Unnamed: 0 int64 | symbol string | quarter int64 | year int64 | date string | company_name string | company_id float64 | text string |
|---|---|---|---|---|---|---|---|
7,800 | VZ | 1 | 2,024 | 2024-04-22 10:00:00 | Verizon Communications Inc. | 415,798 | Tony Skiadas: Yes, so Dave, on the second number, it is included in the line counts. I mean, the one thing we would say is it gives customers flexibility. They can add and remove it as desired. The adoption so far has been good, just a few points on that. It was very low single digit percentage of phone gross adds in the quarter for consumer. And we believe there's a limited market for this. As Hans said, it's ARPA and revenue accretive and it's high margin business. There's no incremental device. There's no incremental data usage and the results in the quarter reflect the strength of our core business. So we -- as Hans said, we would take this profitable connection any day of the week.
Hans Vestberg : And it goes back to the things -- the three things that I talked about that we are measured on from our shareholders, from our board and how I measure my management team. It's a service revenue growth, it's EBITDA and cash flow expansion. That's what we're measuring. Then it's 100 different measurements inside there. But those three are what we're incentivized on, and that's how we run our business.
David Barden: Got it. And just to be totally clear, Tony, so of the five-point something gross add growth year-over-year in the quarter, maybe 1% or 2% of that was the second number add-ons, which might not continue because there's a finite market for that.
Tony Skiadas : We said it was a very low single digit percentage of phone gross adds, yes.
David Barden: Perfect. Okay, thank you.
Brady Connor: All right, Brad, we're ready for the next question.
Operator: The next question comes from Sebastiano Petti of J.P. Morgan. Your line is open, sir. |
7,801 | VZ | 1 | 2,024 | 2024-04-22 10:00:00 | Verizon Communications Inc. | 415,798 | Operator: The next question comes from Sebastiano Petti of J.P. Morgan. Your line is open, sir.
Sebastiano Petti: Hi, thanks for taking the question. Just wanted to see if you could give us an update on what you're seeing in the overall consumer broadband and particularly within consumer fixed wireless. Net adds did -- slow a little bit sequentially year-on-year. Obviously, the backdrops you called out the move environment remains a little bit challenged. Are you seeing incremental competition as AT&T Internet Air perhaps ramps up, even though maybe T-Mo is talking about a little bit of a slowdown there. That would be helpful. And then also touching upon, Hans, thinking about your thoughts on 5G use cases. I think you emphasized private networks a few times within the prepared remarks. How are you thinking about the development of the revenue opportunity here, maybe relative to how you're thinking about [MEC] (ph) as well, you kind of touched on that -- how AI plays into it. Thank you. |
7,802 | VZ | 1 | 2,024 | 2024-04-22 10:00:00 | Verizon Communications Inc. | 415,798 | Hans Vestberg : Thank you Sebastiano. Yeah, when we talk about the broadband, first of all I think Fios continue to be the stellar product, best fiber product in the market, both for businesses and for consumer. You see us continue -- it's a little bit up and down depending on mover markets and all of that, but we are very consistent on growth in that area, very pleased with that product. On the fixed wireless access, we continue to see very, very good net promoter score, the easiness of installing it, the greatness of the product, the quality of the product, all that plays in. So I just see that when we roll out our C-band we get new opportunities. On the consumer side, that we saw of course as an obvious use case. On the business side, we're seeing new use cases that we didn't see before. I mean, all the way from coffee shops replacing cable with fixed wireless access to large enterprises actually replacing with fixed wireless access as well for different use cases. So we had a super quarter in fixed wireless access in the business side this quarter. But again, we are dimensioning ourselves to be around 400 net adds quarter-by-quarter. That's how Joe, our Head of Network, is deploying the capital, the resources so we can handle it. So we're again pleased with that. We said it also was a little bit slower broadband market in the beginning of the year. The exit rates were better at the end of the quarter. So all-in-all good. On the 5G use cases, yeah, now we start talking more and more about private networks because the number of them are many -- then the value of them are still fairly small. But you know, when we build that base of private network, managed spectrum for enterprises, that's over time is going to be a great opportunity for our enterprise sales force to add in, do the mobile edge compute. And as I said, AI is like, that's how we built our mobile edge compute network. And we already have mobile edge compute in many of our sites across the country in order to be able to meet that compute and storage. |
7,803 | VZ | 1 | 2,024 | 2024-04-22 10:00:00 | Verizon Communications Inc. | 415,798 | already have mobile edge compute in many of our sites across the country in order to be able to meet that compute and storage. So over time, long-term, and we are a long term company. We're going to be around for many, many years being telecoms. This is absolutely the right investment. Nobody else has built a network as we have done when it comes to AI network compute storage at the edge on the wireless network. |
7,804 | VZ | 1 | 2,024 | 2024-04-22 10:00:00 | Verizon Communications Inc. | 415,798 | Brady Connor: Thanks, Sebastiano. Brad we are ready for the next question.
Operator: The next question comes from Tim Horan of Oppenheimer. Your line is open.
Timothy Horan: Thanks, guys. Tony, how sustainable do you think the 4% ARPA growth is? It seems like you have a lot of -- lot of levers to pull here, and it sounds like you're feeling a little bit more optimistic about that metric longer-term. And can you be just a little bit more specific in, you know, how much debt you kind of plan on paying down per year, maybe second half of this year or next year? Thank you.
Tony Skiadas : Sure. So on the ARPA growth, again you see the progress on gross adds and you saw the 5% growth on gross adds. You see the progress with myPlan and the continued premium mix has been very, very strong on myPlan, and that's continued. We see a further runway for growth, and you saw it in the first quarter. And as we said in the prepared remarks, we'll see a full quarter's effect of the pricing changes that we announced in the consumer business. And that launched in March. You'll see a full quarter's effect in the second quarter. So we feel very good about the progress on ARPA and that the team is making. And then on your second question, I'm sorry?
Timothy Horan: How much debt do you think you can pay down per year? And just on ARPA, I guess the question is -- is this sustainable over a multi-year period? Thanks. |
7,805 | VZ | 1 | 2,024 | 2024-04-22 10:00:00 | Verizon Communications Inc. | 415,798 | Tony Skiadas : Yeah, we're not going to give multiyear targets here, but we like the shape of the growth right now. We said we're on track with our service revenue growth through the year and the team is very focused on us. We said we were going to be phone net add positive in consumer and that's on track as well. And on the debt, so look, we're not going to give any targets on paying down debt. Our focus is on continuing to generate strong free cash flow to pay down debt in a meaningful way. In the second half of the year, we're on track to do that. We have 3.6 billion of unsecured maturities due this year. About half of that was addressed in the first quarter. And you should expect us to be opportunistic as the year goes on.
Brady Connor: Yeah, thanks, Tim. Brad, We're ready for the next question.
Operator: The next question comes from Craig Moffett of MoffettNathanson. Your line is open.
Craig Moffett: Hi, good morning. Thank you. Let's talk about something a little longer-term, which is spectrum and capacity. Your CapEx has been now trending down as you've largely gotten through the 5G build. I'm just wondering how we should think about your spectrum needs going forward and what your appetite would be for additional spectrum if some were to come available from DISH Network or, if you think about US Cellular, and how you think about that in the context of the spectrum screens at the FCC, which don't really leave much room for incumbent players to add. Do you think that those are a real impediment or do you think that those would likely be adjusted when the time comes? |
7,806 | VZ | 1 | 2,024 | 2024-04-22 10:00:00 | Verizon Communications Inc. | 415,798 | Hans Vestberg : Thank you Craig. Great question. First of all, as we all know, right now the FCC doesn't have any spectrum to auction out them -- and they don't even have an approval to do it. So that's sort of constrained. Then it could, of course be secondhand market spectrum. We feel good about -- we have only deployed a piece of our C-band so far. So we have quite a lot left in -- our many of the sites have 60 megahertz or maybe at best 80. We have 161 megahertz nationwide. So we have quite a lot left of spectrum. And remember, That was the decision I, together with the board, took. We bought spectrum for decades, not for the next two quarters or something like that. So we feel really good about it. Then any opportunistic spectrum coming up, it's hard to predict. And even on whatever regulation is going to be around screens and that. I don't know. The only thing I know, I've sit here on a better position ever say, with my millimeter way, my C-band, my low-band, and how I build a network. And sometimes it's opportunistic spectrum is going to cost me a lot both for my customer interaction because some spectrum is not in the devices. I need new radios, new software. So you need to think when you re-engineer the network to see that you have the right spectrum all the way up to the customer. And I think that no one is even close to our team or radio planning doing that. But all-in-all, we feel good about where we are today. Let's see what's going to happen in the market of spectrum.
Craig Moffett : Hans, You've [seesawed] (ph) back over time between a preference between network densification or more spectrum. Is there a sort of house view at the moment for where you think it's most attractive to add capacity? Would it now be through network densification rather than Spectrum or vice versa? |
7,807 | VZ | 1 | 2,024 | 2024-04-22 10:00:00 | Verizon Communications Inc. | 415,798 | Hans Vestberg : A little bit early to say, and ultimately it's actually a call or return on investment that we do daily here. Should we put up a new tower? Should we densify? Should we put up new elements? Or should we add more spectrum? That's a regional, almost on ZIP code level that the team is going through this. So every time you see spectrum coming out in the secondhand market historically, you make a calculation. We feel good about the position we have again here with all the spectrum we have to make those choices internally rather than betting on external assets coming in. We don't need that. We have everything in-house right now for quite a while.
Craig Moffett : Thank you.
Hans Vestberg : Thank you, Craig.
Brady Connor: Brad we are ready for the next question.
Operator: The next question comes from Greg Williams of TD Cowen. Your line is open.
Greg Williams: Great. Thanks for taking my questions. You provided some great color on ACP. I think you said it could be a 50 basis point hit. I'm just curious if we can drill down there. Is that more of an ARPU hit with these new plans that are coming out, or is it more on the disconnect side? Second question is just on fiber-to-the-home and the open access models that we're seeing. We've seen some news flow with Tillman and Intrepid, et cetera, on open access and maybe even T-Mobile. And just trying to gauge your appetite to ride some of these open access CapEx light models if they come to fruition. Thanks. |
7,808 | VZ | 1 | 2,024 | 2024-04-22 10:00:00 | Verizon Communications Inc. | 415,798 | Hans Vestberg: I can take the first question -- the second question first. As we haven't done any open access deals yet, you can see that the appetite hasn't been that big. Anyhow, we're going to evaluate any type of opportunities that can fortify how we deliver to our customers. So far in this environment, with the very high capital cost, et cetera. It hasn't -- we haven't find a good return on investment on it. And again, we are very financially prudent. And remember, we have fixed wireless access, we have our Fios, we sort of -- we have [own this] (ph) economics on basically everything we're doing. That's why our return on investment is the highest in the industry and our EBITDA is the highest. We will continue to be disciplined. That doesn't mean I'm not going to look into other models, but right now there have not been any models that is appealing to me and the team and for our shareholders.
Tony Skiadas: And then Greg, on your question on ACPs, so as we said, it was up to a potential 50 basis points of headwind in service revenue. And that's a combination of ARPU and churn and it's lower ARPU. And we also said the margin exposure from ACP is also very, very small.
Greg Williams: Got it. Thank you.
Brady Connor: Yeah. Thanks, Greg. Brad we are ready for the next question.
Operator: The next question comes from Bryan Kraft of Deutsche Bank. Your line is open.
Bryan Kraft: Hi, good morning. I had two if I could. First, could you provide an update on your efforts to pursue BEAD funding? Are you seeing any progress at the state level in establishing the rules? And based on what you are seeing there, are you more encouraged or discouraged by what you're seeing? And then separately, I was wondering if you could just provide any color on the company's performance in the first quarter within the larger metro markets relative to smaller mid-size markets and consumer. Thank you. |
7,809 | VZ | 1 | 2,024 | 2024-04-22 10:00:00 | Verizon Communications Inc. | 415,798 | Hans Vestberg : Thank you. On the BEAD funding, yeah, I think that has been widely reported in the press. It is of course a complicated process to get the BEAD money out, et cetera. So we bid where we see it makes sense with return on investment and the subsidy is coming in there. There are some other broadband money coming into the market from the previous funds which were winning. We just had some quite large wins here recently in Pennsylvania. So we're using it but we do it when it makes sense from a profitable point of view. But again, it's probably going to take some time when we see this money rolling out. Second question is for you. I [think you remember] (ph) …
Tony Skiadas: Yes, it was the question on the C-band market. So on the C-band markets -- in the early markets, the performance is much better. As we said earlier, the churn is much better, 4 basis points better in churn. The premium mix is also a lot better, and we see meaningful increase in gross add performance as well. So we're really, really pleased with the performance in C-band.
Bryan Kraft: Thank you very much.
Brady Connor: Yeah, thanks, Bryan. Brad, we have time for one more question, please.
Operator: Your last question will come from Peter Supino of Wolfe Research. Your line is open, sir.
Peter Supino: Hi, good morning everybody. I wondered if you could talk about SG&A growth. It was up 11% in business and 4% in consumer. It was nicely offset by cost relief from lower upgrades. I'm just wondering if you're spending back some of that upside on SG&A and how we might think about modeling operating leverage and specifically SG&A going forward. And then if anybody would be willing to provide an update on your project of deploying millimeter wave spectrum in support of the FWA business to multi-dwelling units. Is that working the way you hope? And if so, could that provide upside to your long-term broadband growth targets? Thanks. |
7,810 | VZ | 1 | 2,024 | 2024-04-22 10:00:00 | Verizon Communications Inc. | 415,798 | Hans Vestberg : Thank you. On the SG&A, we're very focused on seeing that we continue to get full leverage on the growth that we have right now. So the team is really focused on taking out costs. And I said, we are on track with that. We have a lot of initiatives ongoing. Tony will give you some more puts and takes on the SG&A in the quarter. On the millimeter wave MDU solution, that is progressing. We have said it will come in the second half, latter part of this year, in commercial. But we're piloting it right now and it's performing really well. So we feel really good about it. And it will over time, of course, add opportunity for us on MDUs that we haven't served with a fixed wireless access so far. So it will be an addition over time. Tony?
Tony Skiadas : Yeah, Peter, on your question on SG&A, some of that in the quarter is a function of the upfront work on transformation initiatives that will abate as the year progresses. And we also see pressure, year-over-year pressure on the handset insurance claims and we expect that to level off in the second quarter. We expect to see further operating leverage in the second half of the year.
Peter Supino: Thank you very much.
Brady Connor: Great, thanks Brad. That's all the time we have.
Operator: Ladies and gentlemen, this concludes the conference call for today. Thank you for your participation and for using Verizon Conferencing services. You may now disconnect. |
7,811 | VZ | 1 | 2,025 | 2025-04-22 08:30:00 | Verizon Communications Inc. | 415,798 | Operator: Good morning, and welcome to the Verizon’s First Quarter 2025 Earnings Conference Call. At this time, all participants have been placed in a listen-only mode and the call will be opened for questions following the presentation. Today’s conference is being recorded. [Operator Instructions] I would now like to turn the call over to Mr. Brady Connor, Senior Vice President, Investor Relations.
