Verizon Communications Q3 2026 Earnings Call Transcript
Verizon Communications (NYSE:VZ) reported third-quarter financial results on Monday. The transcript from the company’s third-quarter earnings call has been provided below.
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Summary
Verizon Communications reported strong Q3 2026 results, with postpaid phone net additions up 820% year-over-year to 406,000 and postpaid net account additions reaching 137,000, the highest in over a decade.
Mobility and broadband service revenue grew 2.9%, with Q4 revenue growth expected to accelerate to approximately 4%. Adjusted EPS grew 8% year-over-year to $1.31, and the company raised its full-year adjusted EPS growth forecast to 7% to 7.5%.
Free cash flow reached $7.8 billion, the highest since 2020, leading to an increase in full-year free cash flow growth guidance to 12%.
Strategic initiatives include the launch of a 1 gigabit FWA product using millimeter-wave spectrum, which is expected to significantly increase broadband capacity and efficiency, and expansion in AI infrastructure partnerships with AWS and Google, with $4 billion in signed contracts.
Operational highlights include a 41% decline in promotional acquisition costs and a 30% decline in retention costs, along with improved network performance and customer satisfaction metrics.
The company remains cautious about potential competition from satellite networks like SpaceX’s Starlink, emphasizing its strong terrestrial network advantage and ongoing technological advancements.
Future growth is expected from AI Connect, with long-term contracts anticipated to generate substantial revenue, as well as continued expansion in fiber and high-speed FWA offerings.
Full Transcript
OPERATOR
Good morning and welcome to Verizon Communications’ third quarter 2026 earnings conference call. At this time, all participants have been placed in a listen-only mode and the call will be open to questions following the presentation. Today’s conference is being recorded. If you have any objections, you may disconnect at this time. I would now like to turn the call over to Colleen Ostrowski, Senior Vice President, Treasurer and Head of Investor Relations.
Colleen Ostrowski (Senior Vice President, Treasurer and Head of Investor Relations)
Thanks, Brad. Good morning and welcome to our third quarter 2026 earnings call. I’m Colleen Ostrowski and on the call with me this morning are our Chief Executive Officer Dan Schulman and Tony Sciatis, our CFO. Before we begin, I’d like to point you to our safe harbor statement which can be found in the earnings presentation and on our investor relations website. Our comments this morning may include forward-looking statements which are subject to risks and uncertainties. Factors that may affect future results are discussed in our SEC filings. This presentation also contains non-GAAP financial measures and you can find reconciliations of these measures in the materials on our website.
With that, I’ll turn it over to Dan. Thank you. Tony, Brad, we are now ready to take questions. As a reminder, we would ask you to please limit yourself to one question.
OPERATOR
Thank you. We will now begin the question-and-answer session. If you would like to ask a question, please press star one on your touchtone phone. Please unmute your phone and record your name clearly when prompted, as your name is required to introduce your question. If at any point your question has been answered or you would like to withdraw your request, you may remove yourself by pressing 2. One moment, please, for the first question. And the first question will come from John Hudlick of UBS.
Your line is open, sir.
John Hudlick (Analyst)
Great, thanks. Good morning, everyone. Can we talk about pricing and volumes in the postpaid market and continue with that commentary? It looks like you’ve got some nice momentum on the volume side, both from accounts and gross adds. Can that continue as we look out into 2027? And can you talk about what’s resonating with customers that you’re seeing such strong demand? And then on the pricing side, I think you guys have talked about some potential room for targeted price increases as churn came down.
Can you just talk about your overall view on sort of pricing power in the industry?
Dan
Hey, John, it’s Dan. Thanks for your question. You know, we obviously had a good strong quarter on both, you know, lines and end accounts. That’s the first time we’ve had that kind of account growth in over a decade. But the thing that I’m most proud about in the quarter, it’s kind of the way that we did it. I always tell the team that our business model is a multi-variable equation. Solving for just one variable is insufficient. It’s not acceptable.
