The Stock of Verizon is Rising. Here’s the Biggest Positive From Earnings.

Verizon Communications Inc. missed expectations on a key subscriber figure in the latest quarter but still managed to raise several elements of its full-year financial guidance, including its projection for free cash flow.

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In premarket trading Monday, Verizon shares were up 4% after the company lifted its forecast for free cash flow to a range of $19.5 billion to $20.5 billion for the year. This is an increase from its earlier estimate of $17.5 billion to $18.5 billion.

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Free cash flow is a particularly important measure for Verizon shareholders, as it plays a major role in funding the company’s dividend. Verizon’s stock currently yields about 6.6%, making it a key income investment for many.

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While the company made progress on some financial fronts, it disappointed on subscriber growth. In its consumer division, Verizon posted a net loss of 51,000 wireless retail postpaid phone customers during the quarter. However, its business unit helped offset that figure slightly, adding 42,000 postpaid phone subscribers. Taken together, Verizon recorded a total net loss of 9,000 postpaid wireless phone customers, falling short of Wall Street expectations. Analysts surveyed by FactSet were anticipating a net gain of 13,000.

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Postpaid subscribers, who pay for their phone service after the billing cycle ends, are a vital segment for wireless providers. These customers typically generate steady, recurring revenue and are often seen as more valuable than prepaid customers.

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That said, Verizon showed improvement in its prepaid wireless business. The company added 50,000 net prepaid retail subscribers during the quarter, a turnaround from the net loss of 12,000 it reported during the same period a year earlier. This marks a positive development in a segment that has recently been more competitive and challenging for large carriers.

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On the financial side, Verizon outperformed analyst forecasts for earnings. The company reported earnings per share (EPS) of $1.18, or $1.22 on an adjusted basis. Analysts had been projecting EPS of $1.17 and $1.19, respectively, so both actual figures came in slightly above expectations.

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Verizon also boosted its guidance for adjusted earnings per share growth. Previously, the company expected flat to 3% growth for the year, but it now anticipates a 1% to 3% increase. Additionally, the company raised the lower end of its outlook for adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) growth. Management now expects 2.5% to 3.5% growth, compared with the earlier forecast of 2% to 3.5%.

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In terms of revenue, Verizon posted stronger-than-expected results. Total operating revenue in the second quarter rose 5.2% year-over-year to $34.5 billion. Analysts polled by FactSet had been expecting revenue of $33.7 billion, so the company surpassed those projections by a comfortable margin.

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Verizon’s Chief Executive Officer Hans Vestberg highlighted the company’s strengths in a statement following the earnings release. He pointed to the quarter’s results as evidence of Verizon’s “high-quality, industry-leading customer base,” as well as its “multiple growth paths” and the success of its targeted strategy. Vestberg also noted the “inherent strength” of the company, reflecting confidence in its positioning amid a highly competitive telecom landscape.

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The mixed results come as Verizon continues to navigate an evolving industry environment. While it is facing pressure from rivals such as T-Mobile and AT&T, as well as increased costs from U.S. tariffs and network expansion, Verizon appears to be benefiting from disciplined management and focused execution. Its ability to raise free cash flow projections, in particular, may reassure investors concerned about dividend sustainability and overall financial health.

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The better-than-expected top- and bottom-line performance may also help to ease worries around the company’s postpaid subscriber losses. While those figures came in below analysts’ estimates, the stronger-than-expected prepaid results and upward revisions to financial forecasts indicate that Verizon still has positive momentum in other areas of its business.

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As the wireless industry continues to mature, Verizon's focus on financial discipline, segment-based strategies, and maintaining a strong customer base will be crucial to its future growth. Investors may take comfort in the company’s ability to exceed earnings and revenue expectations, even as it confronts competitive and operational headwinds.

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In all, despite falling short on a key subscriber count, Verizon’s overall financial performance and improved forecasts helped lift investor sentiment — at least for now.

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