Brady Connor: Thanks, Brad. Good morning and welcome to our first quarter 2025 earnings call and customer value update. I'm Brady Connor and on the call with me this morning are Hans Vestberg, our Chairman and Chief Executive Officer; Tony Skiadas, our Chief Financial Officer; and we have our Consumer Group CEO, Sampath, who will provide an update on our consumer strategy. 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. Reconciliation of these non-GAAP measures to the most directly comparable GAAP measures are included in the financial materials posted on our website. Discussions and comments related to our 2025 guidance exclude any assumptions regarding the potential effects of the tariff environment, owing to the uncertain and evolving nature of these impacts. Earlier this morning, a detailed overview of our first quarter results was posted to our investor relations website. We also posted supplemental materials relating to today's call on our website. With that, I'll turn it over to Hans. |
7,812 | VZ | 1 | 2,025 | 2025-04-22 08:30:00 | Verizon Communications Inc. | 415,798 | Hans Vestberg: Thank you, Brady. Good morning, everyone. Let me start by addressing the evolving policy and macroeconomic landscape. We continue to monitor the ongoing developments, and we're confident in our ability to effectively manage our business for our customers and shareholders. In periods of heightened uncertainty, our business has demonstrated remarkable strength, given the importance and the essential nature of our connectivity services, the size and quality of our customer base, and the strength of our balance sheet. Our diverse portfolio of offerings serves all market segments and position us for success in any economic environment. And with our bias for action and position of strength, we expect that we will not only weather the current environment, but thrive in it. Now, let me turn to our results. We had an exceptional financial start of the year, delivering strong growth across our key financial metrics. Wireless service revenue was up 2.7%, at the high end of our guided range. Adjusted EBITDA of $12.6 billion was our highest reported result ever, growing 4% and exceeding our guided range. Free cash flow was up over $900 million and enabled continued execution of our capital allocation priorities. Even with the recent declines in consumer confidence, we remain confident in our ability to deliver on our 2025 financial guidance. Our comprehensive portfolio of offerings and strategic moves we’ve made over the last year position us well for a sustainable financial and subscriber growth while also improving the customer experience. These moves include our brand refresh along with continued evolution of our customer-first offerings such as myPlan, myHome, and My Biz Plan, organic and inorganic broadband expansion with the pending acquisition of Frontier, AI Connect and satellite partnerships that enables texting anywhere for free. RootMetrics recently recognized Verizon as the best, fastest, and most reliable 5G network in the US. And our network continues to get even better. On mobility, we're on |
7,813 | VZ | 1 | 2,025 | 2025-04-22 08:30:00 | Verizon Communications Inc. | 415,798 | the best, fastest, and most reliable 5G network in the US. And our network continues to get even better. On mobility, we're on track to deploy C-Band to 80% to 90% of our planned sites by year end and we are aggressively rolling out 5G advanced features. On Fios expansion, we are ahead of our plan year-to-date to deliver 650,000 incremental passings this year. On fixed wireless access, our multi-dwelling unit solution is expected to gradually ramp over time, along with continued expansion of homes and businesses covered with the ongoing C-Band deployment. Turning to our operational performance, our segmentation strategy focused on delivering targeted offerings is yielding positive results. We delivered a year-over-year improvement in combined postpaid and prepaid phone net adds. We did have a slow start on postpaid phone net adds, largely driven by elevated churn due to recent price-ups and pressure from federal government accounts. However, our prepaid net adds of 137,000 were the best since the TracFone acquisition. In broadband, we continue to take share. With fixed wireless access and fiber, we have the most complete offering covering all segments of the market and we will cover more than 100 million premises over the time. Our fixed wireless access product continues to lead our broadened growth and we have a great momentum to reach our next milestone of 8 million to 9 million fixed wireless access subscribers by 2028. We're excited to expand our broadened opportunity and continue to scale our mobile and home offerings as we work towards closing the Frontier transaction. The consumer group's multi-year business transformation effort is progressing as planned, and you will hear more about that from Sampath shortly. In the business group, our private networks business continues to scale. We closed more than a dozen deals in the quarter, including private networks for AdventHealth and Nucor. We were named a leader in the Gartner Magic Quadrant for Managed IoT Connectivity Services worldwide and reached an |
7,814 | VZ | 1 | 2,025 | 2025-04-22 08:30:00 | Verizon Communications Inc. | 415,798 | and Nucor. We were named a leader in the Gartner Magic Quadrant for Managed IoT Connectivity Services worldwide and reached an agreement to deliver a turnkey IoT solution for Atlanta Hawks. We have seen accelerated interest in AI Connect and continue to expand our partner ecosystem. Looking ahead, our priorities are clear. A continued focus on growing wireless service revenue, expanding adjusted EBITDA and generating strong free cash flow. Accelerating our mobility and broadband growth and scale private networks. Leverage our existing fiber and edge compute assets to unlock new revenue stream through our AI Connect offerings. Focus on financial discipline, operation excellence, and customer experience. And finally, execute on our capital allocation priorities, invest in the business, support and grow our dividend, pay down debt, and eventually share repurchases. With that, I turn the call over to Tony. |
7,815 | VZ | 1 | 2,025 | 2025-04-22 08:30:00 | Verizon Communications Inc. | 415,798 | Tony Skiadas: Thanks, Hans, and good morning, everyone. As we reported earlier, the first quarter demonstrated our ability to drive strong financial growth with wireless service revenue growth at the upper end of our guided range. Additionally, we had our best-ever reported adjusted EBITDA result at $12.6 billion, and we delivered an over $900 million improvement in free cash flow from the prior year. We improved our total combined postpaid and core prepaid phone net adds year-over-year. We're taking share in broadband and we continue to innovate with myPlan, myHome, and our new My Biz Plan to deliver best-in-class value across all of our customers. Our consumer postpaid phone net losses of 356,000 reflect the impact of recent pricing actions. We exited the first quarter with positive momentum. Consumer postpaid phone gross adds in March were up mid-single-digits from the prior year, and the performance in April continues to be strong. Additionally, our new three-year price lock and free phone guarantee is resonating in the market. We remain confident in our ability to deliver better consumer postpaid phone net adds year-over-year for the full year. Business phone net adds were $67,000 in the period, impacted by pressure within federal government accounts. We continue to work with customers of all sizes to deliver connectivity solutions that match their needs. Our momentum continued to build in core prepaid where we delivered 137,000 net adds. Our strong execution and investment in Visible, Total Wireless, and Straight Talk is paying off and we continue to expect positive service revenue contribution from core prepaid in the second half of the year. In broadband, our Fios and fixed wireless access offerings are attracting new customers quarter after quarter. We had 339,000 net adds in the period, and we continue to take market share. This is a solid start to the year, and one we expect to build on as we expand our C-Band and Fios availability. Shifting to financials, we delivered strong results with 2.7% |
7,816 | VZ | 1 | 2,025 | 2025-04-22 08:30:00 | Verizon Communications Inc. | 415,798 | expect to build on as we expand our C-Band and Fios availability. Shifting to financials, we delivered strong results with 2.7% wireless service revenue growth. This reflects the benefits of pricing actions, expansion of fixed wireless access subscribers, and continued adoption of perks and premium plans. Adjusted EBITDA of $12.6 billion grew 4% in the quarter, which represents our best quarter of year-over-year growth in nearly four years and demonstrates our sustained and disciplined approach to growth. Adjusted EPS was $1.19 for the quarter, up 3.5% year-over-year. Finally, our free cash flow of $3.6 billion positions us to continue to pay down debt in alignment with our capital allocation priorities and ahead of the anticipated close of the Frontier transaction. In closing, we are pleased with the financial performance we saw in the quarter. As Hans mentioned, we have a lot of experience managing through uncertainty in the broader economy, and we have a product portfolio that allows us to compete effectively in any environment. We remain confident in our ability to deliver on our operational and financial goals for 2025. I will now turn the call back over to Hans. |
7,817 | VZ | 1 | 2,025 | 2025-04-22 08:30:00 | Verizon Communications Inc. | 415,798 | Hans Vestberg: Thank you, Tony. Now, let's discuss our strategic approach to the consumer market to drive sustainable subscriber and financial growth. It all starts with how we compete and go to market. Our network is the foundation of everything we offer. We have the best and most reliable network, and we continue to extend our network leadership with our ongoing C-Band deployment and broadband expansion with fixed wires access and fiber, including the pending acquisition of Frontier. Our customer-first connectivity offerings deliver unmatched control, value and simplicity for all our customer segments. Over the last two years, we have introduced targeted offers for all customer segments across mobility and broadband. As the market leader, we remain committed to introducing new and innovative offerings that meet the evolving needs of our customers. Next is the value-added services, which is one of our key differentiators in the market. We offer add-on perks, including exclusive discounts on some of the top streaming services such as Netflix and Max. Given the size and the quality of our base and the scale of our distribution network, we offer rates that customers cannot find anywhere else and we will continue to expand our product portfolio. Over the past few years, we have dedicated substantial resources to capital to enhance our customer experience through various initiatives, including AI for customer care and personalization. Although the industry, including Verizon, still has room to improve, we have made great progress towards our goal of seamless customer interactions. Lastly, our brand is a pivotal element in our go-to market strategy. Recognizing its importance, we made a strategic decision to refresh our brand last year. And we are committed to further developing and strengthening our brand to drive continued growth and customer engagement. By focusing on these key pillars of our value proposition, we attract new customers, foster loyalty among existing ones, and maximize the long-term value of each |
7,818 | VZ | 1 | 2,025 | 2025-04-22 08:30:00 | Verizon Communications Inc. | 415,798 | our value proposition, we attract new customers, foster loyalty among existing ones, and maximize the long-term value of each customer relationship. This holistic approach ensures that we remain competitive in the marketplace and drive sustainable subscriber and financial growth. Now, let me turn to Sampath, who will provide more details on our consumer transformation journey. |
7,819 | VZ | 1 | 2,025 | 2025-04-22 08:30:00 | Verizon Communications Inc. | 415,798 | Sowmyanarayan Sampath: Good morning, everyone. When I stepped into the role of consumer unit CEO just over two years ago, Hans and I immediately set a course for a multi-year transformation that offers what customers need in today's increasingly dynamic economic environment. We committed to delivering real value to our customers while driving sustained long-term growth. Let me walk you through our transformation journey and the results so far. Beginning in 2023, we revamped our sales engine, moving to a regional model, individual sales incentives, and a stronger focus on local marketing. We also launched myPlan, giving customers more control, value, and simplicity. This allowed us to significantly reduce our perceived price premium while driving higher average revenue per user through perks, insurance, and financial services. In 2024, we relaunched our brand and accelerated myPlan and myHome adoption. We solidified the Verizon model of convergence with the announcement of the Frontier transaction and ramping up our current in-footprint fiber build. This transaction will help enable a long-term goal of offering broadband to over 100 million premises, including fiber passings of 35 to 40 million. We also turned around our prepaid business, which includes the industry's largest portfolio of brands. This was driven by a revamp of our value propositions, expanded exclusive and third-party distribution, and instilling the same operational rigor we introduced in our postpaid business. The core prepaid brands returned to subscriber growth in 2024 and achieved their best results since the TracFone acquisition this quarter. This demonstrates our ability to win across all market segments. Customers are responding to our offers, and we anticipate gaining market share in prepaid this year. As we enter year three, we are doubling down on our customer-first strategy with an increased focus on customer retention with the Verizon Value Guarantee, an industry-leading three-year price lock, free phone guarantee for everyone and |
7,820 | VZ | 1 | 2,025 | 2025-04-22 08:30:00 | Verizon Communications Inc. | 415,798 | retention with the Verizon Value Guarantee, an industry-leading three-year price lock, free phone guarantee for everyone and savings you cannot get elsewhere. Before I dive into the Verizon Value Guarantee, let us quickly recap what makes our offering stand out from the competition. Our strategic differentiation centers on creating real customer value through a unique combination of network superiority and customer-first offerings. Our myPlan and myHome offerings have been the key drivers of our transformation. These offerings go beyond basic connectivity to include premium entertainment and adjacent services that deliver significant savings for the customer. Today, you can get eight of the most popular streaming services from Verizon for $50. That is value customers can only get at Verizon. Our portfolio of adjacent services include industry-leading insurance products for both mobility and the connected home and give customers even more peace of mind. We offer even more ways to save through our financial service partners and products, including the Verizon Visa card and the open bank high-yield savings account with Santander, both exclusive to Verizon customers. This business is growing at a double-digit rate and bringing in margin-rich service revenue. Finally, we launched Verizon Access loyalty program, giving customers access to events like the exclusive presale of 100,000 Beyonce concert tickets, NFL, NBA and NHL games and lifetime experiences, such as the 140,000 free tickets we gave out to the first Verizon Super Bowl FanFest parties. There is no other plan in the industry like myPlan and myHome, and the beauty of having them build side by side is our ability to offer seamless account linkage and promote joint offers. For converge customers, our retention rates are significantly better than those with just mobility or broadband, validating our convergence strategy. Simply put, we offer the most differentiated value proposition in the industry. And with our recently launched offers for both new and |
7,821 | VZ | 1 | 2,025 | 2025-04-22 08:30:00 | Verizon Communications Inc. | 415,798 | put, we offer the most differentiated value proposition in the industry. And with our recently launched offers for both new and existing customers, we are delivering what people want and need on their terms. So now let's turn to what we announced a few weeks ago. We launched a game-changing offer, a three-year price lock and a free phone guarantee with trade-in for new and existing customers. This offer was contemplated in our 2025 guidance and is a key component of our strategy to deliver sustainable growth. The premise of this offer began several quarters ago as emerging consumer trends showed a growing desire for predictability, price control and value, all things that are particularly relevant in today's economic environment. Customers want peace of mind, and we are giving them just that. The key elements of this offer include a three-year price lock guarantee that covers the network portion of all tiers of myPlan and myHome and current customers were automatically enrolled on day one. Guaranteed trade-in credit for phones to new and existing customers within their planned tiers. Free satellite text messaging on all plans. Customers should not have to pay for texting, and it's part of the value we provide to our customers. Customers love our perks and the massive savings they deliver. We had over 10 million perks subscriptions at the end of the first quarter. We now anticipate 15 million subscriptions on our platform by the end of this year, an increase of 1 million perks from our prior forecast in the year-end 2025. They love getting more value for their money with Verizon Visa Card and Openbank high-yield savings account. And customers with both mobile and home services get a free monthly perk that will drive customer loyalty. We did not just launch an offer, we set a new standard for customer value, and customers are responding very well. Early indicators in April suggest strong gross add momentum and very good reception from customers, including many new customers attracted to Verizon. We expect the |
7,822 | VZ | 1 | 2,025 | 2025-04-22 08:30:00 | Verizon Communications Inc. | 415,798 | gross add momentum and very good reception from customers, including many new customers attracted to Verizon. We expect the Verizon Value Guarantee to provide many benefits to Verizon. First, growth. We will continue to drive revenue through higher volumes, higher premium mix, perk adoption and upgrading customers to myPlan. All of that is in addition to revenue benefits from a growing FWA base along with the wholesale business and the momentum with prepaid, which we expect to turn service revenue positive in the second half of the year. Second, better customer retention. In the past, we've made necessary price adjustments, which impacted churn, but we expect trends to improve through the year, and this launch puts us on a path to get back to the lowest churn in the industry over time. And third, we have constructed this offer in a flexible manner to give us continued financial discipline. The price lock applies to myPlan and myHome network plans only. It doesn't apply to perks, discounts, taxes or fees, and we can still adjust price on legacy plans or introduce new plans if we see an opportunity in the market. Another important note is that the free phone offer will be tiered by plan and require a device trade-in. Overall, we believe this is just the beginning of how we'll earn lasting customer loyalty and continue to grow the Verizon base, including deliver better consumer postpaid phone net adds in 2025 compared to 2024. We are back to leading the market, not reacting to it, and we are the only carrier with the brand portfolio covering every price point, positioning us for further growth across every segment of the market. The three-year price lock guarantee is the next phase in our consumer transformation, giving consumers the best network, value and 24/7 support with myPlan and myHome, plus additional peace of mind with the free phone and satellite texting. We want to be people's first choice, providing products, services and experience they can't get elsewhere. With that, let me turn back to Hans. |
7,823 | VZ | 1 | 2,025 | 2025-04-22 08:30:00 | Verizon Communications Inc. | 415,798 | Hans Vestberg: Thank you, Sampath. In summary, we are on plan with our multiyear consumer transformation. We're offering the most differentiated value proposition, and we are well positioned to drive subscriber and financial growth. I'm incredibly proud of the team's dedication and efforts transforming the business. I'm confident that the actions we are taking will set the business up for sustainable long-term growth and extend our industry leadership. Now, Brady, we are ready for questions.
Brady Connor: Thanks, Hans. Brad, we're ready for the first question.
Operator: [Operator Instructions] The first question will come from John Hodulik of UBS. Sir, your line is open.
John Hodulik: Hey, thanks, and good morning, guys. Two questions, if I could. Maybe first for Hans on the subject of tariffs. Any additional color you can give us on how tariffs on, I guess, first handsets and then telecom equipment could affect the business? On the handset side, do you expect the promotions to sort of scale with tariffs and what do you expect the impact to be on upgrades? And then on the equipment side, is tariffs on equipment coming into the US mean the budget stays the same and maybe you do less homes passed? Or just how that unfolds? And then secondly, for Sampath, thanks for all the color on the consumer segment and the strategy and thanks for the color on the gross adds leaving the quarter. Can we talk a little bit about churn? I mean, is all the new plans and promotions and offers you have in place, does that help churn in the second quarter or do we have to wait until the second half of the year? And that comment on getting back to industry-leading churn, is that something you expect to achieve by the fourth quarter, by the end of this year, or just more color on how that plays out would be great? Thank you. |
7,824 | VZ | 1 | 2,025 | 2025-04-22 08:30:00 | Verizon Communications Inc. | 415,798 | Hans Vestberg: Thank you, John. Let me talk about the tariffs. Of course, tariffs is a little bit a moving target [for the hour] (ph). But if we take our capital expenditures, it's a very small portion of the $18 billion, which is the midpoint of the guide this year that it is exposed to any tariffs. And on top of that, we are working with all our suppliers, and we have done so. I mean, during COVID-19, we had no impact at all with the supply chain issues there were because I think my team is the best in the industry to handle that. So that will not change any type of investments we're doing in CapEx or anything. We cannot foresee that. When it comes to handsets, that's also, of course, very early to say where the tariff is going to go and what's going to happen. But in general, if the tariff is going to be as high as they say on the handsets, we are not planning to cover that in our work. That's just not going to be possible. So, we will continue to be with financial discipline in whatever promotions we have, but we will not cover any enormous increase on tariffs on handset. That's ultimately going to hit the consumer in the market. But again, it's too early to say. We don't know where tariff is going to go. But I think my team is well prepared for handling all of it. And on the consumer side, I think Sampath has talked quite a lot about it. I think that the team has done a tremendous work with doing all the new proposals and the new promotions we had all the way from myPlan and myHome and all of that. And now we come to the third leg with the price lock and the phone guarantee. I think we're right in the moment, and we're leading from a very strong financial position. But I'll let Sampath talk a little bit more about the churn and where we are there. |
7,825 | VZ | 1 | 2,025 | 2025-04-22 08:30:00 | Verizon Communications Inc. | 415,798 | Sowmyanarayan Sampath: Thank you, Hans. Look, we made a decision to price-up certain cohorts in December and January, and they were the right trade-offs to make. It helped us lock our revenue for the rest of the year and it was the right thing to do. Look, in Q1, the cohorts that were priced up had higher elasticity than anticipated. And the higher churn can be largely attributed and isolated to those cohorts. So because of that, we think churn is transitory, it is abating, and we expect to get back to BAU by the second half of the year. And we've got other levers that we are deploying quite aggressively. The first and the biggest one is Verizon value guarantee. The three-year price lock and the free phone base is resonating really well, both for our base and for new customers as well. Our second is C-Band expansion. As Joe gets to between 80% and 90% of all macros to be C-Band enabled, you tend to see lower churn when that happens as well. And the Verizon model of convergence. Look, we added 339,000 broadband customers between consumer and business and strong volumes, but the vast majority of those customers are converged, which tends to give a benefit to churn. And then lastly is better customer experience. We have a lot of AI-driven customer experiences, updates in the funnel in the second quarter and the rest of the year. So given all of this, we feel that churn is transitory, abating and expected to get back to a BAU posture by the second half of the year.