Net adds are easy if your cost of acquisition goes way up and you give away a free line. I don’t consider free lines to even be net adds. I think they’re churn waiting to happen. And this quarter, if we operated the same way that we did a year ago, we could do multiple hundreds of thousands more net adds if you give away free lines and free phones. That’s why I’m so proud of the Q3 results. Because not only were our postpaid net adds up ninefold from last year, in fact when we presented that to the board, they questioned whether that was a typo or not.
And our postpaid net accounts, less than a decade. But the quality of all those were exactly what we wanted. No free lines. Every single line and account came with revenue and the cost to acquire those net accounts and net lines were down 41%. Now postpaid churn continues to come down. It’s down 4 points. I think we can continue to do year over year declines as I look ahead and I think we can even do better than where we are. But cost retention was also down 30% and if you remember last year rose every single quarter.
And you know, I said a year ago that we were no longer going to be prey, that we were going to stop losing market share. And that was true this quarter. And we did all that in what I think was a very fiscally responsible manner. I mean, we’re competing the right way to win in the market. We aren’t competing on promotions or free phones or subsidies, which by the way to me gives no one in the market any competitive advantage. If anybody launches something against us, we can respond in two hours and if somebody tries to hit us, we hit back harder.
There’s no competitive advantage gained. The way to gain competitive advantage is to make sure that you look at your overall end-to-end customer experience, your value proposition, the strength of your network, because there you can create sustainable and lasting competitive advantage. And clearly our value proposition is resonating with our customers. Simplicity, Verizon One, our loyalty plan. As Tony said in his remarks, our customers love it and we’re seeing it in all of our results.
What I really like about it is for that segment of the market, it’s ARPA accretive. And as we look ahead, we expect to see net account growth in Q4 as well. In terms of pricing, I’ve always said, like I’m not against taking up pricing as long as we add value to that. In the past we took up pricing without adding any value to customers and eventually that comes back to haunt you. Your churn starts to go up, you lose the trust of your customers. We’ve added a tremendous amount of value in the last year and there’s potentially room for us to adjust that price-to-value equation by increasing pricing as well.
I think we’re in a place where we can start to think about that.
John Hudlick (Analyst)
Great. Thanks, Dan.
Jenny
John, just to add a couple things, our gross adds were up 11% in the quarter and that’s driven by new to Verizon and, you know, simplicity, being subsidy-free and transparent for customers, as Dan mentioned, allowed us to win in a fiscally responsible way. And across segments where we’ve under-indexed, for example, in single-line and two-line accounts, we performed extremely well. And we also delivered very strong margins in the quarter as well. Our EBITDA margin was over 40%, 40.2% and our reported EBITDA was the highest that we reported.
So we’re really proud of that and doing it in a responsible way.
John Hudlick (Analyst)
Thanks, Jenny.
Dan
Brad, let’s take the next question, please.
OPERATOR
The next question comes from Frank Lowthen of Raymond James. Your line is open. Mr. Lowthen, please check the mute button on your phone. And we’ve had no response from Frank. We’ll move on to Michael Ng of Goldman Sachs. Your line is open.
Michael Ng (Analyst)
Hi, good morning. Thanks for the question. I just had two on Verizon AI Connect. First, great to see the momentum in that business. Could you talk a little bit more about the pipeline, the opportunity for the future hyperscale and Neo cloud deals that you talked about in prepared remarks for both distributed compute, but also edge? And then second, anything you could share as it relates to the details of these deals. For instance, how long are the typical deal lengths and anything you could share as it relates to the expected cash margins. Thank you.
Dan
Yeah, thanks, Mike, for that. I’ll start off and then maybe Tony can add. I guess the way I would put it is AI Connect is a real business for us and a tremendous opportunity and we’re seeing that momentum. Customer demand across dark fiber, lit fiber, our edge compute locations is exceptionally strong. I mean obviously it represents a significant growth opportunity for us and a large new and it’s a rapidly growing TAM for us, addressable market. You know, as I mentioned, we already have approximately $4 billion of signed deals and we’re just getting started on that.
