Verizon (NYSE: VZ) raises guidance a third straight quarter as phone adds jump

What happened

Verizon Communications Inc. (NYSE: VZ) added 406,000 postpaid phone customers in the third quarter and raised full-year guidance for the third quarter in a row. That is more than 820.0% above a year earlier and the best third quarter in five years, the company said in its Oct. 26 earnings release.

CEO Dan Schulman said Verizon is winning customers with offerings like Simplicity and an expanded loyalty program, not heavy subsidies. Net account additions of 137,000 were the company's best in over a decade.

Total operating revenue was $34.3 billion, up 1.5%. Net income was $5.3 billion, up 5.2%, and EPS was $1.25, up 6.8%. Adjusted EPS, which leaves out amortization of acquired intangible assets and acquisition and integration charges, was $1.31, up 8.3% from $1.21.

Verizon also signed an agreement valued at $2.0 billion or more with Amazon Web Services (AWS). It sets a commercial framework to scale distributed compute for the real-time demands of agentic and generative AI workloads.

Key numbers

Metric	Latest	Change	Source
Total operating revenue	$34.3 billion	from $33.8 billion, +1.5%	SEC 8-K earnings release
Consolidated Adjusted EBITDA	$13.8 billion	from $12.8 billion, +8.0%	SEC 8-K earnings release
Adjusted EBITDA margin	40.2%	from 37.8%, +2.4 percentage points	Calculated from SEC 8-K
Free cash flow	$7.8 billion	from $7.0 billion, +12.1%	SEC 8-K earnings release
Adjusted EPS	$1.31	from $1.21, +8.3%	SEC 8-K earnings release
Postpaid phone net additions	406,000	from 44,000, +820.0% or more	SEC 8-K earnings release

Read more: Verizon Communications (VZ) stock analysis and investment case

Where the growth came from

Service revenue did the work. Mobility and broadband service revenue reached $23.5 billion, up 2.9% from a year earlier. Growth was 2.8% in the second quarter and 1.6% in the first.

Equipment revenue fell 9.0%. The company blamed much lower upgrade volumes, as customers keep their devices longer, and its decision to cut device subsidies.

Customer costs fell. Promotional cost of acquisition dropped 41% and promotional cost of retention improved 30%, both from a year earlier. Postpaid phone churn improved 4 basis points to 0.94%.

Consolidated Adjusted EBITDA reached $13.8 billion, up 8.0% and the highest quarterly figure the company has reported. The margin widened to 40.2% from 37.8% a year earlier, a gain of 2.4 percentage points by OptimistFi's calculation.

Broadband added 314,000 connections, 159,000 on fixed wireless access and 155,000 on fiber. Total broadband connections now stand at 17.4 million.

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Cash flow, debt and payouts

Free cash flow of $7.8 billion rose 12.1%, far faster than operating cash flow of $11.5 billion, which grew 2.2%. Capital spending was $3.7 billion, down from $4.3 billion a year earlier.

Over nine months, free cash flow was $18.0 billion, up 14.3%. Verizon returned $12.8 billion to shareholders in that period, up 49.0%. That was $8.8 billion in dividends and $4.0 billion in buybacks. It still expects to repurchase up to $4.5 billion of stock for the full year.

Net unsecured debt ended September at $123.7 billion, down from $128.7 billion at the end of June, a drop of $5.0 billion by OptimistFi's calculation. It was 2.3 times Adjusted EBITDA, up from 2.2 times at the end of 2025.

What the raised guidance says

Verizon now expects 1.1 million to 1.2 million postpaid phone net additions for 2026, up from the upper half of 750,000 to 1.0 million. Adjusted EPS is guided to $5.04 to $5.06, or growth of 7.0% to 7.5%, up from 6.0% to 7.0%.

Free cash flow growth is expected to approach 12.0%, up from 9.0% to 10.0%. Operating cash flow growth moved to 3.5% to 5.0% from 2.0% to 4.0%. Capital spending guidance is unchanged at $16.0 billion to $16.5 billion, including success-based investments for AI Connect.

Why it matters

OptimistFi has argued that Verizon's network scale lets it hold pricing and keep churn low. It then turns connectivity revenue into free cash flow that funds shareholder returns and selective network investment. The quarter supports that view on churn and cash.

Pricing is the softer spot. Postpaid account ARPA, the average service revenue per account, fell 1.9% to $168.08 from $171.27 a year earlier. Interest expense rose 17.2% in the quarter. Net income for the first nine months is down 4.9% from a year earlier, so one strong quarter has not erased a weaker year to date.

What's next

Verizon forecasts fourth-quarter mobility and broadband service revenue growth of about 4.0%, up from the third-quarter pace. Hitting it would confirm the improvement the company is reporting. A result near the third-quarter rate would weaken the guidance raise.

The company also expects total fiber passings to exceed 32 million by year-end. Fourth-quarter results are the next test of whether free cash flow growth approaches the guided pace. They will also show whether capital spending stays within $16.0 billion to $16.5 billion as the AWS-related buildout proceeds.

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