John Hodulik: Great. Thanks guys.
Brady Connor: Yeah. Thanks, John. Brad, we’re ready for the next question.
Operator: The next question will come from Ben Swinburne of Morgan Stanley. Your line is open, sir. |
7,826 | VZ | 1 | 2,025 | 2025-04-22 08:30:00 | Verizon Communications Inc. | 415,798 | Operator: The next question will come from Ben Swinburne of Morgan Stanley. Your line is open, sir.
Ben Swinburne: Thank you. Good morning. Maybe just to follow on the conversation with Sampath. Can you talk a little bit about the March and April gross adds improvement and sort of how much that's been tied to specific promotions including the new three-year price lock? And there was a lot of talk during the first quarter at various conferences about competitive intensity. I didn't really hear you guys talk about that as being something that's incrementally more concerning, et cetera. So maybe frame the gross adds commentary, if you can, and sort of the new plans in the context of the competitive environment. And then maybe for Tony, 4% EBITDA growth for the quarter obviously sets you guys up really nicely for the year. I think your business margins were the highest in, I think, since '21. Anything in the quarter around expenses that we should think about is non-recurring? Or any commentary on how you're feeling about the EBITDA guidance for the year? It seems like you could be trending maybe to the upper end of the range, but I'll let you talk to that, if you will. Thank you. |
7,827 | VZ | 1 | 2,025 | 2025-04-22 08:30:00 | Verizon Communications Inc. | 415,798 | Hans Vestberg: Thank you, Ben. I'll start and then I'm going to hand it over to Sampath and Tony. But on the competitive environment, I think we have seen that for quite a while. I mean it is a competitive market. We perform well in that market. I think our propositions that we have had in the market that's really resonating with our customers, both on the business side and on the consumers and then adding also both the wireless business and the broadband business. I mean the broadband business continued to gain share in this quarter. We have done, that's why I'm not sure how many quarters right now as well as now we turned around the prepaid business as well, which I'm very proud of what the team has done. So I think we're competing well. But of course, it's going to be competitive. It's a great product and it's a great market, but we -- there's nothing new when it comes to that. I would ask Sampath to comment on the momentum that we have gained in March and April. But on the finance, before I move it over to Tony, yeah, what you saw in this quarter is that how hard we worked with efficiency because we have leverage right now, we grow 2.7%, and we have 4% bottom line. Our expenses, if you take it by the hands, the cost is down compared to last year. So we're coming down in expenses. And the team is doing a great job here. And I have to say also on the Verizon business group, they have been on the journey for years right now with the headwind of wireline to take down the cost, at the same time, building AI connect, fiber, broadband business, wireless business. And now you start seeing that they turn around and this is the second quarter of year-over-year growth. And I know that Kyle and the team are committed to continue that work. So, I will start with Sampath talk about the momentum in March and April, and then we'll go over to Tony talk a little bit more about leverage. |
7,828 | VZ | 1 | 2,025 | 2025-04-22 08:30:00 | Verizon Communications Inc. | 415,798 | Sowmyanarayan Sampath: Thanks, Hans. Look, it's always a competitive market. We pulse in and out promotions as we see volumes in the market. And when we have an opportunity to go for volumes, we go for it. Look, we have our playbook. We like our playbook. It's an aggressive playbook, but it's also a playbook that lets us win. In March, we started seeing mid-single-digit growth in gross adds in March, and the last two weeks of March was very good and strong for us. As we came into April, we launched the Verizon Value Guarantee, and we are seeing double-digit growth in gross adds. I think that's largely because how well the offer is resonating both for base as well as new customers coming into the category. So, we have good momentum coming out of March and currently in April right now. And this gives us comfort that, in 2025, we'll have better phone net adds than in 2024. Because on the back half of the year, we see churn coming back to a BAU posture and continued momentum on gross adds, the combination of those two is what gives us comfort that will have a good phone net add year in 2025. |
7,829 | VZ | 1 | 2,025 | 2025-04-22 08:30:00 | Verizon Communications Inc. | 415,798 | Tony Skiadas: Okay. Good morning, Ben. So on the EBITDA in your question, look, we're off to a great start, and we're very confident the EBITDA guide and it starts with the strong service revenue growth that Hans mentioned at 2.7%, and very healthy customer economics when you look at that versus the [abrupt] (ph) amortization as well. And as Hans mentioned, we continue to focus on the cost transformation work and the -- always working to make the business more efficient, whether it's the customer care, managed services work that Kyle and Sampath are doing day in and day out or the network decommissioning as well. And we also completed our voluntary separation program, and we expect to see a full run rate benefit of that for the balance of the year. And we've said many times, volumes are important, but we're going to drive volumes and be very disciplined in support of our service revenue, EBITDA and free cash flow guidance, and that has not changed at all. On your question on business margins, look, Hans mentioned this earlier, the team is doing a great job in growing the wireless portfolio. If you think about the mix of business shifting more wireless now, Kyle and the team have been growing both mobility and FWA for many quarters now, so that mix shift is skewing more wireless. And as that skews more wireless, that brings more margin with it. And we're also seeing some early contribution from private 5G networks and also AI Connect, where we saw improvements in the fourth quarter. And then on the cost side, the team continues to take cost out, being very disciplined at the deal desk, particularly on business wireline and also the work we're doing around HCL with managed services and also the network decoms as well. So we're pleased to the start to the year. Obviously, the goal here is to grow the business margins for the full year, and we're off to a great start.
Ben Swinburne: Thank you, everybody.
Brady Connor: Yeah. Thanks, Ben. Brad, we're ready for the next question. |
7,830 | VZ | 1 | 2,025 | 2025-04-22 08:30:00 | Verizon Communications Inc. | 415,798 | Ben Swinburne: Thank you, everybody.
Brady Connor: Yeah. Thanks, Ben. Brad, we're ready for the next question.
Operator: The next question comes from Jim Schneider of Goldman Sachs. Please go ahead, sir.
Jim Schneider: Good morning. Thanks for taking my question. Maybe first off, on the consumer side, maybe Sampath or Hans, you could talk to the broad sort of behavior you're seeing from consumers from March into April. Are you seeing any kind of significant change in consumer behavior, trade downs, more reticence to upgrade phones? Or actually are you seeing potentially consumers react to the potential for tariffs and actually pulling forward some upgrades into the month of April. I mean, maybe how are you thinking about that, the impact of the sort of knock-on impact of tariffs on consumer behavior, anything you're seeing in terms of the deterioration of consumer in terms of health, credit metrics or whatnot? And then maybe as a sort of second question, can you maybe just sort of talk about sort of following on the business EBITDA question, I mean that really sticks out to me as the best growth you've seen in quite some time. Can you maybe talk about the cost metrics underlying that? Are those structural in nature due to the HCL arrangement or are there any one-time effects that we should think about? And do you think business EBITDA growth is sustainable from here? Thank you. |
7,831 | VZ | 1 | 2,025 | 2025-04-22 08:30:00 | Verizon Communications Inc. | 415,798 | Hans Vestberg: Thank you. When it comes to consumer behavior, I mean, in general, we haven't seen any major consumer shifts in behavior, even though we read the same articles as everybody else that consumer sentiment come back or coming down. Of course, we have a product, the mobility and broadband, is so essential for our consumers and for our business customers because it's just relevant. So we haven't seen that. And Tony can talk a little about the payments as well, but they have continued very intact, no deterioration on payments. And then there have been speculation also of any growth in handsets due to worries for tariffs. I think what we can see, and I think Sampath can talk about it is that we have seen a somewhat uptick, but I think it comes more from our offering that we start with a new three-year price lock in as well as that we had any phone guarantee trade-in. I think that has driven a little bit more handsets for us, not per se. But maybe Sampada and Tony will talk a little bit, and Tony will talk about the margin as well. So let's start with Sampath about the momentum there. |
7,832 | VZ | 1 | 2,025 | 2025-04-22 08:30:00 | Verizon Communications Inc. | 415,798 | Sowmyanarayan Sampath: Look, we have good momentum in our business and March and April were very strong, and April have double-digit growth there. We're seeing good premium mix, in other words, a portion of our base new customers that is taking our premium plans, that mix has actually grown higher. So that suggests that, a, our value prop is resonating well and customers like what we offer. In terms of upgrades, look, Q1 was a bit soft, and we didn't chase volumes where there was no demand. We didn't think it made sense for us to chase volumes there. For the whole year, I think we're still committing to a mid-single-digit growth in overall upgrade. There will be some volatility quarter-to-quarter as that works through. As we come into April, there will be some pent-up demand mostly from the Verizon Value Guarantee. Customers really like that, so they're going to take some -- take advantage of that. But overall, for the year, we still think mid-single-digit growth for upgrade holds. Tony?
Tony Skiadas: Yeah, sure. And good morning, Jim. So on the customer payment trends, look, Hans said this in the prepared remarks, the business is very resilient, and the demand and priority for connectivity is still high, and the payment trends we see are still very stable in both consumer and business and very much at normal historical levels. The ageings and the quality of the receivables continue to be very strong. And the bad debt we see, and as you know, we have a very high-quality customer base. And the bad debt that we do see trends with volume growth, and you see the gross add growth. But as always, we're going to continue to monitor the trends very closely, but no change in trends there. |
7,833 | VZ | 1 | 2,025 | 2025-04-22 08:30:00 | Verizon Communications Inc. | 415,798 | Hans Vestberg: And then on the Verizon business group's performance, I think that they are now into year-over-year improvements and the focus for Kyle and the team together with Tony is to continue to drive year-over-year improvements, that can be a little bit up and down. But definitely, the focus and the target is clear for us, continue to grow our Verizon business bottom line. And they have proven it in two quarters right now. So, we're pleased with what we're seeing right now.
Jim Schneider: Thank you.
Brady Connor: Yeah. Great. Thanks, Jim. Brad, we are ready for the next question.
Operator: The next question comes from Michael Rollins of Citi. Your line is open, sir.
Michael Rollins: Thanks and good morning. So as you're looking to still target better consumer phone net adds in '25 over '24, can you give us an update on how you're seeing postpaid phone industry growth and the volumes you're expecting for the year, and how important that is relative to your target for your own volume? And then within that, are you seeing any impacts from changes in immigration policy? And do you have a better sense of how to frame the potential sensitivities to the forward operating prospects? And then just one more, if I could. You mentioned some impact from the federal government on business postpaid phone net adds. I'm just curious if there's additional impacts that you could see as you move through this year, whether it's on the wireless side or on the business wireline side? Thanks. |
7,834 | VZ | 1 | 2,025 | 2025-04-22 08:30:00 | Verizon Communications Inc. | 415,798 | Hans Vestberg: Let me start. First of all, I'm going to let Sampath comment on the postpaid market. But I would say, on the immigration, we don't have any impact of that and that's not something that we have seen anything from. When it comes to the federal government, what we comment on in the quarter was wireless, where we had little bit reductions in wireless as we saw some impact of the new government and their efficiency work. But all in all, all other things in wireless when it comes to large enterprises and SMBs, very strong and continue to take share. I'm not sure how many quarters we have now with Kyle and team taking share and continue to grow the wireless portfolio. So, I'm pleased with what I see. So that's where it is. But, Sampath, talk about the postpaid market business and consumer.
Sowmyanarayan Sampath: Look, earlier in the year, we had estimated that the market is likely to grow between 8 million and 8.5 million postpaid phones, both for the consumer and the business segment. Sitting where we are right now, we think that number holds. But remember that more than 50% of that is pre to postpaid migration, i.e., customers who are on prepaid plans migrating to postpaid. This is not a segment Verizon typically plays in directly. We play through our partners, but directly, we do not play in the space there. So that segment could have some impact, but very little impact to Verizon. The second is, on the prepaid side, immigration could impact the lower end of prepaid. That's also not a segment where Verizon has a high level of participation in that segment. So -- and on prepaid, despite lower immigration last three quarters, we're actually seeing our best performance in a very long time. We are gaining on the higher end of prepaid, which is why we are seeing strong performance despite low immigration in those segments.
Brady Connor: Great. Thanks, Mike. Brad, we are ready for the next question. |
7,835 | VZ | 1 | 2,025 | 2025-04-22 08:30:00 | Verizon Communications Inc. | 415,798 | Brady Connor: Great. Thanks, Mike. Brad, we are ready for the next question.
Operator: The next question comes from Sebastiano Petti of JPMorgan. Mr. Petty's line has disappeared, we'll go ahead and move on to Mr. Peter Supino of Wolfe Research. Your line is open, sir.
Peter Supino: Hey, good morning, everybody. Two, if I may. On marketing, in light of your churn experience over the last two years, does the market's ARPA expectations need to adapt to a less aggressive pricing growth trajectory? Are you feeling too much pressure from whatever the expectations are about pricing to serve all your needs? And then secondly, on FWA, I'm wondering when that multiyear expansion plan might begin to pressure either or both of CapEx or tower rental costs as some of your 5G sales become more utilized? Thank you. |
7,836 | VZ | 1 | 2,025 | 2025-04-22 08:30:00 | Verizon Communications Inc. | 415,798 | Hans Vestberg: I can start with the second question on fixed wireless access. I'm not sure I 100% understood it. But what we see in fixed wireless access is exactly what I articulated in the second half of 2024. That is, when we now start deploying C-Band in the suburban markets, our OFS is a little bit smaller. And remember, our priority is mobility first when we roll out C-Band. So that means that the potential open for sale is a little bit smaller. And we said that's going to happen in the first half of the year. What we're doing to add to that is, of course, number two or number one, the MDU solution that we now have launched in more than 15 markets will start ramping during the year, and that will help us to have more. And then, of course, we're going to bring out the C-Band more widely. Our plan is to go to 80% to 90% this year. So that's going to increase. And then we have our Fios, which last year was roughly 450,000 OFS, we're ramping up to 650,000. That will help us to continue. So there is no slowdown in speed or appetite or interest on customers, it's just technically how the rollout is working with a fixed wireless access. So again, we're super happy with the product, and we think that we have the two superior products in the market with Fios and fixed wireless access, and we are the most covered broadband supplier in the market. So very excited over that and continue with that. I will leave the question to Sampath around the business. I didn't really get it.
Peter Supino: Hans, if I could just briefly follow-up before we get to pricing. The purpose of my question was a bit more focused on your multiyear guidance as opposed to your 2025 execution as I think we can all agree that, in certain locations, you're going to experience more highly utilized sales over time as you achieve your success in FWA. And I'm wondering what year should we expect to see some pressure on CapEx as a result of that given the desire to achieve a lot of FWA growth? |
7,837 | VZ | 1 | 2,025 | 2025-04-22 08:30:00 | Verizon Communications Inc. | 415,798 | Hans Vestberg: So in the multiyear plan, we have to '28, there's no pressure. That's part of our normal rollout. And as always, Joe and network team, they're always building more capacity as needed. So there's no particular pressure in the multiyear plan, where I said to reach 8 million to 9 million subscribers, that's going to be managed with the BAU rollout of C-Band.
Peter Supino: Thank you, helpful. |
7,838 | VZ | 1 | 2,025 | 2025-04-22 08:30:00 | Verizon Communications Inc. | 415,798 | Peter Supino: Thank you, helpful.
