as well as with fiber, with best-in-class metrics. But more importantly, it's demand-led, and |
7,698 | VZ | 3 | 2,024 | 2024-10-22 09:00:00 | Verizon Communications Inc. | 415,798 | for broadband, with FWA as well as with fiber, with best-in-class metrics. But more importantly, it's demand-led, and that's the Verizon model of convergence. Talking about demand led, a lot of the reason it's demand-led actually comes from our unique value prop. Let me start with this. The bottom of layer is our connectivity layer. Best network. Joe always says, we will be the most reliable network. That's where our value comes from. It's the same network we have for broadband, for postpaid, through myPlan and our prepaid value brands as well. And we keep tiering these. We have segments that go after it. And over a period of time, we'll have new sources of revenue. Let me touch on two of these. The first is network slicing. It's a new currency. It's something that you should -- we should talk a little more about soon. And that will have upside opportunity for us. Second is satellite connectivity. That's another new form of connectivity and then new ways to monetize our overall connectivity network. Then on top of that, you get to our entertainment and adjacent services. We call them perks, because you have to be a Verizon customer to get them. That's the perk you get for being a Verizon customer. And we right now have seven million perk subscriptions on our network. And then guess what, they're going to double by 2025. So we have a large revenue stream that customers find very compelling. It reduces churn for us and is very margin rich for us. So it covers a lot of pieces for us. And we're not stopping still. We're going to keep innovating. But to be on our network to be part of perks, it's going to have to be compelling. It's going to have to be exclusive to Verizon and something our customers want and they can save money with it. On top, we have our loyalty program. Verizon Access or if you're a customer, it's just myAccess because it's your access, because it gives you access to two things. One is always on deals to some of the best premium brands out there. But second is once in a lifetime, my kids call it |
7,699 | VZ | 3 | 2,024 | 2024-10-22 09:00:00 | Verizon Communications Inc. | 415,798 | things. One is always on deals to some of the best premium brands out there. But second is once in a lifetime, my kids call it bucket list type opportunities they have. For example, you can sky dive with the bronchos, or you can go to London to watch the Jacksonville Jaguars. Or we can actually toss the kind for the opening game. These are once-in-a-lifetime events for NFL, NHL, NBA and some of the best musical acts out there. I don't know if you can get tickets for Taylor Swift, but definitely check in on the Verizon myAccess plan to do that. As I wrap up, I want to leave you with two thoughts. The first is we at Verizon right now, have two engines for growth. Two engines that have secular growth in front of them, two engines that have tailwinds and where we have unique market position but huge opportunity as well. You're going to see us do the Verizon model of convergence, which is demand-led, which is give customers choice, be transparent about pricing and offer them a huge set of services on top of that. We're going to deepen our relationship with our customers and extract value for them and for ourselves in the process. The second is, over the last seven quarters, you've seen our vision and execution on the business. You're going to give a lot of confidence you're going to get from that that we will execute on that for our mobility business, our broadband business and the Verizon converged business. With that, I'm going to pass it over to Tony talk about two things; 3Q update and more importantly, capital allocation. Tony take it away. |
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