And that includes hundreds of millions of dollars in revenues from our edge computing locations. And we’re just scratching the surface there, obviously with the explosion of agents right now, the need for distributed inference computing, a move from GPUs to CPUs. The assets we have for that edge computing are exactly in the right place. And we’re seeing a ton of demand for what are scarce assets. But from a financial point of view, these revenues come with attractive margins because of the demand and the scarcity of that and we will begin to see their impact in 2027.
There’s no change to our 2026 capex envelope and as I said in my remarks, we’ll see some modest success-based capex associated with AI Connect in 2027. You know, we are clearly an attractive option and partner for the most demanding of customers. We know how to build networks, we have assets in place, we are amongst, if not the best in class in terms of service and performance. We have a solid balance sheet and we now have plenty of supply because fiber itself is a scarce commodity as well. We’re obviously really pleased to be partnering with Google and Amazon and others and this is going to be an exciting new growth vector for us over the years to come.
Tony
Yeah, just to add to that, on your question on the deals themselves, the deals are very customer specific, so no two deals are alike. So it’s very much to customer specifically that Dan mentioned. We’re very happy with the Amazon deal that we announced this morning and on the Google deal we’re already processing orders for fibers, so we’re moving along there. And as Dan mentioned, these are very good margin deals for us and they’ll start layering into the results in 2027.
And it’s a, you know, it’s growth on top of our core business as well, which is really important for us and we’re really excited about the potential.
Michael Ng (Analyst)
Great, thank you guys.
Dan
Brad, let’s take the next question please.
OPERATOR
The next question will come from Michael Rollins of Citi. Your line is open.
Brad
Thanks and good morning. So I’m curious if you could discuss your latest thoughts on the potential impacts from a possible LEO and Starlink entry into the core mobile business, and if there’s any development on how you’re looking at strategic alliances with LEO constellations in the category, and whether or not you would offer an MVNO to LEO constellations, including Starlink. Thank you.
Dan
Thanks, I’ll take that. First of all, I appreciate the question and the concern. I just start off by saying my operating philosophy in general is to be very thoughtful, be analytic, and to never take anything for granted. I always have my eyes wide open. Clearly the tech and the wireless landscape is rapidly evolving, and we need to rapidly evolve along with that. That’s why I’ve been so demanding from everyone at Verizon Communications. I mean, I just don’t want us to get incrementally better.
I want us to leapfrog. I want us to think about not improving by 10%, which is great. But how do we improve by 10x? How do we do that in months, not years? And I’m pushing hard on everyone so that we can shape the market and not react to it. And I want to be sure that we’re always in a position to play to win. I also operate under the assumption that everything SpaceX says they will do, they will do, and that they will execute flawlessly. That’s my operating assumption on it. I think to assume anything else makes no sense from my perspective. In everything that we’ve seen so far, all of their announcements, everything we’re hearing in the market—and I’ll talk about that in just a second—is so far the path that we basically predicted that they would do.
We always knew that they needed a terrestrial network to have any chance at providing a competitive service. I don’t really need to re-review the satellite beam physics, but just suffice to say that without a terrestrial network, their addressable market for broadband services is relatively small. It’s in very rural areas, and their service just can’t compete with the terrestrial network in suburban and urban areas, where like 98% of our revenues are.
We’re somewhere between 100 to 1,000 times more efficient than they are. And when you think about wireless, it’s even more difficult for them to compete on a satellite basis. So I think that SpaceX realizes this and they’re exploring a potential path to creating a terrestrial network. It’s not surprising—they said it on their call. So I think we should take it quite seriously. And from what we see and what we hear in the market, because there are no secrets in the market. We know exactly what they’re going to do, we know what their RFIs are, we know who they’re talking to on towers, we know who they’re talking to to put terrestrial equipment in place—like inside the industry, we know exactly what they’re thinking about doing.