Sowmyanarayan Sampath: Thanks, Peter, for the question. Look, I don't want to use -- this is not the time to discuss future pricing. So, what I will talk about more is wireless service revenue and how we think about it in the medium term. As far as the Verizon Value Guarantee, it was contemplated in our '25 guidance. And -- but let me talk about some of the puts and takes that we have in our wireless revenue. The first is higher volumes. We'll have higher volumes in '25 compared to '24, and that will help with wireless service revenue. Second is, only 50% of our pace is on myPlan. With the Verizon Value Guarantee, there are more incentives for customers to migrate to myPlan, which tends to be accretive to revenue immediately. Longer term, look, we have step-ups. There's a lot of value in our ultimate high-end plan, including an upgrade to unlimited hotspot, which we did last week, and it's really helping with the premium mix. Perks is another area that will continue to grow. We had said that we'll get to 14 million perks by the end of this year. I'm happy to say that I think we have line of sight to 15 million perks, an increase of 1 million perks by the time the year ends. FWA, look, that's a place for good, strong service revenue growth, both on volume, but also on ARPU with a much higher premium mix that we had planned. Value on our prepaid business, historically, has been a drag on our service revenue. In 2024, it was a 0.8% drag on our overall service revenue. We expect that to turn positive in the second half as volumes grow nicely, and that will help with the long-term service revenue growth. The last is our wholesale business. It has healthy service revenue growth margin in it. So those are all the different levers that we have at our disposal to drive long-term wireless service revenue growth, and we are very comfortable with sustained growth in our business.
Peter Supino: Yeah. Thank you.
Brady Connor: Yeah. Thanks, Peter. Brad, we are ready for the next question. |
7,839 | VZ | 1 | 2,025 | 2025-04-22 08:30:00 | Verizon Communications Inc. | 415,798 | Peter Supino: Yeah. Thank you.
Brady Connor: Yeah. Thanks, Peter. Brad, we are ready for the next question.
Operator: Thank you. We're going back to Sebastiano Petti of JPMorgan. Your line is open, sir.
Sebastiano Petti: Hi, thank you for getting me back in the queue. Just one quick question just on EBITDA in the first quarter here and how we should be thinking about that. Obviously, EBITDA, there was -- SG&A side in consumer was -- I wouldn't necessarily say depressed, but was there any perhaps savings or a pullback in spend related to SG&A that will resurface or be a bit more aggressive in 2Q and beyond as we think about the price guarantee and getting some, I guess, advertising and sales and marketing push behind that? So that's a quick, just, housekeeping question. And then as you're thinking about the company's broader multiyear convergence strategy, obviously, there is some fiber available in the market as well as others looking for potential partners. But if you step back, how do you think about perhaps -- or does it make sense to either partner with additional fiber providers to accelerate the Fiber-to-the-Home or your fiber locations push? Or does it perhaps make sense to accelerate your fiber footprint build engine somewhat at the expense of leverage and free cash flow in the interim ahead of the Frontier deal close? Thank you. |
7,840 | VZ | 1 | 2,025 | 2025-04-22 08:30:00 | Verizon Communications Inc. | 415,798 | Hans Vestberg: Thank you. I think, I can start with the fiber, and I will leave it to Tony talk about EBITDA and the cost savings. On the fiber, we're already ramping up right now our fiber deployment, and that's contemplated in our CapEx from 450,000 OFS to 650,000. So, that's ongoing. And our focus right now is, of course, to close Frontier. And when we have Frontier closed, we have said initially as we didn't have all the data, that plus $1 million OFS a year should be what we're targeting and plus means plus. We haven't defined in that we need to get closer to the closing to give you an update, and we will do that. So we are very focused on that and see that we're doing the right thing. And then on convergence, the only thing I would say, first of all, I think we have owner’s economics on everything in broadband and mobility, which means that we have a great position on convergence. And a big portion, I would say, the majority and maybe Sampath can comment on it. If you take the majority of all the customers coming in on broadband this quarter, they converged. So it's actually working for us. So maybe, Sampath, you can comment on that first, and then we'll go to Tony on the EBITDA. |
7,841 | VZ | 1 | 2,025 | 2025-04-22 08:30:00 | Verizon Communications Inc. | 415,798 | Sowmyanarayan Sampath: Hans, we saw 339,000 broadband net adds, both for the business and consumer side, spread over FWA and Fios. And the vast majority of them were in a converged offering, aka, they had mobility and broadband together with us. And we are still holding on our plan that every time you combine the two, we tend to see a 50% reduction in mobility churn when we have fiber and a reduction in mobility churn when we have FWA as well. So, a, volumes have been very strong, but second is our converged posture is improving every single day that happens. And that helps with long-term churn, but also proves the Verizon model of convergence, which tends to be very demand-led, it's based on a strong offering and giving customers what they want, which is flexibility, not just using price and promotions to get a converged offering.
Tony Skiadas: Yeah. Hey, Sebastiano, on your question on EBITDA, look, we started out of the gate very strong with 4% growth. And we were very disciplined in our approach. We didn't chase volumes in the first quarter as we knew we had the Verizon Value Guarantee launching in early April. So we stayed very disciplined there. And we launched it from a position of financial strength, and that was very important. If you look across the margin profiles, this is a team sport. So whether it's consumer business, we guide at the consolidated level. And we also had very strong cash flow in the quarter as well, and I'm proud of the cash flow result having $900 million of free cash flow improvement and a lot of on the operating cash flow side. So we're very confident in the EBITDA growth and the start to the year.
Sebastiano Petti: Thank you.
Brady Connor: Yeah. Great. Sebastiano, thanks. Brad, we’re ready for the next question.
Operator: The next question comes from Craig Moffett of MoffettNathanson. Please go ahead, sir. |
7,842 | VZ | 1 | 2,025 | 2025-04-22 08:30:00 | Verizon Communications Inc. | 415,798 | Operator: The next question comes from Craig Moffett of MoffettNathanson. Please go ahead, sir.
Craig Moffett: Hi, good morning. You just talked about what my previous question was going to be about conversion. So, let me shift a little bit to -- there's a lot of talk and expectation about a renegotiation of your MVNO agreement with the cable operators. Can you just talk about that a little bit as to how the relationship with the cable operators as customers has been evolving? And what you expect to happen with the renegotiation this year? Do you -- maybe just conceptually, do you think of the cable operators as part of your convergence solution in the sense that they are offering Verizon wireless service themselves? Or do you think of them as a convergence competitor?
Hans Vestberg: Thank you, Craig. You know that we cannot deep dive in our MVNO relationship, but I will try to do my best here. Number one, our strategy is to build a network once and have as many profitable connections on top of it. That's also where our MVNO partners are playing a role. We -- I would say we have a very good relationship with our MVNO partners and any business-to-business relationship. So we continue to have a good conversation with them and offering them service on the best network in the United States. So the only thing I can say. But we -- this is an accretive business for us. That is important in our overall strategy. And hopefully, our partners and our customers on the MVNO side feels the same, but that's at least what I believe.
Craig Moffett: Perfect.
Brady Connor: Yeah. Thanks, Craig. Brad, we’re ready for the next question.
Operator: The next question comes from Kannan Venkateshwar of Barclays. Your line is open. |
7,843 | VZ | 1 | 2,025 | 2025-04-22 08:30:00 | Verizon Communications Inc. | 415,798 | Operator: The next question comes from Kannan Venkateshwar of Barclays. Your line is open.
Kannan Venkateshwar: Thank you. Starting with fiber once again. Just to get a sense of the framework that we are using, the 35 million to 40 million number in terms of the goalpost, what does that mean? [Technical Difficulty] And secondly, there's some spectrum bands that may come up for auction this year and maybe over the next couple of years as well. So, would like to get an update in terms of your spectrum position and how you guys are thinking about some of the bands coming up in this year and beyond? Thank you. |
7,844 | VZ | 1 | 2,025 | 2025-04-22 08:30:00 | Verizon Communications Inc. | 415,798 | Hans Vestberg: Thank you, Ken. And I hope that you're not using a Verizon line because it was a little bit wobbly. Anyhow, I think I heard your question. And the first one was around the long-term plan of 35 million to 40 million fiber coverings. Yeah, that's the long-term plan we have. And again, we did that communication when we just had made the offer to acquire Frontier. We are, of course, in the planning stage right now and of course, working through the regulatory approvals. As soon as we get more clarity and closer to the closing of Frontier, we will do more updates where we are and timing, et cetera. And secondly, I would say, everything with the Frontier transaction is going as planned. Our plan is to close it in the first quarter. So that is going according to plan, but we are in the planning stage right now as we have not that acquired entity in our hands. But as soon as we are closing in on that, we will have more updates where we are. But that was a long-term number we gave when we made the acquisition. When it comes to spectrum, I think, first of all, we have a really good position on spectrum. I think the C-Band and the millimeter wave positions that we have is really yielding. And we have talked about it on previous calls that when we deploy C-Band, we have lower churn, better step-ups, we are creating fixed wireless access opportunities. So, it is really making a difference for us. So the secondhand market of spectrum is always coming in and out. We always do an evaluation if it makes sense for us to buy it. It's a buy versus build, but I don't see any major secondhand market spectrum coming up. I think it's more important long term for the US government for the competitiveness of the US to actually bringing out spectrum all the time in order for the carriers to continue to grow. And I think that we all are aligned at that in the industry, it's going to be important. But that's not a short-term issue, not even medium for us. But over long term, US need to come up with spectrum to continue to |
7,845 | VZ | 1 | 2,025 | 2025-04-22 08:30:00 | Verizon Communications Inc. | 415,798 | But that's not a short-term issue, not even medium for us. But over long term, US need to come up with spectrum to continue to compete, especially with 5G-Advanced and 6G coming later on. |
7,846 | VZ | 1 | 2,025 | 2025-04-22 08:30:00 | Verizon Communications Inc. | 415,798 | Kannan Venkateshwar: Thank you.
Brady Connor: Yeah. Thanks, Kannan. Brad, we are ready for the next question.
Operator: The next question comes from Sam McHugh of BNP. Your line is open.
Sam McHugh: Yeah, thanks. Just two quick ones. On the tariffs, you sounded pretty relaxed, and so I was just wondering why you added the caveat for the guidance. Where could we see an impact from tariffs potentially, part one? And the second question on broadband? Obviously, there's a lot of talk about kind of market weakness in wireless. What are you seeing in broadband? Do you think there's -- are you seeing higher churn? Is that why subs are a bit weaker? Or is it more of a gross add and market growth issue? Thanks. |
7,847 | VZ | 1 | 2,025 | 2025-04-22 08:30:00 | Verizon Communications Inc. | 415,798 | Hans Vestberg: Yeah. On the tariffs, I mean, I don't think anybody is relaxed on tariffs, given what the volatility of where tariffs are going. I just conclude that if I take the midpoint, or $18 billion guide on capital expenditures this year, it's a very small portion that is exposed to tariffs. We are a US-based company, investing in US. Fiber is US-centric, everything we do with labor, product, is fiber-based. Wireless equipment, of course, we’re importing, but here, we are -- but a smaller portion of the total $18 billion. That's why I'm saying that this we're going to handle. We have handled it before with our suppliers, strategic suppliers, and I don't see that we will not handle it this time. So that's why I'm talking about that. Then what I said on handsets, it still remains. If we're going to see those type of increases on handsets that we've heard, we are not planning to absorb those. I mean that needs to be passed on to the customers. That's the only way to do it because that's so much money. And then on the broadband, we continue to see very good performance on broadband. The Fios, I think is just doing great. The churn is extremely low. On the fixed wireless access, we have good gross adds because it's a very attractive product from [indiscernible]. And then what we see is, of course, our churn that is higher than on Fios because it's a -- product is in early stages compared to Fios that has been around for 25 years or at least 20-plus, 22, Tony tells me. So, we're -- but we're seeing now improvements quarter-by-quarter. So we're doing that as well. But maybe Sampath can add something about we see on the usage and the step-ups. |
7,848 | VZ | 1 | 2,025 | 2025-04-22 08:30:00 | Verizon Communications Inc. | 415,798 | Sowmyanarayan Sampath: Yeah. What we are seeing is, look, it's a normal market on broadband. It is competitive. But what's interesting for us is because of our segmentation approach on FWA and Fios, where on FWA, we lead with value for money, we lead with convenience, and on Fios, we lead with just incredible reliability and performance. That segmentation strategy is working well, and we are growing on both sides. That's why we had a very strong quarter at 339,000 broadband net adds for both consumer and business. On churn, Fios had its best churn in a very, very long time this quarter and it goes back to the strong NPS customer satisfaction and reliability of the fiber plant. On FWA, we are seeing sequential improvement in churn, which is really important for us as the product matures and we get more comfortable and customers get more comfortable with the piece. In terms of ARPU, we are seeing good ARPU growth across both Fios and our FWA products. Two things are happening. One is we're getting better price realization. Two is a better premium mix in terms of higher-end plans on FWA and 1-gig-plus plant on Fios. A combination of those two is giving us good ARPU growth in the space. So overall, it's a really good market for us. We are doing extremely well. We are taking share every single quarter in the market. We are growing on volume and we are growing on price. And that's the perfect thing to build a long-term sustainable business in the broadband space.
Sam McHugh: Great.
Brady Connor: Thanks, Sam. Brad, we have time for one last question, please.
Operator: The final question for today will come from Bryan Kraft of Deutsche Bank. Your line is open, sir. |
7,849 | VZ | 1 | 2,025 | 2025-04-22 08:30:00 | Verizon Communications Inc. | 415,798 | Operator: The final question for today will come from Bryan Kraft of Deutsche Bank. Your line is open, sir.
Bryan Kraft: Good morning. Thank you. I had two, if I could. First is a follow-up question on the March and April gross add strength. I think early in 1Q, industry volumes were pretty soft. So just wondering if part of the March and April strength has been from a pickup in those industry volumes or if it's more market share take driven by your new offers? And then second question I had relates to your MDU solution for fixed wireless. I was wondering if you could talk about the breadth of that launch. Maybe comment on what some of the markets are that you've launched in, how available the product is in those markets? Any comment on homes available? And then also, how is the product performing? What kinds of speeds and reliability you're seeing? And then lastly, can you talk about what's involved in expanding that services availability from here? What are the sort of gating factors to doing that? Thank you. |
7,850 | VZ | 1 | 2,025 | 2025-04-22 08:30:00 | Verizon Communications Inc. | 415,798 | Hans Vestberg: On the first question about the momentum we are seeing in March and April, and I think what we see, that's because of our offerings. I mean, I don't see anything else if the industry is coming back or not. I think this is related to us, how we perform. And remember, this is a plan that Sampath and his team, together with our CMO, has had for a long time to take the next step with our offering, and it resonates with our customers because, I mean, whatever we have learned from our customer is that they want the control or predictability about the offerings, they want the simplicity of the offers and they want the value and we're hitting on all three of them. So I think that, maybe Sampath can comment after this, but I can talk about the MDU, yes, we have launched the MDU solution in more than 15 markets. And of course, in the beginning, you start with certain high rises. And this is, of course, sort of a Fios work. You need to see that the landlords in every house is accepting our solution and then you can sell it into the whole household. So of course, we are working in parallel with a technical solution as well as seeing that we are opening up more and more MDUs. And that is going to roll out over the year. And it's both for the business side, but I would say, mainly for the consumer side, this is opening up. We have different type of solutions on technology, both on sort of Fios like performance down to fixed wireless access performance. And that's how we're going to work it because ultimately, we want to give choice for our customers for different type of speed tiers as we did the fixed wireless access, et cetera. So this is going to ramp over the year, and we just came out. So, we feel good about the solution and the technology, and this is just adding opportunity for us to grow our broadband. But maybe, Sampath, you can add something. |
7,851 | VZ | 1 | 2,025 | 2025-04-22 08:30:00 | Verizon Communications Inc. | 415,798 | Sowmyanarayan Sampath: Yeah. Look, March and April -- March was mid-single-digit growth in gross adds, April, we saw double-digit growth, largely on the back of our Verizon Value Guarantee. It's resonating really well with customers. It's very easy to explain. Our sales team is doing an incredible job of explaining it to customers. And then lastly is impact on the base, because to get the Verizon Value Guarantee, the base has to do absolutely nothing. They all get locked in for three years with a price guarantee. And they like that and hence, it's driving add aligned opportunity for us as well in the space. What we are seeing is good performance from -- on our prepaid side of our business. That's a base that's been incredibly strong in the first quarter. We're likely taking share in prepaid. And we're seeing good performance across all our core brands. Total, Visible and Straight Talk are probably the brands that had the strongest performance. And it's the same playbook that we had in postpaid. We are rolling out that same playbook in prepaid, which is execution, better distribution, disciplined financials and just getting to better outcomes on that. And then lastly is our portfolio of brands. We are in a very unique position where we have a brand in every segment of the market, and more importantly, a leading brand in every segment of the market. So, irrespective of how the economy moves and what level of economic uncertainty there is, we'll always have a place and a place for the customer to go through. So, that gives us comfort. And that's a little bit of commentary about the March and April performance. Hans? |
7,852 | VZ | 1 | 2,025 | 2025-04-22 08:30:00 | Verizon Communications Inc. | 415,798 | Hans Vestberg: Yeah. Maybe before we end up, I mean, people usually ask me what questions have we not answered. I think what we haven't gotten any questions on is our prepaid business. And I would say this is Verizon at its best in execution, taking it from where it was. The whole team with Sampath has turned this around with branding, segmenting the market. And basically, all our brands are growing at the moment in prepaid. And I think that we're going to see that going forward. I'm really excited, and this was the right decision for Verizon to buy TracFone. Now we can be in all segments of the market with wireless, and that's where we should be as a leader and number one in this market. So that was answering a question I didn't get.
