verizon 2q12 earnings release slides[1]

7/31/2019 Verizon 2q12 Earnings Release Slides[1]

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2nd QUARTER 2012 EARNINGS RESULTS

Fran ShammoChief Financial Officer

July 19, 2012


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SAFE HARBOR STATEMENT

NOTE: This presentation contains statements about expected future events and financial results thatare forward-looking and subject to risks and uncertainties. For those statements, we claim theprotection of the safe harbor for forward-looking statements contained in the Private SecuritiesLitigation Reform Act of 1995. The following important factors could affect future results and couldcause those results to differ materially from those expressed in the forward-looking statements:

adverse conditions in the U.S. and international economies; competition in our markets; materialadverse changes in labor matters, including labor negotiations or additional organizing activity, andany resulting financial and/or operational impact; material changes in available technology; anydisruption of our key suppliers provisioning of products or services; significant increases in benefitplan costs or lower investment returns on plan assets; breaches of network or information technologysecurity, natural disasters or terrorist attacks or existing or future litigation and any resulting financialimpact not covered by insurance; technology substitution; an adverse change in the ratings affordedour debt securities by nationally accredited ratings organizations or adverse conditions in the creditmarkets impacting the cost, including interest rates, and/or availability of financing; any changes in theregulatory environments in which we operate, including any increase in restrictions on our ability tooperate our networks; the timing, scope and financial impact of our deployment of broadbandtechnology; changes in our accounting assumptions that regulatory agencies, including the SEC, mayrequire or that result from changes in the accounting rules or their application, which could result in an

impact on earnings; our ability to complete acquisitions and dispositions; and the inability toimplement our business strategies.

As required by SEC rules, we have provided a reconciliation of the non-GAAP financial measures included in thispresentation to the most directly comparable GAAP measures in materials on our website at www.verizon.com/investor.

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CONSOLIDATED

2Q 12 OVERVIEW

Solid double-digit growth in operating income and earnings

YTD free cash flow more than doubled over last year

Strong growth in wireless retail service revenue with

continued robust postpaid ARPU accretion Industry-leading and record wireless EBITDA service margin

Accelerating wireline consumer revenue and ARPU growth

Intense focus on profitability and cash management

Continued strong, sustained performance 3


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CONSOLIDATED

2Q 12 FINANCIAL SUMMARY

Consolidated revenue

of $28.6B, up 3.7% Y/Y Revenue growth across allstrategic areas Y/Y

Operating income growth of15.5%

EBITDA margin expansion to34.2%

2Q 12 EPS of $0.64 up

12.3% Y/Y

Earnings Per Share

Revenue ($B)

3.7%Y/Y Growth

2Q '11 1Q '12 2Q '12

$0.57 $0.59$0.64

2Q '11 1Q '12 2Q '12

Strong earnings growth trajectory

12.3%Y/Y Growth

4

$27.5 $28.2 $28.6

Wireless Wireline


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CONSOLIDATED

CASH FLOW

YTD cash flow of $15.3B, up19.4% Y/Y

Disciplined capital spendingacross entire business

1H 12 capital expendituresdown 16.7% Y/Y

YTD free cash flow up $4.0BY/Y

Capital Expenditures / Revenue

1H 11 1H 12

Cash from operations $12.8 $15.3

Capital expenditures $8.9 $7.4

Free cash flow $3.9 $7.8

Note: Amounts may not add due to rounding.

16.4%13.1%

1H '11 1H '12

Cash Flow Summary ($B)

Solid cash flow growth and capital efficiency profile 5


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WIRELESS

REVENUE

Total revenue growthof 7.4% Y/Y

Retail postpaid revenue up8.3% Y/Y

Retail prepaid revenue up27.2% Y/Y

Total data revenue of $6.9B, up18.5% Y/Y

Web and e-mail servicesrevenue up 32.3% Y/Y

Messaging revenue up 4.2%Y/Y

Total Service Revenue ($B)

Retail Service Revenue ($B)

8.6%

Y/Y Growth

7.3%Y/Y Growth

$14.0$14.9 $15.2

2Q '11 1Q '12 2Q '12

$14.7 $15.4$15.8

2Q '11 1Q '12 2Q '12

Sustained top-line growth trends 6


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0.84%0.96%

0.89%

WIRELESS

CONNECTIONS / NET ADDS / CHURN

Strong growth in retailconnections, up 4.9% Y/Y

888K retail postpaid net adds*

290K retail prepaid net adds*

7% of retail postpaid baseupgraded in 2Q 12

7.5M Internet devices

61% of tablet customers arepostpaid

* Excludes acquisitions and adjustments

4.9%Y/Y Growth

2Q '11 1Q '12 2Q '12

1Q 122Q 11 2Q 12

Retail Postpaid Retail Prepaid

89.7 93.094.2

Retail Postpaid Retail Prepaid

1,3181,178

734

Retail Postpaid Churn

Retail Net Adds* (000)

