Verizon Communications Inc. shares are on the rise in Tuesday’s premarket activity, as the wireless operator surpasses profit expectations for its latest quarter, despite falling short on revenue.
Strong Profit Performance
In the second quarter, Verizon generated net income of $4.8 billion, or $1.10 a share, compared to $5.2 billion, or $1.24 a share, in the same period last year. On an adjusted basis, Verizon earned $1.21 a share, slightly lower than the $1.31 a share recorded the previous year; however, it still beat the FactSet consensus of $1.17 a share.
Special Items Impact
Verizon’s earnings were impacted by a pre-tax loss of approximately $598 million from special items, including severance charges, amortization of intangible assets related to its TracFone deal, and costs associated with real estate and other assets that the company will no longer utilize.
While revenue fell to $32.6 billion from $33.8 billion, analysts had predicted $33.3 billion in revenue. The drop was primarily due to reduced wireless equipment revenue and decreased activity in postpaid upgrades.
Positive Growth in Wireless Service Revenue
Despite the decline in revenue, total wireless service revenue saw a 3.8% increase in the quarter. This growth was partly a result of recent pricing adjustments and the success of Verizon’s fixed-wireless offerings.
Verizon expects a 2.5% to 4.5% growth in total wireless service revenue for the full year and maintains its forecast of adjusted earnings per share ranging from $4.55 to $4.85.
“The steps that we have taken to improve our operational performance are working, and we are confident that we will achieve our financial targets for the full year,” said Chief Executive Hans Vestberg.
Verizon’s shares rose by 1.7% in premarket trading.
Despite falling short on revenue for the second quarter, Verizon Communications Inc. delivered strong profit performance and witnessed growth in wireless service revenue. The company remains optimistic about meeting its financial targets for the full year.