Bryan Kraft: Thank to you, both.
Brady Connor: Okay. Yeah. Thank, Bryan. Thanks for asking that at the end. Brad, I think that's all the time we have for today. Thank you.
Hans Vestberg: Thank you.
Operator: This concludes our conference call for today. Thank you for your participation and for using Verizon Conference Services. You may now disconnect. |
7,853 | WMT | 4 | 2,024 | 2024-02-20 08:00:00 | Walmart Inc. | 313,055 | Operator: Greetings. Welcome to Walmart's Fourth Quarter Fiscal Year 2024 Earnings Conference Call. At this time all participants are in listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note, this conference is being recorded. At this time, I'll now turn the conference over to Steph Wissink, Senior Vice President of Investor Relations. Steph, you may now begin.
Steph Wissink: Thank you, and welcome, everyone. The format of today's call will follow prior quarters. First, our CEO Doug McMillon will share his reflections on the quarter and year. Then our CFO, John David Rainey will review our Q4 and fiscal 2024 results, provide perspective on the key drivers of our financial framework, and offer initial guidance for fiscal 2025. Following these remarks, we will take your questions. At that time, we will be joined by our segment CEOs, John Furner from Walmart US; Kath McLay from Walmart International; and Chris Nicholas from Sam's Club. In order to address as many questions as we can, please limit yourself to one question. Today's call is being recorded, and management may make forward-looking statements. These statements are subject to risks and uncertainties that could cause actual results to differ materially from these statements. These risks and uncertainties include, but are not limited to, the factors identified in our filings with the SEC. Please review our press release and accompanying slide presentation for a cautionary statement regarding forward-looking statements, as well as our entire Safe Harbor Statement and non-GAAP reconciliations on our website at stock.walmart.com. Doug, we are now ready to begin. |
7,854 | WMT | 4 | 2,024 | 2024-02-20 08:00:00 | Walmart Inc. | 313,055 | Doug McMillon: Good morning, and thanks for joining us to talk about our business. Our team delivered a great quarter, finishing off a strong year. We drove sales growth of 4.9% and adjusted operating profit growth of 10.9% in constant currency. Highlights include: higher transaction counts and unit volumes; gains in market share in the U.S. and internationally; improved in-stock levels with inventory being in great shape and down versus last year; strong performance in Walmart U.S. customer experience scores, even during the high volume days before Christmas. Plus, this year, we passed $100 billion in global e-commerce sales for the first time. We had a very good holiday season. We were strong in the US, Mexico, Canada, and India, where we had the best Big Billion Days ever, and we continued the strong performance in China with the start of Chinese New Year. Typically, we see some of our customer experience scores dip during the high volume hours and days we experience during the holidays. But during Q4, the Walmart U.S. team delivered three year high customer scores in our stores, for pickup and delivery from stores, and for those orders that flow directly from our e-commerce fulfillment centers. I'm excited about the omni-channel net promoter score trends the team is driving. Across countries, we continue to see a customer that's resilient, but looking for value. As always, we're working hard to deliver that for them, including through our rollbacks on food pricing in Walmart U.S. Those were up significantly in Q4 versus last year, following a big increase in Q3. Our general merchandise prices are lower than a year ago, and even two years ago in some categories, which means our customers are finding value in areas like apparel and hardlines. In food, prices are lower than a year ago in places like eggs, apples, and deli snacks, but higher in other places like asparagus and blackberries. Dry grocery and consumables categories like paper goods and cleaning supplies are up mid-single digits versus last year, and |
7,855 | WMT | 4 | 2,024 | 2024-02-20 08:00:00 | Walmart Inc. | 313,055 | Dry grocery and consumables categories like paper goods and cleaning supplies are up mid-single digits versus last year, and high teens versus two years ago. Private brand penetration is up in many of the countries where we operate, including the United States. During our Q3 call, I mentioned that we might find ourselves in a deflationary position early in calendar 2024. In Walmart U.S., we're there in general merchandise, but the slope of the decline softened during Q4, meaning the prices are lower than a year ago, but not as much as the trend line would have suggested at the end of Q3. We saw the trend line for food and consumables in Walmart U.S. soften too, resulting in our retail prices in food and consumables being slightly higher than a year ago. In total, for Walmart U.S., our year-end retail prices on like-for-like items were inflated by about 80 basis points. Importantly, we're encouraged by our strength in terms of units and transactions. Sam's Club U.S. is in a similar pricing position to Walmart U.S., and outside the U.S. our pricing comparisons to a year ago are in more of a normal range. We're excited about the momentum we see and we're pleased with the quarter, but my focus stays primarily on what we're building for the longer term. That future is an omni-channel one where we simultaneously strengthen our stores and clubs and build a more compelling ecommerce business. As it relates to strengthening our stores and clubs, we're investing in remodels and supply chain automation to improve the customer experience and increase productivity. Those things are going well. We'll remodel 928 stores and clubs globally over the next year, including 650 stores in the U.S. Not long ago, we shared that we would be building 30 new Sam's Clubs in the U.S. over the next several years, and more recently we announced we will add more than 150 supercenters in neighborhood markets in the U.S. over the next five years. Most of those are new builds and locations where we need a new store, but a few of them will be |
7,856 | WMT | 4 | 2,024 | 2024-02-20 08:00:00 | Walmart Inc. | 313,055 | U.S. over the next five years. Most of those are new builds and locations where we need a new store, but a few of them will be discount store conversions to a supercenter where we're relocating in the same community. Outside the U.S., we'll open around 230 stores and clubs next year, mainly in Mexico and Central America, and in China where they'll mostly be Sam's Clubs. We ended the year with 47 Sam's Clubs in China, and they continue to be quite strong on the top and bottom line. We are, by far, the leading membership club operator in China with 28 years of experience there. So, our physical fleet is getting stronger, and it plays a hybrid role serving customers and members when they visit, and simultaneously enabling an important portion of e-commerce. Beyond our stores and clubs, we're continuing to strengthen our first and third-party e-commerce capabilities and scale those businesses around the world. The combination of marketplace and the commissions that go with it, fulfillment services, membership, advertising, and our smaller but fast-growing data monetization business enable us to grow our bottom line faster than our top line, while delivering everyday low prices for our customers and investing in our associates at the same time. Marketplace is an engine for our business. As we've added more sellers in the U.S., we've seen more of them use our fulfillment capabilities. Marketplace is also the fastest growing aspect of e-commerce for us outside the U.S. That growth helps us drive our global ad business. For now, we see the biggest dollar impact from Walmart U.S. and in India from Flipkart. But as these businesses scale in places like Mexico and Canada, we expect to see a similar relationship. Globally, we drove advertising growth of 28% for the year to reach $3.4 billion. Our announcement today that we've agreed to acquire Vizio gives us the opportunity to reach and serve customers in new ways and connect more dots for those that advertise with us. Membership is another area where we'll continue to |
7,857 | WMT | 4 | 2,024 | 2024-02-20 08:00:00 | Walmart Inc. | 313,055 | in new ways and connect more dots for those that advertise with us. Membership is another area where we'll continue to enhance our offerings. Walmart Plus members spend nearly twice as much with us as non-members, and they buy more over the course of a year. At Sam's Club U.S., we're rolling out new exit technology that enables our members to use Scan & Go to just walk out after completing their transaction on their phone, further enhancing their membership. Last year, we began describing ourselves as a people-led, tech-powered, omni-channel retailer dedicated to helping people save money and live better. This description is really resonating for us inside the company. We can prioritize our associates, our values, and our culture and put impactful technology to work to help us fulfill our purpose, strengthen the customer and member experience, and strengthen our company. Here are some recent examples of us being tech powered. Our new generative AI powered search on the Walmart U.S. app, which rolled out to iOS users last month and is coming to Android users this month, is a great example. One of those popular searches this month was help me buy a Valentine's Day gift. And rather than searching separately for things like chocolates, a car, jewelry, flowers, the search returns a list of results that are relevant and curated. And Flipkart launched a similar generative AI search tool, which was available just in time for Big Billion Days. Another example is our ability to provide customers and members with more convenient and affordable delivery. We already offer express delivery in the U.S. where customers can get their orders delivered fast. But what if you need something faster? There's a pot of chili on the stove and you realize you forgot chili seasoning. Drone delivery can get it to you in 15 minutes or less. Delivering by drone isn't new to us. Over the last two years, we've operated 37 hubs across seven states, completing 20,000 deliveries. By the end of the year, we'll make it available to about 75% of |
7,858 | WMT | 4 | 2,024 | 2024-02-20 08:00:00 | Walmart Inc. | 313,055 | 37 hubs across seven states, completing 20,000 deliveries. By the end of the year, we'll make it available to about 75% of households in Dallas, Fort Worth. I'm really excited about how the pieces are coming together in the near term. Our customers will have an improved store experience given our remodels. They can pick up an order, have it delivered to their doorstep or into their home, or get a fast drone delivery when they want it. And this flexibility is enabled by a more intelligent, more connected, and more automated supply chain. From scaled businesses to our faster growing newer businesses, we're well on track to continue to hit the financial targets we laid out and make important investments for the future. And while we do this, we can grow in a way that helps us achieve our goals of creating opportunities for our associates and becoming a more sustainable business. In 2017, we announced a bold ambition to work with our suppliers to reduce, avoid, or sequester one gigaton, that's 1 billion metric tons, of greenhouse gas emissions by 2030. We call it Project Gigaton. Our merchants and suppliers got to work and made investments in practical things like energy efficiency, packaging, redesign, and load optimization. We've reported steady progress since then, and we're excited to say that our suppliers have now reported projects exceeding that 1 billion metric ton mark six years early. We'll continue to work with our suppliers on real initiatives with real-world impacts that make our products better and our business stronger. As we think about developing our associates, we want them to feel, think, and act like owners. The degree to which our team takes ownership will have a big impact on our level of success. That's what motivated us to make shares of Walmart stock part of U.S. store manager compensation. It's also why we decided to do a three-for-one stock split. Today, more than 400,000 associates participate in our associate stock purchase plan. That's a big number, but hopefully even more will choose to |
7,859 | WMT | 4 | 2,024 | 2024-02-20 08:00:00 | Walmart Inc. | 313,055 | associates participate in our associate stock purchase plan. That's a big number, but hopefully even more will choose to participate and take advantage of the 15% the company contributes for the first $1,800 purchased by an associate each year. Psychologically, it just feels better to buy a whole share rather than a fraction. We believe in our plan, and we're looking for ways, in addition to our 401(k) and the match that goes along with it, to help our associates build wealth and do more than just earn a paycheck. I'll close by thanking our associates for delivering a great quarter to end a year where we've accomplished so much. We're out to build on our momentum. We have strong omni-channel businesses globally and they're getting stronger. We're focused on executing the plans we have for this year and beyond, which we believe will deliver top and bottom line growth within the framework we've discussed and improve ROI over time. With that, I'll turn it over to John David. |
7,860 | WMT | 4 | 2,024 | 2024-02-20 08:00:00 | Walmart Inc. | 313,055 | John David Rainey: Thanks, Doug. We're excited about the progress we've made in growing and evolving our omni-channel platform in pursuit of our purpose to help people save money and live better. Our teams did a great job in the quarter, finishing the year strong. For the year, in constant currency, we achieved 5.6% net sales growth and over 8% adjusted operating income growth. We have strong underlying momentum exiting Q4 and are clear about the strategic initiatives we're seeing driving profitable growth in the years ahead. This is reflected in the sustained sales and operating income growth included in our FY 2025 guidance. I'll recap Q4 results using the framework we introduced at our investor community meeting last year, growth, margins, and returns. As a reminder, there's a supplemental presentation on our IR website with additional information beyond my remarks. First growth. Constant currency sales increased nearly 5% or almost $8 billion in Q4 with strong growth from all three segments, led by increased transactions across in-store, club and e-commerce channels. International sales grew 13%, reflecting strength in Flipkart, Walmex, and China. International e-commerce sales increased 44%, reaching a penetration level of 25%, which is a record high for us. This included Flipkart's largest ever Big Billion Days event with 1.4 billion customer visits over the eight-day period. In the U.S., Walmart comp sales grew 4%, reflecting increased unit volume and share gains. Like-for-like sales inflation was about 1%, moderating approximately 160 basis points from Q3 levels. We saw better than expected holiday sales, including two record-breaking volume days leading up to Christmas. Store-fulfilled delivery sales were up nearly 50% and we reached a $2 billion monthly run rate. Delivery has been a key source of share gains among upper income households and is also the most productive channel for acquiring Walmart Plus members. Sam's Club US delivered comp sales growth of 3.1% excluding fuel, with strength in food, |
7,861 | WMT | 4 | 2,024 | 2024-02-20 08:00:00 | Walmart Inc. | 313,055 | for acquiring Walmart Plus members. Sam's Club US delivered comp sales growth of 3.1% excluding fuel, with strength in food, consumables, and health categories. E-commerce sales increased 17% and we gained grocery share in both units and dollars. E-commerce continues to be a key point of differentiation for Sam’s with delivery and curbside driving e-commerce growth and in-club Scan & Go penetration up over 270 basis points. Turning to margins. Enterprise gross margins expanded 39 basis points. Customers are responding as we continue to manage pricing aligned to competitive historic price gaps. In addition, we had lower markdowns resulting from strong inventory management, with Walmart U.S. inventory down 4.5%, Sam’s down over 8%, and international relatively flat excluding currency. This puts us in a good position to start the new fiscal year. The timing of Flipkart's Big Billion Days was a partial offset to gross margins, and while category mix pressure continued this quarter, we're encouraged to see sequential improvement versus Q3. SG&A expenses on an adjusted basis deleveraged 16 basis points, largely due to higher variable pay expenses in the U.S. relative to last year as a result of exceeding our planned performance. One of the areas I'm most pleased about is the improvement in e-commerce profitability within the Walmart U.S. segment, resulting from lower e-commerce fulfillment cost, and densifying the last mile. Our store proximity to customers is an advantage as we increasingly use stores to fulfill e-commerce orders. We've lowered last mile store to home delivery cost by about 20% in the last year, even as we've shortened delivery times to same day from around 90% of stores. Combining the fulfillment efficiencies with the improved product margins of e-commerce, we far exceeded the 200 basis point goal we outlined at our investor community meeting and lowered e-commerce losses by more than 40% versus last year's level. We also saw another strong quarter from our portfolio of higher growth initiatives |
7,862 | WMT | 4 | 2,024 | 2024-02-20 08:00:00 | Walmart Inc. | 313,055 | by more than 40% versus last year's level. We also saw another strong quarter from our portfolio of higher growth initiatives that reinforce our core omni-retail model. Global advertising grew approximately 33%, led by internationals 76% growth. Internationals growth benefited from the timing of big billion days, but still delivered full year growth of about 30%. Sam's ad business achieved a new high with almost 50% more advertisers versus last year. Walmart U.S. Connect ad sales grew 22% with more than 50% growth from Marketplace sellers. We're encouraged by the strong demand from new advertisers as active advertiser counts increased over 20%. We're excited about our agreement with Vizio to bring together their unique operating system and our Walmart Connect advertising business. This combination would create new opportunities for advertisers to connect with customers, empowering brands to realize greater impact from their advertising spend with Walmart. We believe the deal would close during FY 2025. Due to certain transaction-related costs associated with the acquisition, including for talent retention and technology integration, we expect the deal to be slightly dilutive to EPS in the near term. We plan to finance the acquisition to use cash and/or debt. Importantly, we believe the transaction would be IRR accretive, delivering returns ahead of our expected ROI. Within Marketplace and Fulfillment Services, Flipkart's momentum continued with double-digit growth. In the U.S., Walmart's Marketplace delivered strong holiday events, including Black Friday, our largest marketplace sales day ever. Over the past year we've increased sellers 20% with approximately 30% of sellers using Walmart Fulfillment Services and we're pleased with the trends in our membership programs around the world. Sam's Club US reached another record high level for member counts and plus member penetration, which led to membership income growth of 10%, and Walmart Plus continues to grow double digits. Strong sales and margins led to fourth |
7,863 | WMT | 4 | 2,024 | 2024-02-20 08:00:00 | Walmart Inc. | 313,055 | to membership income growth of 10%, and Walmart Plus continues to grow double digits. Strong sales and margins led to fourth quarter adjusted operating income growth of more than 13%, while adjusted EPS of $1.80 increased 5.3%. Below the line, higher interest and non-controlling interest were headwinds to adjusted EPS. Moving to returns. We generated over $35 billion in operating cash flow this year, an increase of nearly 24% due to strong business performance and improvements from working capital initiatives. Return on investment improved approximately 230 basis points to 15%, a level last achieved in 2017. Our stepped-up investments aimed at improving margins and productivity resulted in capital expenditures of $20.6 billion. The magnitude of ROI improvements reflects some benefits from productivity initiatives that we initially expected to realize in FY 2025. And as we announced this morning, we're pleased to raise the dividend by 9% this year, the largest increase in over a decade, reinforcing our commitment to strong cash returns to shareholders. And as we continue to execute on our long-range plan, we will continue to evaluate the appropriate payout ratio for our business. We have a clear vision to deliver our financial framework of growing operating income faster than sales. I'd like to spend the next couple of minutes on the initiatives we believe will drive improved incremental margins in the years ahead, even as we stay customer and top line focused, deliver value for them, and invest in our people. Beyond steady broad-based sales growth across segments, incremental profits will be derived from four key areas. Business mix, productivity benefits from our supply chain transformation and automation improvements, product mix, and geographic mix. These areas will contribute to improved e-commerce economics over the next several years. Starting with business mix. As I noted previously, we're excited about how our newer, higher-growth businesses are scaling. Together, these businesses have significantly |
