Verizon Communications Inc. (VZ) — Earnings Preview (Q3 2026)
Key Points
| Factor | Details & What to Watch For |
|---|---|
| Guidance vs. Consensus | Management has raised 2026 guidance twice YTD: now expects adj. EPS +6% to +7%, FCF +9% to +10%, and mobility/broadband service revenue +2.5% to +3%. Consensus for Q3 2026: Revenue $34,856M, EBITDA $13,774M, EPS $1.28. |
| YoY Comparables | Q3 2025 was a soft comp: Revenue $34,268M, EBITDA $12,733M, EPS $1.17. Q3 2026 consensus implies +1.7% revenue, +8.2% EBITDA, +9.0% EPS YoY. |
| Operational KPIs | Focus on postpaid phone net adds (guidance: upper half of 750k–1M for FY), churn (Q2: 84 bps, down 6 bps YoY), ARPA/ARPU inflection (management expects ARPU to turn positive in Q4). |
| Cost Structure | $9B cost program for 2026 ($5B OpEx, $4B CapEx) is on track; watch for further margin expansion and commentary on structural improvements in COA/COR. |
| Broadband/Fiber Momentum | Broadband net adds remain strong (Q2: 348k), fiber passings on track for >32M by year-end; mix shift toward fiber expected to continue. |
| AI Infrastructure | New revenue vector: $1B+ Google dark fiber deal announced, more multi-billion deals expected; management expects meaningful AI Connect revenue contribution starting 2027. |
| Capital Returns | Buyback target raised to up to $4.5B for 2026 (already at $3.5B YTD); dividend commitment remains “ironclad.” |
Recent Results and Forward Consensus
Quarterly Financials — Actuals and Consensus
| Quarter | Revenue ($M) | EBITDA ($M) | Net Income ($M) | EPS ($) | Cash Flow/Share ($) | YoY Revenue Growth | YoY EBITDA Growth | YoY EPS Growth |
|---|---|---|---|---|---|---|---|---|
| Q3 2026E | 34,856 | 13,774 | 5,361 | 1.28 | 2.46 | +1.7% | +8.2% | +9.0% |
| Q2 2026 | 35,106 | 13,665 | 5,217 | 1.23 | 1.95 | +4.1% | +8.0% | +5.7% |
| Q1 2026 | 34,887 | 13,141 | 5,074 | 1.19 | 1.62 | +2.9% | +7.7% | +1.8% |
| Q4 2025 | 36,196 | 12,036 | 4,442 | 0.97 | 2.25 | |||
| Q3 2025 | 34,268 | 12,733 | 5,073 | 1.17 | 2.59 | +1.6% | +2.3% | +1.7% |
*Consensus figures for Q3 2026; actuals for prior periods.
Guidance Summary (as of Q2 2026 Earnings and Latest Conferences)
| Metric | FY 2026 Guidance (Latest) | Previous Guidance (Jan/Apr 2026) | Context/Notes |
|---|---|---|---|
| Mobility & Broadband Service Rev | +2.5% to +3% | +2% to +3% | Q3: ~3% YoY, Q4: ~4% YoY; core business accelerating, AI Connect not included in 2026 guide |
| Adjusted EPS | +6% to +7% | +4% to +5% (raised to 5–6% in Q1) | Step function improvement; Q2 EPS $1.30 (+6.6% YoY) |
| Free Cash Flow | +9% to +10% ($21.5B+) | +7% or more | Q2 FCF $6.4B (+24% YoY); YTD $10.2B (+16% YoY) |
| Postpaid Phone Net Adds | Upper half of 750k–1M range | 750k–1M | Q2 YTD: 239k; Q2: 184k; Q2 best consumer postpaid phone net adds in 5 years |
| CapEx | $16B–$16.5B | $16B–$16.5B | Includes fiber build, C-Band completion, AI Connect success-based capital |
| Buybacks | Up to $4.5B | At least $3B | $3.5B completed YTD through Q2 |
| Churn | Down YoY (Q2: 84 bps) | Targeting continued sequential and YoY improvement | |
| Fiber Passings | >32M by YE | >32M by YE | On track for 40–50M medium-term target |
| AI Connect Revenue | Not in 2026 guide | Multi-billion pipeline; first meaningful impact expected in 2027 |
What to Watch for in the Next Report
1. Revenue and Margin Acceleration
- Q3 2026 consensus implies +1.7% revenue, +8.2% EBITDA, +9.0% EPS YoY.