And if they build a terrestrial network, it will basically look and feel like every other network. There’s no magic wand, there’s no secret sauce, there’s no shortcut, there’s no radically lower structural cost advantage. If they build one, they’re going to look at 65,000 to 80,000 macro sites, they’re going to need backhaul, some combination of fiber and maybe some satellite. They’re going to need RAN, they’re going to need a tremendous amount of spectrum.
And assuming that’s the case, and assuming they try to go do that, it’s going to take a minimum of four to six years to fully build that out. It’s going to cost hundreds and hundreds of billions of dollars. I assume somewhere between $300 billion and half a trillion over the next like seven or eight years. And then they need to build retail, customer service, back-office systems, et cetera. And all of that gets them basically the same network and same capabilities and same cost structure as what we have today.
And then sometime over the next four, six years, they have the possibility of becoming the sixth—not the fourth, the sixth—competitor in the market, and frankly at that point we welcome the opportunity to compete against them. It’s very hard to throw a punch against something that doesn’t exist. But once they come into the market, we will be ferociously competitive. We already have America’s best network in terms of coverage, performance, and reliability.
We already compete against free. I mean, two of our competitors out there offer free wireless service. And we are not only competing extremely well, but we’re now holding share and beginning to gain share. And you can be sure over these next three to five years or six years, we’re not going to be standing still. I mean, four to five years from now, we will be two to three generations better than where we are today. We’ll have high-speed broadband, gig-plus coverage across the country with our millimeter wave, which has now become this tremendous advantage for us.
With 1,700 MHz of millimeter wave, two times that of any of our competitors, we’ll put that and deploy that. We are ahead of most people and already experimenting with what 6G applications will look like. We are going to have a host of AI-enabled value propositions using our data, our information, our AI tech stack to create new products, new services to be able to play into edge computing and all of the applications around that, whether it be robotics or agents.
In three to five years, most of our base will be fully bundled and we will be massively more efficient and massively more optimized in terms of our cost structure. And of course AI Connect is going to be a major business for us. So we are more than ready to compete on our network, on our value prop, on our service, and much more. And there’s no reason to think that with the same network, same cost structure, that we won’t be very successful at continuing to grow our business and compete strongly.
I do think there is a role for satellite for sure in remote areas. It’s a great service for those customers. And I do think there are ways that we can work together, either directly or through our JV with satellite providers, to provide a complementary service and a differentiated value proposition. I will say, and I’ll repeat it again, that there are no backdoors to any of our MVNO agreements and I see absolutely no benefit whatsoever to extending an MVNO deal to any satellite provider.
I don’t buy into the idea of this prisoner’s dilemma. That’s ridiculous. There is no benefit to Verizon Communications extending an MVNO deal and we look forward to being able in four to six years to finally punch back. And we’ll punch back hard when that happens. Thank you, Brad.
OPERATOR
Let’s take the next question, please. The next question will come from Sean Difley of Morgan Stanley. Your line is open.
Sean Difley (Analyst)
Great, thanks very much, Taman. That was very clear. Dan, I wanted to hear your thoughts on where you see fixed wireless fitting into the broader equation in the next three to five years. You mentioned you hit some speed standard issues, I guess intra-quarter. Maybe just double click on that. Walk us through what those are. You mentioned a kind of one-gig fixed wireless product in metros. If you could elaborate. And do you guys have enough spectrum to scale where you want to be in this business?
Dan
Yeah. Okay, those are a lot of questions. Let me try and get out as many of them as I can. First of all, on broadband fixed wireless access and convergence we continue to take share. We did 314,000 FWA and fiber net adds. We’ve done over a million year to date. We have 17.4 million broadband subs in our base. We have strong ARPUs. We actually have growing ARPUs in our broadband service. We’re up year over year in Q3 and we’re seeing no discernible impact from any alternative providers.