7,864 | WMT | 4 | 2,024 | 2024-02-20 08:00:00 | Walmart Inc. | 313,055 | we're excited about how our newer, higher-growth businesses are scaling. Together, these businesses have significantly higher structural margins than our core retail business, and they are growing significantly faster, which has the effect of bending our margin curve upward. Over the past year, global advertising grew 28% to about $3.4 billion. Walmart U.S. Marketplace revenue grew 45%, with more than 35% of orders fulfilled by Walmart Fulfillment Services. And lastly, global membership income grew 20%. Over our planning horizon, the growth of this portfolio is expected to be one of the largest drivers of operating income growing faster than sales. We believe global advertising and membership alone will represent 20% of annual operating income in FY 2025. These profit streams allow us to fund investments in our core business, while also expanding our operating margins. Turning to supply chain transformation and automation. This was a significant year for the phased deployment of automated technologies to optimize our next generation supply chain. This program spans several years with activity stepping up in FY 2025 and FY 2026. To date we've retrofitted 13 regional distribution centers with varying levels of automated storage and retrieval systems. This technology gets product to shelves faster and has meaningful benefits to productivity both in our DCs and stores. With the progress we've made over the past year we're on track toward our goal of having approximately 55% of our fulfillment center volume and roughly 65% of supercenters serviced by automation by the end of FY 2026. Already around 1,500 stores are receiving palletized freight from these DCs. There are also exciting benefits from technology being realized in our stores. We're using applications to drive speed and proficiency, including RFID and computer vision, as well as digital displays and labels to remove friction for both customers and associates. New digital tools that automate repetitive tasks or eliminate heavy lifting have increased |
7,865 | WMT | 4 | 2,024 | 2024-02-20 08:00:00 | Walmart Inc. | 313,055 | for both customers and associates. New digital tools that automate repetitive tasks or eliminate heavy lifting have increased associate productivity and customers are benefiting from improved in-stock rates and associate accessibility, leading to customer experience scores up over 140 basis points in FY 2024. We expect to begin seeing the enterprise financial benefits of upstream automation and cost to fulfill, inventory efficiency, store productivity and wage leverage as we move through FY 2025 with a more pronounced benefit in the second half. On product mix, continuing to expand our e-commerce assortment is critical to earning first-position consideration among customers. This is particularly true for general merchandise, including our marketplace. We've accelerated visit frequency and built incredible trust through core essentials like food and consumables. In fact, weekly active e-commerce customers grew 17% this last year. We're building on this trust by improving our general merchandise assortment both on and offline. General merchandise also benefits as US store remodels continue to perform well. We'll execute another 650 in Walmart U.S. in FY 2025 on top of the nearly 700 remodels completed this year. We're also excited to be returning to store growth in the US, as Doug mentioned. Our supercenter, store of the future design, is resulting in stronger four-wall sales, while also delivering a sales lift in the surrounding trade area, as these modernized stores offer more capacity for pickup and delivery, are more engaging to shop, and are improving customer perception about Walmart, especially in general merchandise, where we're encouraged by the share gains we're seeing. For general merchandise categories that surged during 2020 and 2021 and have longer replacement cycles such as electronics and housewares, we expect relative weakness to persist in FY 2025, although are hopeful to see directional improvement in the second half as comparisons ease. Lastly, geographic mix. Our international portfolio is |
7,866 | WMT | 4 | 2,024 | 2024-02-20 08:00:00 | Walmart Inc. | 313,055 | to see directional improvement in the second half as comparisons ease. Lastly, geographic mix. Our international portfolio is accretive to sales and profit growth and is expected to be a larger contributor to enterprise performance. We're on pace to achieve our goals to reach approximately $200 billion in GMV and more than double profits by FY 2028 from the FY 2023 base. This implies high single digit annual sales growth for the segment. In FY 2024, international grew constant currency sales 10.6% and adjusted operating income over 15%. India, Walmex, and China are the sales growth leaders. These three markets are expected to account for approximately three-fourths of international growth over the next several years. In India, Flipkart's growth continues to compound in the double digits, while PhonePe is now processing more than 6 billion monthly transactions and has reached 1.4 trillion in annual total payment volume, about 40% higher than one year ago, and Walmex continues to go from strength to strength. Turning to guidance, relative to prior years we're introducing a slightly wider range of potential outcomes given the size of our business and a greater degree of variability we've seen. There are three nuanced factors to consider for FY 2925. First, FY 2025 is a leap year, which adds an additional day in Q1. I'll refer to this effect in our Q1 guidance shortly. Second, we'll experience a 53rd week for comp sales in Q4. We've included a slide in our presentation to help with modeling this. And third, on January 30th, we announced that the Board approved a three-for-one stock split effective February 23rd. We're offering full year and first quarter EPS guidance on a pre and post-split basis. For FY 2025, we expect net sales on a constant currency basis to grow between 3% and 4%, and for operating income to grow 4% to 6%. We expect Walmart U.S. and Sam's Club U.S. net sales growth to fall in line with the enterprise and for international growth to be above enterprise growth. We expect all three segments to |
7,867 | WMT | 4 | 2,024 | 2024-02-20 08:00:00 | Walmart Inc. | 313,055 | to fall in line with the enterprise and for international growth to be above enterprise growth. We expect all three segments to contribute to operating income growth, led by Walmart U.S., Walmart International, and then Sam's US. At our Investor Day last April, we outlined a multi-year plan of growing sales approximately 4% and growing operating income even faster. We depicted that as a range of 4% to 8%. Looking at our growth over a two-year period, combining FY 2024 actuals and our guidance for FY 2025 at the midpoint suggests we will grow sales more than 5% and operating income over 8% on average annually. This is aligned with the framework we laid out, and we're pleased with how we're executing on this plan. At the enterprise level, we expect sales to grow faster than operating income in the first half due primarily to the timing of technology spent. In the second half, we expect operating income growth to exceed our sales growth. And on a full year basis, we expect operating income growth to exceed sales growth by 150 basis points at the midpoint. This spread between operating income growth and sales growth in FY 2025 is similar to what we experienced in FY 2024. Adjusted operating income grew 250 basis points faster than sales, including a benefit of approximately 90 basis points from LIFO. As we've noted in the past, this relationship of operating income growing faster than sales won't occur every quarter, but we aim for the framework to hold on an annual basis at the enterprise level. We provided additional detail on guidance for interest, tax rate, and non-controlling interest in our press release. We expect FY 2025 EPS in a range of $6.70 to $7.12 on a pre-split basis and $2.23 to $2.37 on a post-split basis. As we continue the multi-year investment in technology and innovation to optimize our supply chain and stores, we expect CapEx to range between 3% to 3.5% of sales for the next couple of years. Importantly, we have good visibility to the ROI on these investments and we're encouraged by what we're |
7,868 | WMT | 4 | 2,024 | 2024-02-20 08:00:00 | Walmart Inc. | 313,055 | next couple of years. Importantly, we have good visibility to the ROI on these investments and we're encouraged by what we're already seeing. For Q1, we expect sales growth of 4% to 5% and operating income growth of 3% to 4.5%. The leap year benefit is estimated to be approximately 100 basis points to sales growth. Operating income growth is expected to be below sales growth this quarter, reflecting the timing of technology expenses mentioned previously. We expect Q1 EPS in the range of $1.48 to $1.56 on a pre-split basis and $0.49 to $0.52 on a post-split basis. In closing, our FY 2024 results demonstrated our ability to reshape our sales and operating income growth trajectory. And our guidance for FY 2025 assumes operating income growing faster than sales again. Our value proposition is resonating with customers. We're deploying capital to proven and scalable investments in our people and platform, and our business model is evolving towards higher margins and returns. I'd like to thank our 2.1 million associates worldwide who are indeed making the difference in bringing our purpose and business strategy to life every day. We're excited that by making our stock more accessible to them, more of our associates can become owners and align their interest with our external stakeholders. I'll now turn the call over to the operator for questions. Thank you. |
7,869 | WMT | 4 | 2,024 | 2024-02-20 08:00:00 | Walmart Inc. | 313,055 | Operator: Thank you. At this time we'll be conducting a question-and-answer session. [Operator Instruction] Our first question this morning is from the line of Michael Lasser with UBS. Please receive your question.
Michael Lasser: Good morning. Thank you so much for taking my question. My question is on the outlook for fiscal year 2025. At the outset of last year, Walmart guided to 2.5% to 3% constant currency sales growth. This year, it's guiding to 3% to 4% constant currency sales growth. Presumably, there's some benefit from the extra week and leap year within that outlook for this year. But essentially, on a full-store sales basis, you're guiding to a similar level, yet the impacts from inflation is going to be a lot more moderate this year. So what do you see that's driving this, what seems to be a bit more optimistic outlook? And as part of that, if you could comment on what would have to happen in order for you to hit the high end of your operating margin outlook, that would also be quite helpful. Thank you so much. |
7,870 | WMT | 4 | 2,024 | 2024-02-20 08:00:00 | Walmart Inc. | 313,055 | John David Rainey: Michael, this is John David. There's a lot to that question. Let me try to unpack that a little bit. I think it's helpful to go back a year and think about the mood and the tone around the overall macro environment. At that point in time, I think there was largely a consensus that we were going to enter a recession in the last year. Fortunately, we avoided that. And so, I think overall we feel a little bit better about the health of the economy right now. That said, price levels certainly affect our forecast as well. So let me decompose our guidance just a little bit, spend a moment on this. I think there's a couple important elements to point out. One is that, overall, we expect some level of improvement in gross profit. But I want to decompose that further because there's two elements to that. One is our product margin, which we are not relying on raising prices to achieve our long range plan. So let me be very clear about that. The improvement in gross profit is mostly related to the change in our business mix. As we have these faster growing higher margin parts of our business like advertising that are contributing to an outsized part of our portfolio. So we should expect to see some improvement in gross profit. Conversely, on the SG&A line, we do expect some amount of deleverage in our business. And I want to pause on that for a second, because we recognize that EDLC is critical to being -- performing on EDLP. And so we have a lot of focus on continuing to become more efficient, to continue to try to leverage aspects of the business that we can, but our business has changed. Just as I noted in my prior comment around business mix, that affects what happens in SG&A. As we rely on things like advertising, some of the expenses related to that hit the SG&A line. And so, our focus as a team is on growing operating income. And you see that in our guidance. I'll also point out that while mix, and I should say product mix, has been a headwind over the last two years, we do assume some amount of |
7,871 | WMT | 4 | 2,024 | 2024-02-20 08:00:00 | Walmart Inc. | 313,055 | out that while mix, and I should say product mix, has been a headwind over the last two years, we do assume some amount of headwind going into the coming year as general merchandise is -- will be less of our business relative to food. So there is some persistent tell to that. In terms of what would have to happen to -- for us to hit the top end of our guidance, I think a couple things. And we're most focused on what we can control, and that's the team executing on our plan. So that's our focus, but we're not immune to the whims of the economy. And certainly there are economic outcomes that could cause us to move to the high end of the range or the low end of the range. But given where we are right now, going into the first part of this year, we feel really good about the plan. We feel really good about the way that the team is executing and the way that we're serving our customers. |
7,872 | WMT | 4 | 2,024 | 2024-02-20 08:00:00 | Walmart Inc. | 313,055 | Operator: Our next question is coming from the line of Krisztina Katai with Deutsche Bank. Please proceed with your question.
Krisztina Katai: Hi. Good morning, and thank you for taking the question. So similarly, I wanted to start with gross margin, right? It was very strong in the quarter, up nearly 40 basis points for the enterprise. So I'm wondering if you could quantify maybe the biggest drivers behind the improvement to look at higher margin services for total retail and how that gives you sort of confidence in the back half of the year for fiscal 2025? And then John David, you talked about the improvements in digital contribution margin, certainly the drivers behind that. I was wondering if you could quantify it or maybe speak to the magnitude of improvement we've seen and sort of where that puts you on that path to greater -- even profitability. Thank you.
John David Rainey: Sure. I'll start on the answer to the improvement of gross margin. John may want to jump in there, but we're just in a healthier place than we were a year ago. And I think inventory is a big part of that. As we noted, inventory in the U.S. was down 4.5%, down 8% for Sam’s. And that just enables us to operate a lot more effectively. We saw markdowns in the quarter be notably less than they were the year before, and all those have an effect on gross margin. John, do you want to talk a little bit more about that, and I'll go back to e-com? |
7,873 | WMT | 4 | 2,024 | 2024-02-20 08:00:00 | Walmart Inc. | 313,055 | John Furner: Yes, Thanks, John David. Krisztina, thanks for the question. A few things that I'd say on margin. Number one, the team is really committed to driving value for customers, and they did that in the quarter while improving margin. And I want to talk about value just a second. We're really proud about the fact that our rollback count is up significantly from a year ago, similar to what it was in the third quarter. Second, the value with customers is resonating well. We saw NPS levels at a high level throughout the quarter and all-time highs for the quarter, which we're also proud of. And then on the gross margin line as it relates to the overall flow through, there are two things to consider there. One is, sell-through was very strong throughout the quarter. Inventory closed down 4.5%. This is the first year I can remember in my career being in stores in early December. And they were out of storage containers, product on the counter in the back rooms. The teams did a very nice job getting inventory inside, knowing what they owned, and selling through. And the sell-through that was strong at the holiday events, we mentioned two of our strongest days ever were in December, just leading up to Christmas. The strong sell-through led to lower markdowns, and the markdowns were by far the biggest impact on margins in the U.S. And then the second impact would have been from business mix. So John David said that earlier, but those are the two factors that improved it. And we feel good about our inventory position as we begin this year. We ended the year clean. Store managers and associates have back rooms that are quite under control. They feel very good about their inventory levels and we're really proud of how they performed. |
7,874 | WMT | 4 | 2,024 | 2024-02-20 08:00:00 | Walmart Inc. | 313,055 | John David Rainey: Sure, and Krisztina, I'll address the improvement that we've seen and expect to continue to see in our contribution margin on e-commerce. There's a couple elements to this. One is, I'm really pleased with the way the team has performed on cost of fulfillment. That has gone down 20% in the last year. A lot of hard work has gone into making that happen. But the unit economics of delivering a package to a customer or a member have simply improved. So that's a big part of the improvement we've seen. And we expect to see continued improvements there. Second aspect of this is the densification of our network, specifically the last mile. As we have more customers coming to us, using us through e-commerce channels, it enables us to spread that cost of delivery over multiple customers. And so if you think about an item like our weekly active customers on e-commerce, that's up 17%, much more than our top line. So customers are recognizing that they can come to Walmart for convenience just as much as they can on price, and that actually helps the profitability of this channel for us. In terms of where we or when we can get to profitability, we have line of sight to e-commerce being breakeven when we include all the various components of this, advertising, fulfillment services, all that together. But to be clear, we're focused on getting to e-commerce profitability even without the subsidization of those additional items. That's a little further down the road. We have a lot of work to do to get to that point, but we're really pleased with the progress that we've made and the plan that we have going forward. |
7,875 | WMT | 4 | 2,024 | 2024-02-20 08:00:00 | Walmart Inc. | 313,055 | Doug McMillon: I think big picture, as it relates to the business model scale has helped a lot. Getting to $100 billion for the year is a different number than what we were dealing with before, and it's nice to have growth coming on top of that. And as John David said, the formula, whether it's in the US or it's in other markets around the world, is now clear to us. We're in execution mode as it relates to these things. And obviously, route density helps, volume helps, mix. As it relates to contribution, profit is part of the equation. And it's exciting to see whether [indiscernible] Walmex or it's what's happening in India in addition to what we've been talking about in the U.S. with Walmart and Sam's, the commonalities that we're now experiencing. It feels like for some time now we've really kind of known what we're doing and omni is an advantage, figuring out how to leverage stores and clubs, what role they play has been part of that journey as well.