- Management expects Q3 mobility and broadband service revenue growth to approach 3% YoY, Q4 at ~4%.
- Watch for confirmation of this acceleration and any update to full-year guidance.
2. Postpaid Phone Net Adds and Churn
- YTD net adds up 537k YoY; Q2: 184k (best in 5 years).
- Consumer postpaid phone churn at 84 bps (down 6 bps YoY, sequentially down two quarters).
- Management expects to hit the upper half of 750k–1M net adds for FY; look for continued momentum and account growth (positive for past 2 months).
3. Cost Structure and Margin Expansion
- $9B cost program ($5B OpEx, $4B CapEx) is on track.
- Q2: COA down 15% YoY, COR down 17% YoY.
- Adjusted EBITDA margin hit a record 40.1% in Q2.
- Watch for further evidence of sustainable cost reductions and margin expansion.
4. Broadband and Fiber Execution
- Q2 broadband net adds: 348k; total broadband subs: 17.1M.
- Fiber passings on track for >32M by year-end; mix shift toward fiber expected to continue.
- Convergence (mobility + broadband) driving lower churn and higher ARPA.
5. AI Infrastructure Revenue Ramp
- $1B+ Google dark fiber deal announced; more multi-billion deals expected.
- Management expects meaningful revenue contribution from AI Connect starting in 2027.
- Look for updates on pipeline, margins, and incremental capital needs.
6. Capital Returns and Balance Sheet
- Buyback target raised to up to $4.5B for 2026; $3.5B completed YTD.
- Dividend commitment remains strong; leverage ratio improved to 2.5x.
- Watch for further deleveraging and capital return commentary.
How Did They Report Last Year? (Q3 2025)
| Metric | Q3 2025 Actual | YoY Change (vs. Q3 2024) | Notes |
|---|---|---|---|
| Revenue ($M) | 34,268 | +1.6% | Q3 2024: $33,711M |
| EBITDA ($M) | 12,733 | +2.3% | |
| Net Income ($M) | 5,073 | ||
| EPS ($) | 1.17 | +1.7% | |
| Free Cash Flow ($M) | |||
| Postpaid Phone Net Adds | -7,000 | Weakest Q3 in years; negative net adds | |
| Consumer Churn | 0.91% | Churn was elevated due to prior price increases |
Context: Q3 2025 was a soft comparable, with negative postpaid phone net adds and elevated churn. The company was coming off several years of market share losses, rising churn, and heavy reliance on price increases without corresponding value, which management has since reversed.
Summary and Conclusions
- Verizon enters Q3 2026 earnings with strong momentum: Management has raised full-year guidance twice, operational KPIs are improving, and the business model is shifting toward sustainable, volume-driven growth.
- Key focus areas: Revenue and margin acceleration, postpaid phone net adds and churn, cost structure improvements, broadband/fiber execution, and early signs of AI infrastructure revenue ramp.
- Comparables are favorable: Q3 2025 was a weak base, making YoY growth easier to achieve.
- Consensus expectations: Q3 2026 revenue $34.9B (+1.7% YoY), EBITDA $13.8B (+8.2%), EPS $1.28 (+9.0%).
- Risks: Execution on cost savings, competitive intensity (especially around device launches), and timing of AI Connect revenue realization.
- Catalysts: Continued improvement in churn and net adds, ARPU/ARPA inflection, further AI infrastructure deal announcements, and sustained capital returns.
Bottom line: Verizon is set up for a strong Q3 2026 print, with easy comps, raised guidance, and clear operational/financial momentum. The Street will be focused on confirmation of revenue/margin acceleration, continued churn/net add improvement, and tangible progress on new revenue streams (AI Connect).