Retail Connections (M)

Lowest retail postpaid churn in 4 years

(10.6%)Y/Y Growth

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$54.12 $55.43 $56.13

4.9%

3.3%

4.9%

2Q '11 1Q '12 2Q '12

50%47%36%

2Q '11 1Q '12 2Q '12

WIRELESS

PHONES / SMARTPHONES

Smartphone penetration of

50%, up 13.8%

5.9M smartphones sold in 2Q

73% of postpaid phone saleswere smartphones

41% of postpaid smartphoneupgrades were new tocategory

Retail postpaid data ARPU of

$24.53, up 15.4% Y/Y

Retail Postpaid ARPU

Retail Postpaid Phone Connections (M)

Smartphone Penetration

Phones

Smartphones

Y/Y Phone ARPU Growth

3.7%Y/Y Growth

8Highest retail postpaid ARPU growth in 3 years 8


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146176

203 209233

2Q '11 3Q '11 4Q '11 1Q '12 2Q '12

WIRELESS

4G LTE NETWORK DEPLOYMENT / COVERAGE

3.2M 4G LTE device sales in2Q 12

Verizon Wireless 4G LTEnetwork:

offers more 4G LTE coveragethan all other competitorsnetworks combined

now available in 337 markets

covers nearly 75% of the U.S.population

Recognized by RootMetrics in

more markets for excellence inmobile performance experience

4G LTE POPs (M)

9Continued progress in 4G LTE adoption

4G LTE Devices (M)

9

1.7

3.15.3

8.0

10.9

2.0% 3.6%6.1%

9.1%

12.2%

2Q '11 3Q '11 4Q '11 1Q '12 2Q '12

% of Retail Postpaid Connections


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WIRELESS

PROFITABILITY

Record EBITDA service margin

Continue to balance growth andprofitability

Sustained service revenue

growth

Increased smartphonepenetration

On track to achieve $2B ofexpense reduction in 2012

45.4% 46.3%

49.0%

2Q '11 1Q '12 2Q '12

EBITDA Service Margin

Sustained industry-leading profitability 10


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WIRELINE

REVENUE & PROFITABILITY

Managing challenges

Strategic revenue growthcontinues Consumer revenue up 2.5% Y/Y

FiOS revenue grew 17.4% Y/Y

Enterprise strategic services

revenue up 4.4% Y/Y

Sequential EBITDA margingrowth

Product portfolio rationalization

Targeted pricing actions Cost management

(3.1%)Y/Y Growth

Total Revenue ($B)

Segment EBITDA ($B)

$10.2 $9.9 $9.9

2Q '11 1Q '12 2Q '12

$2.4 $2.2 $2.3

23.8%22.6% 23.1%

2Q '11 1Q '12 2Q '12

EBITDA Margin %

Focus on long-term profitability

(6.0%)Y/Y Growth

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WIRELINE

MASS MARKETS

FiOS now 65% of consumer revenue 16% Y/Y growth in triple play

customers

ARPU over $149

FiOS Internet subscribers 5.1M subscribers, 134K net adds

36.6% penetration

FiOS Video subscribers 4.5M subscribers, 120K net adds 32.6% penetration

Copper migrations accelerating

Consumer ARPU now over $100 8.5% Y/Y growth

Line loss continues to improve Y/Y

Consumer Revenue ($B)

Mass Markets Revenue ($B)

1.7%Y/Y Growth

8.5%ARPU

Y/Y Growth

$4.1 $4.1$4.1

2Q '11 1Q '12 2Q '12

$3.4 $3.4 $3.5

$92.44 $97.88

2Q '11 1Q '12 2Q '12

$100.26

Consumer ARPU

Highest consumer revenue growth in several years 12


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WIRELINE

GLOBAL ENTERPRISE

Global economy and F/Xpressures

Product rationalization actions

De-emphasis of CPE

Positive revenue growth without

CPE and F/X impacts Strategic services revenue

growth of 4.4%

52% of Global Enterprise revenue

Executing strategy

Global Enterprise Revenue ($B)

Confident in asset portfolio longer term 13

Services Hardware

2Q '11 1Q '12 2Q '12

$4.0 $3.9 $3.8 (3.4%)Y/Y Growth


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CONSOLIDATED

2Q 12 SUMMARY

Continued revenue growth across all strategic areas

Strong earnings momentum and free cash flow generation

Capital efficiency continues to improve

Strategic investments set stage for continued growth

Strategic actions leading to improved revenue mix andlong-term profitability

On track for solid double-digit earnings growth in 2012 14


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verizon 2q12 earnings release slides[1]

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