So broadband and convergence are going to be key priorities for us. There’ll be substantial growth drivers in both the short and the medium term. There’s strong consumer demand. Really pleased with the uptake of Verizon One and increasing demand for higher download speeds. And I think that will just continue to increase with what’s happening with AI. And I’ll just point out, you know, when I was talking about satellite, their physics get even worse as you have higher and higher broadband speeds to serve.
The congestion happens much quicker at those levels. So there are two implications that became very clear to me. One is we need to be way more sophisticated and segmented in our go to market approach. I want to assure we sell consumers the right service to meet their needs versus selling what we have available in our network. If a customer needs a gig of speed and we can only offer them 300 meg, we shouldn’t sell the service. It’s just going to be something that disappoints the customer. And a customer need is always going to supersede any internal metric from my perspective.
And then the second implication was that we need a much wider footprint in which we can provide one gig or more of speed. And that really was the genesis of our millimeter wave solution. How could we take this massive spectrum holding that we have, 1700 MHz of spectrum that was largely underutilized, and turn it into a competitive and differentiated advantage for us, not just against competitors, but in serving our customers as well. And our goal now with this new service, and we trialed it and now we’ve been having operational success with it, we’ll start to roll it out this quarter into 27 and beyond, is to have the nation’s largest high speed footprint with a medium term target of 50 to 65 million premises passed with one gig or more of download speed.
You know, people ask me like, you know, are you still comfortable with the 8 to 9 million of FWA by 2028? The answer would be absolutely, we are. But the truth of the matter is now that we have a high speed FWA offer, we’ll go well beyond that now because we have a lot more capabilities, we have a lot more capacity to do that. And clearly another obvious and ancillary benefit is it makes our entire network more efficient. It offloads C-band capacity, it gives our network more capacity and runway, and it significantly alters our spectrum positioning.
And by the way, that rollout, which will start in Q4 and again do it market by market in 27 and beyond, is much more cost efficient than rolling out fiber, significantly. So there’s no right of way, no digging, no permitting. And so we would expect to see our broadband pick up throughout 2027 and beyond on both fiber and a revamped high speed FWA service. I think you’ll see broadband convergence be a substantial growth driver for us. And these new solutions provide a technological competitive advantage that others don’t have.
And when it comes to spectrum in general, I think there’s a lot of thought around spectrum, obviously a lot of speculation. You got upper C-band coming the first half of next year. That’s 160 MHz. Speculation: will SpaceX be a part of that or not? Remember on that, that will take four to five years to clear and you need different equipment associated with that. So even if SpaceX, and I’m assuming they’ve been in it, I’m not sure one way or another what we will do given our new spectrum position.
But say they get some spectrum, they can’t deploy that for four or five years. I mean, it’s spectrum that is, I think, reasonable spectrum. But it takes quite some time to clear. And we’ll evaluate our spectrum needs. We always look at build versus buy. We look at densification alternatives. I’m really pleased with the network efficiencies that our guys have done in terms of improving our network capacity. And now we have the ability to put our millimeter wave spectrum to use.
I mean, it’s early days, but it is a technological breakthrough and it’s very exciting. We have basically two times that of our competitors. I like the way our millimeter wave spectrum is laid out. It’s a real competitive advantage. It will offload C-band and it re-frames the way that we’re thinking about our spectrum needs. You know, the good news is, as Tony has pointed out, is we have plenty of flexibility. We have very strong free cash flow, our balance sheet is in really good shape. We’ll hit our leverage targets early next year. And you know, our priority is to invest in our business and keep the growth in our dividend per share, pay down our debt, return to our leverage ratios and return capital to shareholders.