Kathryn McLay: And if I can just comment on China. If you look at their progress over the last few years, they had a digital penetration of about 4% in 2019. They're now at 48%. It's almost 50-50 offline and online and we're driving our profit through that business. So I think they've shown a path to really growing omni-sales profitably.
Operator: Our next question is from the line of Simeon Gutman with Morgan Stanley. Please proceed with your question. |
7,876 | WMT | 4 | 2,024 | 2024-02-20 08:00:00 | Walmart Inc. | 313,055 | Operator: Our next question is from the line of Simeon Gutman with Morgan Stanley. Please proceed with your question.
Simeon Gutman: Hi, good morning everyone. Doug, I was going to ask you to kind of keep it high level. For fiscal 2024, the prior year, it was a tough consumer year, but strategically Walmart made progress on a lot of fronts. If you look at fiscal 2025, can you boil down the year one to three measures of success? And I have some ideas, but I won't preload the question. And then what will define success in terms of strategic initiatives? And then just secondarily any evolving thoughts about reinvestments in the business, so the business should continue to see higher EBIT growth over the next several years. Do you -- since you have one year or at least a couple years under your belt now of seeing that evolve, do you find that the reinvestment rate should be any greater such that not all of that flows through? |
7,877 | WMT | 4 | 2,024 | 2024-02-20 08:00:00 | Walmart Inc. | 313,055 | Doug McMillon: Thanks, Simeon. I feel good about the reinvestment rate. If you look at what our plans include, whether it's on the OpEx or CapEx side, I think we're being aggressive. And it is exciting to be in a position where we can play offense on price to the degree we need to. We can invest in associate wages and at the same time we can grow operating income faster than sales. I'm going to look back at last year and then how that plays through FY 2025. I think that themes are the same. We got to keep the top line going. And this business has always been so fun as it relates to just being a merchant driving sales. And I like the fact that we've got an opportunity across so many categories, food, consumables, general merchandise, apparel. And as prices come down on the general merchandise side, there's an opportunity to show off our merchant skills and to drive more units. And that's one of the reasons why, to Michael's question, to start this conversation, we have some confidence, is because we're seeing our units move and our share numbers look strong. So top line is a focus. I think we're positioned to grow that because we can do that in-store club, pick up delivery, however people want to be served. The second thing I'd mention is the automation plan. And I think in the U.S. where we're most aggressive, we'll see over the next few years a higher level of inventory accuracy, improved flow, which will help us with markdowns, associate wage productivity, all the metrics that we've been talking about with you guys, in particular for the last year. So I think automation is the next theme. And then the last one that I'll mention is, all of the things that flow from Marketplace and advertising. I think we've learned a lot about marketplace over the last few years, and we're working together to build what is a multi-country marketplace business, which will help us not only with commissions related to marketplace and Fulfillment Service scale, but it'll also help us with advertising and data monetization and some |
7,878 | WMT | 4 | 2,024 | 2024-02-20 08:00:00 | Walmart Inc. | 313,055 | related to marketplace and Fulfillment Service scale, but it'll also help us with advertising and data monetization and some of the other keys to changing the shape of the P&L, or the business mix as we refer to it. So those are the things that come to the top for me and that's what I stay focused on. |
7,879 | WMT | 4 | 2,024 | 2024-02-20 08:00:00 | Walmart Inc. | 313,055 | Operator: Our next question is from the line of Rupesh Parikh with Oppenheimer. Please proceed with your question.
Rupesh Parikh: Good morning, and thanks for taking my question. So I just want to go back to the Walmart U.S. general merchandise category. Just curious how the remodels have continued to perform, as I believe you'll soon be lapping the Teterboro opening? And then as you look at the general merchandise offering, curious if you're seeing any re-insured. Just trying to get a sense of when we can start to expect a return to positive growth? Thank you.
John David Rainey: Hey, Rupesh. Good morning. It’s John. Really pleased with the team. They're growing top and bottom line, and we're investing in the future, as we talked about. This year we're planning to do 650 more remodels. We did close to 700 last year, which is I think our largest year, and had a really big month in the month of November. The results are very promising. As you know, there is more space for customers. We opened the store up. We're really proud of the results in apparel, in home, beauty. We see positive signs out of the pet department. There are a number of things that are coming together. In the fourth quarter, in particular, we're really pleased with the toy performance, where we saw unit share gains with big brands like Lego, Mattel, Muffin Dugs. So there's some really nice signs coming out of those stores. And we're really looking forward to this year to put another, as we said, 650 remodels out in the market.
Doug McMillon: And you've consistently performed seasonally. I think as we look forward to this year, whether it's Easter, back to school, all the way through to holiday again, people come to Walmart for seasonal purchases and we've got a great strength there that we plan to build on. |
7,880 | WMT | 4 | 2,024 | 2024-02-20 08:00:00 | Walmart Inc. | 313,055 | John David Rainey: We do, Doug. It's been a lot of fun to see how these came together. As I mentioned, the sell-throughs are really strong throughout the fourth quarter. And Valentine's Day was a strong holiday early in the year. Because we're so close to customers, we were delivering same day up until 8:30 that night. I wouldn't recommend that for everyone, but certainly the capability to be able to take flowers to someone at 8:30 who had a bit of a moment was a lot of fun. Save the day.
Operator: The next question is from the line of Kelly Bania with BMO Capital Markets. Please proceed with your question.
Kelly Bania: Hi, good morning. Thanks for taking our questions. I wanted to just talk a little bit more about advertising, 28% growth for the year. I think you said reaching $3.4 billion. Just doing some math here, it seems like that could be adding about $300 million to $400 million in EBIT on an annual basis. Now, just wanted to see if that's in the right ballpark and what kind of magnitude of growth you're forecasting for this coming year and really the next couple of years? And also if you can just elaborate here on the vision with Vizio as it relates to advertising.
John David Rainey: Sure, Kelly. This is John David, I'll start. We're really pleased with not just advertising, but a lot of these faster growth parts of our business. Advertising, we've called out. You noted the growth that we had for the year. We have really strong growth in the quarter. You're right, your math is right in terms of the type of contribution that we could expect there. And that segues into the conversation around Vizio. We're really excited about that acquisition. I think it's very complementary to what we're already doing organically in that part of the business, and this is an accelerant. I'll turn it to Doug and John, though, to add more about that. |
7,881 | WMT | 4 | 2,024 | 2024-02-20 08:00:00 | Walmart Inc. | 313,055 | Doug McMillon: Yes, we're not going to say too much. Obviously, we need to give that some time for the process to play out. But as John David said, we are really excited about the opportunity to bring together Vizio's operating system with our ad platform. And we can appreciate that you all would probably have a number of questions about it. Marketplace and advertising are key drivers of profitability growth, as we've already discussed. And this acquisition accelerates the buildout of our advertising platform into the connected TV business, which will be exciting. But given that the acquisition hasn't closed, we can only reinforce what we've already shared. So we'll be limited in our remarks today. So you may want to save your questions for another topic. We want to focus for now on our quarter on the company's strategy and more broader topics and then we can come back to you once the deal is closed.
Operator: Our next question is from the line of Robbie Ohms with Bank of America. Please proceed with your question.
Robert Ohmes: Hey, thanks for taking my question. My question is on the transaction comps. I think it was 4.3% for Walmart U.S. That's a pretty strong number in a big quarter for you guys. A couple things on that. Can you talk about how that kind of played out in terms of the fourth quarter? Was it more grocery driven and e-commerce driven in grocery, or did you have really strong transaction growth year-over-year in holiday? And then in the guidance you guys have given for Walmart U.S., how should we think about that transaction momentum continuing? And then also, probably the biggest drivers that's sustaining that kind of high level of transaction growth for this year. |
7,882 | WMT | 4 | 2,024 | 2024-02-20 08:00:00 | Walmart Inc. | 313,055 | John Furner: Hey Robbie, it's John. Let me start on this and others can jump in. The 4.3% is encouraging, we're seeing more customers, we're seeing them more often, we're seeing a lot of new customers. The frequency, John David mentioned earlier, weekly average customers in the e-commerce up 17% is a strong number. The mix hasn't changed really all that much. I think if you look at our results by business unit from consumables to food to GM, pretty similar trends than what we've been seeing. I think the big difference that we can talk about is, is we see more customers using same-day services and express deliveries, and that's also across a broad range of categories. That would be intuitive to assume it's food at times like the example earlier when you're missing an ingredient. But we're also seeing this happen for birthday gifts and general merchandise items and other things. So, I’d go back to what we talked about at the beginning of last year when we talked about supply chain strategy, having a short last mile is an important component in e-commerce and having stores be able to deliver what historically would have been an e-commerce order or a food delivery order or the combination of the two is really helping the brand. And additionally, that's bringing the delivery costs down, which has contributed to the improvement in operations loss in e-commerce.
Doug McMillon: I think the things you've done to make it easier to pick at store level should be mentioned too, RFID and apparel. Having inventory levels down so that people can find things. I think it helped us a lot when it came time to pick toys at the last minute, for example. Our accuracy, -- our customer scores reflect that improved accuracy. Combine that with the automation that we're putting into e-commerce fulfillment centers and you can start to see that there's a great opportunity for us to leverage math and optimize where things come from, but our accuracy is also improving. |
7,883 | WMT | 4 | 2,024 | 2024-02-20 08:00:00 | Walmart Inc. | 313,055 | John Furner: It really has, Doug. There are a few things that we're doing with technology to help us ensure that we know what we own, where it is, and ensure that it's accessible for the store associates. And I can't overemphasize the importance of inventory levels being down 4.5% and what that does for a store manager, a team lead, for the coaches that are in the stores who need to take care of what a customer needs right now and they're able to do that much more accurately. So I think it'll get better over time as the automation continues to come online, but definitely some notable improvements from the store team this quarter.
Operator: Our next question is from the line of Corey Tarlowe with Jefferies. Please proceed with your question.
Corey Tarlowe: Good morning, and thank you for taking my question. I wanted to double click on technology and talk about Walmart being a people-led and tech-powered company, but specifically as it relates to AI, what is it in the last 12 months that you've deployed enterprise-wide that's worked well for the business and helped drive better returns? And then what is it over the next 12 months that you see that could really help to improve results even more going forward? As I know that that's been a continued focus for the enterprise broadly. Thank you. |
7,884 | WMT | 4 | 2,024 | 2024-02-20 08:00:00 | Walmart Inc. | 313,055 | Doug McMillon: Yes. Thanks, Corey. This is Doug, and others can chime in here and help me with this, but we're very excited about generative AI. There are big opportunities for us to improve the customer and member experience, improve associate experiences and productivity, and help take costs out of business, and we're moving. I think big picture, we've got a very clear plan as it relates to what we want to build versus what we want to leverage from others and we've got good partnerships and good advisors and we've got a strong tech team that knows what they're doing in this area. So I do expect that it'll have benefits. As I talk to other CEOs and we learn here, I think it's still too early to try and quantify this specifically. I think as we look back on what develops, we can probably tell you in the rear view mirror how things played out from a cost perspective, for example. But the thing we're most excited about that's already happened is the way search has improved. The way generative AI helped us really improve a solution-oriented search experience for customers and members is the thing that we're most excited about and it happened pretty quickly and it impacted Super Bowl search results. We gave you an example of Valentine's Day earlier and the team is learning how to do that across all of our markets and the entirety of the company. So that's also exciting. We also rolled out something we call My Assistant on our Me@Walmart applications so that all of our associates have access to generative AI tools and capabilities. So strategically, the way I think about it is, the leadership of the companies working through where our biggest opportunities are, prioritizing and resourcing those opportunities. But we're also making generative AI available broadly so that we get surprising good news from the way that all of our associates interact with it. Anybody else want to comment on that technology? |
7,885 | WMT | 4 | 2,024 | 2024-02-20 08:00:00 | Walmart Inc. | 313,055 | Chris Nicholas: For Sam's Club we were really excited to unveil at [CES] (ph) the first of our Sam's Club's big consumer facing applications of AI. So our easy exit process, which employs computer vision and AI to allow people to just walk out, is just a really exciting way. And when you watch customers, I was in a club last week watching customers just walk out, members just walk out. And the joy that it gives them, there is some computer vision and AI is making their lives better without them knowing why or how is really exciting. And I think it's just the beginning of a journey in Sam's Club. We like to innovate. We have the opportunity to innovate. And we'll see opportunities for cost out, no doubt. We took 35 million tasks out of the club last year for associates by employing technology. A lot of that is artificial intelligence that helps them manage inventory better. And we're working a lot with our members, too, on personalizing how we interact with them. So we replete with opportunities, and I think the important thing is to choose the biggest ones and invest in those.
Doug McMillon: That exit technology still requires a member to scan their items on their app. So Scan & Go is the first step and then you can just leave the building when the transaction is completed. But obviously, eventually we want to remove all of that as part of the process, too.
Chris Nicholas: We do.
Doug McMillon: Thanks for the question.
Operator: Our next question is from the line of Paul Lejuez with Citigroup. Please proceed with your questions.
Paul Lejuez: Hey, thanks, guys. You mentioned rollbacks being up versus last year. Can you quantify that and maybe talk about what percent of those rollbacks are being vendor-funded? How that compares to last year as well? And how that might have also compared to how you operate rollbacks historically? Also I'm curious in which categories you're most focused on providing those rollbacks? Thanks. |
7,886 | WMT | 4 | 2,024 | 2024-02-20 08:00:00 | Walmart Inc. | 313,055 | John Furner: Hey, Paul. It's John. I'll take that question. This rollback [indiscernible] one of the programs [indiscernible] Walmart format. It's up around 50% on last year, which is similar to what we reported in the third quarter. As far as categories, it's pretty evenly spread across the box. If you go back to what we said earlier about pricing, general merchandise is negative by low single digits. So you'll see a decent number all across general merchandise. The food business has a number that are showing up quite as well. It's a really key items that we know that our customers have responded to well. We took our French bread back to a dollar, which had been a dollar for a long time and went up as inflation hit the market. And we're seeing results of that running about 40% over last year. So customers immediately responded. Rotisserie Chicken is another one. That price has come down by $1. Customers are responding. And as John Davis said earlier, customers are being choiceful. And our customers are smart. And they recognize value really well. So as prices come down and we can show the value digitally or physically, we're seeing a lot of great responses. As far as the funding, I mean, it's always going to be balanced. Merchants have a lot of levers in their P&L from their initial margin to how they manage their inventory back to mix. In many cases, you can improve margin by selling items that are higher margin. You can take higher margin items down and move sales to those items, and it shifts the entire mix to the category. So it's not as easy as just one simple answer, but the merchants are, as I said earlier, they're doing a nice job of managing value for customers. They are driving rollbacks and because of strong inventory management, we were able to save markdowns and improve gross margin on product.
Operator: Our next question is from the line of Seth Sigman with Barclays. Please proceed with your question. |
7,887 | WMT | 4 | 2,024 | 2024-02-20 08:00:00 | Walmart Inc. | 313,055 | Operator: Our next question is from the line of Seth Sigman with Barclays. Please proceed with your question.
Seth Sigman: Hey, good morning, everyone. Just reflecting on the market share gains, a lot of the commentary this past year has been focused on wins with the higher income consumer. Just any more perspective on how that's been playing out within consumables versus discretionary categories? And how you think about getting that customer really up that spending curve over time. And I guess just related, if you could speak to market share trends, perhaps across some of the other customer segments as well, that would be helpful. Thank you.
John David Rainey: Seth, this is John David. We're pleased with what we've seen in market share gains. In the quarter, we gained share in virtually every category. But notably, one of the biggest contributors in the quarter was in this income demographic from households that make more than $100,000 a year. For general merchandise, as an example, two-thirds of the share gain that we had in the quarter was through this income demographic and digital channels. And what that illustrates, I think, broadly, is that our value for convenience is every bit as much -- every grade is what it is for price. And that resonates to people regardless of the size of your paycheck. And so that's one of the reasons we think that we're gaining share, our value proposition is resonating with customers and they're clearly shopping us in new ways versus how they have historically.
Kathryn McLay: I'd also just comment on some of the other markets that we're into looking at the market share gains that we've got really closely correlate with the improvements we've seen in MPS as well as price gap. So I think as we look at just being really relevant from a value perspective in markets we're seeing that the consumer is responding with improvements in traffic and also in market share. |
7,888 | WMT | 4 | 2,024 | 2024-02-20 08:00:00 | Walmart Inc. | 313,055 | Doug McMillon: There's so many things Seth in there, but what customers want, they want a great price, they want a great environment, they want value and they want experience. And we've been talking about for a couple of years the flexibility that we can offer that we couldn't or did not years ago. And the stores are a very important part of the e-commerce solution, including delivery, but also picking and at times just being exactly what they are which are great stores that offer those four elements. So remaining flexible can be really important in saving people time. John David mentioned convenience and that is definitely a driver of the results. |
7,889 | WMT | 4 | 2,024 | 2024-02-20 08:00:00 | Walmart Inc. | 313,055 | Operator: Thank you. At this time, we've reached the end of the question-and-answer session. Now I'll turn the call over to Doug McMillon for closing remarks. Thanks for joining us today. I'm a little concerned that I'm going to be boring in my closing remarks, because we're becoming quite repetitive. We're in execution mode and the headlines are, we believe we can grow, we're confident in our ability to grow because we're positioned to serve customers and members however they want to be served. We can provide value and we can provide convenience. And underneath the supply chain's changing to be more intelligent, more connected, more automated. And that's just going to help us improve execution. From a profit point of view, we can grow profit faster than sales, while investing in our associates, while investing in our business, and having flexibility on price if we need it. And we'll do that through the combination of business mix, the productivity delivered by automation. We're in a great set of countries. We can sell food. We can sell general merchandise, whatever the customer wants in the moment. And then thirdly, we can grow ROI over time. I think we're investing in the right categories. We're very clear on the places where we're investing. We know what the expected returns are there. It's great to see the automation plans continuing to scale. We're in a period of time here over the next few years where that's going to be vital, but it doesn't last forever and there's a transition on the other side and it looks quite exciting to us. So I think the combination of growth, profit growing faster than sales and ROI look attractive here and we'll just keep trying to get better as we execute it. Thanks again for your time.
