On January 23, 2024, Verizon Communications Inc (VZ, Financial) released its 8-K filing, detailing the company's financial performance for the fourth quarter and full-year 2023. As a leading provider of technology and communications services, Verizon has shown resilience in its wireless segment, which accounts for the majority of its service revenue and operating income. The company serves a vast customer base with approximately 92 million postpaid and 22 million prepaid phone customers, bolstered by its nationwide network and the acquisition of Tracfone.
Financial Performance and Challenges
Verizon's financial results for 2023 reflect a mix of achievements and challenges. The company's wireless service revenue grew by 3.2% for the full year, reaching $76.7 billion, driven by pricing actions and the adoption of higher premium plans. Fixed wireless net additions also saw a significant increase, indicating strong demand for Verizon's product offerings. However, the company faced a decline in total operating revenue, which decreased by 2.1% to $134.0 billion for the full year, attributed to lower wireless equipment revenue and a decrease in total postpaid upgrades.
The company's earnings per share (EPS) for the full year stood at $2.75, a sharp decline from $5.06 in 2022. Adjusted EPS, excluding special items, was $4.71, compared to $5.18 in the previous year. This decline in EPS was influenced by a pre-tax loss from special items amounting to approximately $7.8 billion, including a significant goodwill impairment charge related to the Business reporting unit.
Despite these challenges, Verizon's cash flow from operations increased slightly to $37.5 billion, and the company reported a robust free cash flow of $18.7 billion, up from $14.1 billion in 2022. These figures underscore the company's ability to generate cash and maintain financial flexibility.
Key Financial Metrics
Verizon's financial achievements in 2023, particularly in wireless customer growth and cash flow improvement, are critical for the company's long-term strategy in the competitive telecommunications industry. The increase in wireless service revenue and fixed wireless net additions demonstrates the company's strong position in the market and its ability to attract and retain customers. The improvement in free cash flow is also a positive indicator for investors, as it provides the company with the resources to invest in network improvements, pay down debt, and return value to shareholders.
However, the decline in total operating revenue and EPS presents challenges that Verizon will need to address. The competitive landscape of the telecommunications industry requires continuous investment in technology and network infrastructure to meet customer demands and stay ahead of competitors. The decrease in operating revenue and the substantial goodwill impairment charge highlight the need for Verizon to reassess its business strategies, particularly within its Business reporting unit.
Outlook and Guidance for 2024
Looking ahead to 2024, Verizon expects total wireless service revenue growth of 2.0% to 3.5% and adjusted EBITDA growth of 1.0% to 3.0%. The company anticipates adjusted EPS to be in the range of $4.50 to $4.70 and plans for capital expenditures between $17.0 billion and $17.5 billion. The adjusted effective income tax rate is projected to be between 22.5% and 24.0%.
Verizon's performance in 2023 and its outlook for 2024 will be of keen interest to value investors and potential members of GuruFocus.com, as they assess the company's financial health and future prospects. The company's ability to navigate the challenges ahead and capitalize on its strengths in the wireless market will be critical in determining its success in the coming year.
Explore the complete 8-K earnings release (here) from Verizon Communications Inc for further details.