I think at the end of the day, as I think about all the things the team has done, all the work they’ve done around creating some innovative solutions and capabilities, is all of a sudden our spectrum position is suddenly in a much better place than we expected. And there’s a robust pipeline of upcoming spectrum auctions beyond 27 that give us additional flexibility. So all in all, you know, the picture’s changed quite a bit for us. We have a lot of flexibility and we’ll be thoughtful about how we approach the market.
Thank you, Brad.
OPERATOR
I believe we have time to take one more question. Your final question will come from Greg Williams of TD Cowen. Your line is open, sir.
Greg Williams (Analyst)
Great, thanks for taking my questions. Just had one on the rise of agentic AI and the talk about news and potential impacts on ARPU.
Dan
Thanks, I’ll take that one, I guess. Look, clearly we are entering into the age of AI, of agents. I think AGI, depends on who you talk to, is one to three years away. I mean, it’s clearly upon us. Quantum hitting shortly thereafter, robotics after that. All of these things are going to fundamentally change the face and nature of every single business. And I’m pretty excited about the opportunity that that affords us. We have an opportunity to dramatically improve our productivity and our cost structure.
We are already utilizing AI to increase customer satisfaction, whether that be fixing issues before they even pop up to customers in our network through our customer service. It’s going to open tremendous new TAMs for us. AI Connect, already, in six months we’ve already signed up almost $4 billion of signed contracts. There are going to be all sorts of new value props that we develop using our data, our network infrastructure, our quite extensive customer relationships and our trusted brand.
And so you’re going to see a very different Verizon going forward with all sorts of new adjacencies opening up for us. Look, I think as I look at over the next couple of years, there’ll be something like 8.5 billion people in the world, but I think there could be at least 100 billion agents. There is going to be an explosion in data traffic and our network will become a scarce and crucial asset and we will price it as such. You’ll see different pricing plans.
You’ll see us take advantage of our national fiber network backbone, which will be competitively differentiated. Consumers and agents will need a trusted and safe and secure environment to protect against fraud, to protect their privacy. And we’ll be sure that we won’t allow agents to access our platforms unless we’re 100% certain that it’s truly a customer and not a rogue agent and that the purchase decisions that that agent is doing are aligned with what a customer is giving them permission to go do. So I do think purchase decisions in wireless are complex.
They have to do a lot with coverage and quality speeds, family plans, perks, loyalties, converged bundles. It’s not just a straight-to-straight price comparison. And I do think that’s possibly a huge opportunity for us to deliver agents to our consumers to sell more. You think about our bundles, our bundles are always better than any stand-alone offer out there. You can imagine how much more bundles, how much more subscriptions we could get utilizing agents who can go find the right password, which is typically why people don’t change, because they don’t remember their passwords.
And so I think there’s a huge opportunity for us to drive incremental revenues, for us to be able to utilize Verizon dollars, our new loyalty structure, with agents so they can go out and purchase things with that. So overall I see a tremendous opportunity and it is something that we are doubling down to take full advantage of everything going on with agentic commerce, but with AI in general. All right, thank you. Yep, you bet. I’d say just to wrap up I think there are really like three big takeaways for the quarter. I mean, obviously our results were really strong for the quarter. And what I’m most pleased about is the momentum that we see as we’re going into the fourth quarter.
As Tony mentioned, we’re off to a strong start and we have strong momentum going into 2027. Second thing is that AI Connect is now real. Now in six months, we have $4 billion of signed contracts. It’s a large and growing TAM, and we have strong momentum in that. And finally, this technological breakthrough with millimeter wave is now a real substantial strategic asset and competitive advantage for us. And our whole relative spectrum position has flipped.
And our goal there now is to be the largest high speed provider in the country at the lowest cost. So when I say lowest cost, it’s to deploy. So thank you everybody for your time. We appreciate it and look forward to conversations in the future.
OPERATOR
That’s all the time we have. Thank you all for your time today. This concludes the conference call for today. Thank you for your participation and for using Verizon conference services. You may now disconnect.
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