Operator: Thank you. This will conclude today's conference. You may disconnect your lines at this time and we thank you for your participation. Have a wonderful day. |
7,890 | WMT | 3 | 2,024 | 2023-11-16 08:00:00 | Walmart Inc. | 313,055 | Operator: Greetings. Welcome to Walmart's Fiscal Year 2024 Third Quarter Earnings Call. At this time, all participants are in listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded. At this time, I will turn the conference over to Steph Wissink, Senior Vice President of Investor Relations. Steph, you may begin.
Steph Wissink: Thank you and happy holidays, everyone. Joining me today at our home office in Bentonville are Walmart's CEO, Doug McMillon, and CFO, John David Rainey. Doug will begin with his reflections on the quarter and year. John David will follow with his view of enterprise results and segment highlights using our financial framework of growth, margins and returns before speaking to our updated guidance for the year. For specific segment level results, please see our earnings release and accompanying presentation on our website. Following prepared remarks, we'll take your questions. At that time, we will be joined by our segment CEOs, John Furner from Walmart U.S.; Kath McLay from Walmart International; and Chris Nicholas from Sam's Club. In order to address as many questions as we can, please limit yourself to one question. Today's call is being recorded and management may make forward-looking statements. These statements are subject to risks and uncertainties that could cause actual results to differ materially from these statements. These risks and uncertainties include, but are not limited to, the factors identified in our filings with the SEC. Please review our press release and accompanying slide presentation for a cautionary statement regarding forward-looking statements, as well as our entire Safe Harbor statement and non-GAAP reconciliations on our website at stock.walmart.com. Thank you for your interest in Walmart. Doug, over to you. |
7,891 | WMT | 3 | 2,024 | 2023-11-16 08:00:00 | Walmart Inc. | 313,055 | Doug McMillon: Good morning, everyone, and thanks for joining us to talk about our third quarter results and how we're seeing the rest of the year. Our value proposition continues to resonate with customers, helping us gain share and drive e-commerce growth. We're on track to grow adjusted operating income at a faster rate than sales for the year, consistent with what we discussed at our investor meeting earlier this year. We had strong revenue growth for the quarter across each of our segments. Comp sales for Walmart U.S. were 4.9% and 3.8% for Sam's Club U.S. Sales for Walmart International were up 5.4% in constant currency, led by Walmex and China. Sam's Club continues to perform well both in Mexico and China, and while strength was broad-based for Walmex. Our Bodega Aurrera business is worth calling out as it continues to deliver outstanding growth. E-commerce sales were up 24% in Walmart U.S., 16% in Sam's Club U.S., and 15% globally. Timing of our Flipkart Big Billion Days event, which moved from Q3 last year to Q4 this year, affected comparisons in our International segment, leading to a decline of 3%. So we'll see the benefit from the timing shift as we report next quarter. Across markets, the team did a nice job driving our seasonal events. Our in-stock and inventory levels are in good shape. We finished down 1.2% in inventory for the total company, including down 5% for Walmart U.S. Both our top line and adjusted EPS came in better than what we projected at the beginning of the quarter, but we could have done a better job on expenses, which is reflected in adjusted operating income growing less than we expected. We had a couple of unexpected expense increases in SG&A, and you'll hear more about those when John David walks through the numbers. In the U.S., pricing levels in many food categories continue to be a concern. Overall, our product costs are up versus last year, and they remain up even more on a two-year stack, which is putting pressure on our customers. Beef prices are high, but we're happy to |
7,892 | WMT | 3 | 2,024 | 2023-11-16 08:00:00 | Walmart Inc. | 313,055 | remain up even more on a two-year stack, which is putting pressure on our customers. Beef prices are high, but we're happy to see lower pricing in dairy, on eggs, and with chicken and seafood. The pockets of disinflation we are seeing are helping, but we'd like to see more, faster, especially in the dry grocery and consumables categories. The other good news is that general merchandise prices continue to come down GM is down low to mid-single digits versus last year. That enables us to rollback pricing which will help our customers during this holiday season when general merchandise is so important for gift-giving. We still see pressure from mix including outside the U.S., which we expected, but I like the market-share gains we're seeing in this category. In the U.S., we may be managing through a period of deflation in the months to come. And while that would put more unit pressure on us, we welcome it because it's better for our customers. When I look at our P&L, it's continuing to change shape. Mentally, break it down as a combination of a traditional retail P&L and a newer version that starts with our digital businesses. It flows from first and third-party e-commerce pickup and delivery to businesses like membership, advertising and fulfillment as a service. It includes some faster growing, higher margin components that combined with the more traditional P&L gives us a business model that's more profitable in percentage terms as it grows. We saw strong growth in all these areas for the quarter. And when you put it together with the supply-chain automation work we're doing, you get a more sustainable business that can grow more effectively over time and create a better mix along the way. Marketplace is one of our engines for these mutually reinforcing businesses. Meaning that marketplace growth pulls other businesses like fulfillment through. Back in September, we held our first ever Marketplace Seller Summit. We hosted thousands of current and potential sellers to let them see first-hand our commitment to |
7,893 | WMT | 3 | 2,024 | 2023-11-16 08:00:00 | Walmart Inc. | 313,055 | Marketplace Seller Summit. We hosted thousands of current and potential sellers to let them see first-hand our commitment to this business and how we will grow it together. Since the beginning of last year, we've more than doubled the number of items available to customers on our U.S. marketplace. It's an important piece of what we're building, and it's growing fast and not just in the U.S. We have a unique opportunity to grow in India, Mexico, Canada, and Chile. We love the opportunity to grow our assortment in this way, so customers can get what they want, when and how they want it. We're making shopping easier and more convenient. Our net promoter scores for pickup and delivery in Walmart U.S. are improving and we've started using generative AI to improve our search and chat experience. We've released an improved beta version of search to some of our customers who are using our app on iOS. In the coming weeks and months, we will enhance this experience and roll it out to more customers. When I step back and look at the company overall, I love what we're building and how we're building it. We've got a good hand at play and a strong team making things happen. It's our recipe for growth and improved margin and returns we've been discussing with you. Everyday low prices are a foundational component of us fulfilling our purpose. We bring EDLP to life on a year-round basis by doing things like offering a Thanksgiving meal in the U.S. and Canada, that cost less than last year. We're offering tremendous value for things like fashion, electronics, and seasonal decorations and helping remind people that when they're looking to buy toys, we're the place to come because we have the right product at the right price. The same focus on purpose and execution came through when I was visiting Chile, Canada, and China earlier this quarter, it was my first time back in China since before the pandemic. Our team there run some of the most incredible Sam's Clubs in the world and they continue to be a leader for us in terms of |
7,894 | WMT | 3 | 2,024 | 2023-11-16 08:00:00 | Walmart Inc. | 313,055 | Our team there run some of the most incredible Sam's Clubs in the world and they continue to be a leader for us in terms of digital penetration and innovation. As I wrap up, I know we're all concerned about events across the world, war, acts of terror, political unrest, impacts from storms like those in Mexico from Hurricane Otis, the pressure we're feeling from stubborn inflation in some categories and other challenges beyond our control. As for our company, we care about everyone. We want to be a place where literally everyone feels comfortable and welcomed to shop or work. We want to live our values and create a warm, safe and fun place for the hundreds of millions of people that will shop with us in the days and weeks ahead. I'm grateful to be part of this big team, grateful to work alongside our associates. Now, I'll turn it over to John David. |
7,895 | WMT | 3 | 2,024 | 2023-11-16 08:00:00 | Walmart Inc. | 313,055 | John David Rainey: I'd like to start by thanking our customers, members, associates and partners for helping us deliver a good quarter. We're pleased overall with how the team executed and how our strong value proposition and omnichannel strategy continue to resonate with customers. We're gaining share, seeing strong e-commerce growth, and excited about the contributions from higher margin businesses like advertising. Sales grew more than 4%, gross profit was better than expected and we exceeded our guidance for EPS. These results reinforce the benefits of our highly diversified business with broad-based contributions across segments and markets, channels and formats, and strategic growth areas. While we're pleased with our topline results, operating income was below our guidance due to higher than anticipated expenses largely certain legal accruals. I'll provide more details on guidance shortly. But the key takeaway is that we're raising our full year sales and EPS guide while reiterating our prior operating income guidance. We expect the relationship between profit and sales growth to favor profitability in Q4 and for the full year to align with our goal of operating income growing faster than sales. Now let me review the key financial highlights for Q3, using our financial framework of growth, margins and returns. First, growth. Constant currency sales increased 4.4% or nearly $7 billion. Importantly, we saw traffic growth across both in-store and digital channels. All three operating segments experienced mid-single digit sales growth, with comp sales for Walmart U.S. up 4.9%, in Sam's Club U.S. up 3.8% excluding fuel. International grew sales 5.4% in constant currency with Walmex sales up more than 9%, and China up 25% with strong performance in Sam's Club and e-commerce. The timing of Flipkart's Big Billion Days pressured international sales growth as the event moved from Q3 last year to Q4 this year. So we expect the timing to be a benefit to Q4's growth rate for the segment. PhonePe also continued its |
7,896 | WMT | 3 | 2,024 | 2023-11-16 08:00:00 | Walmart Inc. | 313,055 | year to Q4 this year. So we expect the timing to be a benefit to Q4's growth rate for the segment. PhonePe also continued its strong momentum with annualized TPV or total payment volume reaching 1.2 trillion on nearly 5.8 billion monthly transactions. And PhonePe recently achieved an impressive milestone eclipsing 500 million registered users. We continue to grow share in key categories, particularly in Walmart U.S. grocery where we delivered positive comps and saw strong share gains in both units and dollars. Grocery inflation moderated nearly 300 basis points from Q2 levels to a mid-single digit increase versus last year. But on a two-year stack, it was still elevated at a high teens percentage. We see our customers showing ongoing discretion in seeking value to manage within their household budget, while general merchandise sales were down low-single digits year-over-year in Q3, the rate of change was stable to Q2 levels and we gained share across categories. As we enter the holiday season, we're working hard to lower grocery prices to ease the pressure for customers giving them more capacity for general merchandise spent. Our business is rooted in a timeless purpose to save customer's money, so they can live better. Against any economic backdrop, we're there for customers, how and where they need us and we're making shopping with Walmart and Sam's Club, more convenient. Omni services including pickup and store fulfilled delivery continue to drive strong growth, leading to a 24% increase in Walmart U.S. e-commerce sales and 16% growth at Sam's Club. Multi-channel shoppers are more valuable, engaging more often and spending more with us. Pickup and delivery for Walmart U.S. has been a key source of growth and share gains among upper income households and has become the most productive channel for acquiring Walmart Plus members. In International, Walmex's expansion of omni offerings led to 1.5 million Bodega store-fulfilled digital orders in Q3. In Canada, we continue to roll out our unlimited next day store |
7,897 | WMT | 3 | 2,024 | 2023-11-16 08:00:00 | Walmart Inc. | 313,055 | led to 1.5 million Bodega store-fulfilled digital orders in Q3. In Canada, we continue to roll out our unlimited next day store delivery subscription called Delivery Pass, which is now available from two-thirds of our Canada stores. And I was in China recently where our business is nearly a 50-50 split of physical and digital. I was impressed with how we're serving omni customers with speed and accuracy through new engagement and delivery models. Turning to margins. Gross margins expanded 32 basis points, reflecting the timing shift of Big Billion Days in India and lapping last year's LIFO charge at Sam's Club U.S. Walmart U.S. gross margins increased to 5 basis points reflecting lower markdowns and supply chain costs. But we're still seeing an ongoing category mix pressure as health and wellness and grocery sales outperformed general merchandise. Continued disinflation along with the success of our merchants at Sam's Club and bringing down the cost of inventory resulted in us not taking the expected $50 million LIFO charge in Q3. We no longer expect any further LIFO charges in Sam's Club this year. As we've said previously, over the next several years, we expect margins to move higher as we modernize our supply chain and scale higher margin growth initiatives. We made good progress on both during the quarter. We continue to deploy capital to build technologies and optimize our next-generation supply chain with automation and productivity benefits starting to appear in our results. We now operate nine regional distribution centers servicing U.S. stores with varying levels of automation with six more centers in active stages of construction. Currently, more than 15% of stores receive merchandise from these facilities, helping to get product to shelves faster and more efficiently. During the quarter, we opened our third next-generation e-commerce fulfillment center. These 1.5 million square feet facilities are expected to more than double the storage capacity, enable 2X the number of customer orders fulfilled |
7,898 | WMT | 3 | 2,024 | 2023-11-16 08:00:00 | Walmart Inc. | 313,055 | square feet facilities are expected to more than double the storage capacity, enable 2X the number of customer orders fulfilled daily, and will expand next and two-day shipping to nearly 90% of the U.S. including marketplace items shipped by Walmart Fulfillment Services. They also unlock new opportunities for our associates to transition into higher skilled tech focused positions. To support the store fulfilled digital business, we're on-track to have seven stores with automated market fulfillment centers or MFCs operational by the end of this month. These MFCs start thousands of the most sought after items and are expected to increase order capacity and productivity, while also increasing inventory accuracy, which helps us deliver perfect orders for customers. As we focus on improving e-commerce margins, we're making good progress in lowering digital fulfillment cost and densifying the last mile by tapping our broad store and club network. Over the past year, Walmart U.S. has increased the percentage of digital orders fulfilled by stores by 800 basis points and Sam's Club fulfills nearly 60% of online orders from its clubs. With the growth of our Spark Driver platform, we've lowered store to home delivery costs by 15% even as we shorten delivery times the same day for more than 80% of our stores and in some cases as quick as 30 minutes. As we scale Walmart GoLocal, we are densifying the last mile, and we're approaching the milestone of 12 million deliveries for other retailers with this service. I'd like to touch on our portfolio of higher growth initiatives. These businesses reinforce our core omni-retail model in our key to driving operating income growth ahead of sales over time. In Q3, this portfolio positively contributed to gross margins. Global advertising grew approximately 20% in Q3 with Sam's Map growing over 27% and Walmart Connect, up 26%. As an illustration of the omnichannel benefits of our ad platforms, more than 75% of Sam's Map active advertisers are investing in search and sponsored ads as |
7,899 | WMT | 3 | 2,024 | 2023-11-16 08:00:00 | Walmart Inc. | 313,055 | benefits of our ad platforms, more than 75% of Sam's Map active advertisers are investing in search and sponsored ads as in-club sales attribution has improved returns of digital ad spend by over 30%. International's ad revenue growth was impacted by the timing of Big Billion Days, but we're on track to deliver strong growth of approximately 45% for the full year. Moving to marketplace and fulfillment services. Customer engagement continues to validate our strategy is to invest in ways to grow this business on a global basis. As Doug mentioned, we held the inaugural Marketplace Seller Summit to help accelerate our marketplace growth. For cross-border sellers in the U.S., we're expanding access to more customers beyond the U.S., Canada and Mexico by opening our e-commerce marketplace in Chile to cross-border products next year. Over the past year, we've increased marketplace sellers by more than 20% and the number of sellers utilizing Walmart Fulfillment Services is up over 55%. Next, membership remains a compelling way we deepen engagement with our customers. Sam's Club membership income grew over 7%, reflecting record member counts and Plus Member penetration. During Q3, we held events that were focused on member acquisition and digital engagement. We'll take a similar approach again during Q4 offering discounted access to Walmart Plus memberships while providing members early access to the best savings event throughout the holiday season. Turning back to the middle of the P&L. SG&A expenses deleveraged 37 basis points on an adjusted basis, impacted by higher year-over-year wage related cost in Walmart U.S., including higher variable pay expenses relative to last year when we were below our planned performance. Store remodel costs were also higher as we rolled out 117 of our flagship design stores earlier this month and legal expenses increased. Lastly, the timing shift of Big Billion Days pressured international expense leverage in Q3, we'll see the benefit come through in Q4. Third quarter adjusted operating |
Subsets and Splits
No community queries yet
The top public SQL queries from the community will appear here once available.