Verizon (VZ) Q3 2025 earnings review
New CEO Pivots to Customer Growth as Subscriber Bleed Continues
Verizon's Q3 results met expectations and FY25 guidance was reaffirmed, but the quarter was defined by the arrival of new CEO Dan Schulman and his immediate pivot in corporate strategy. The company's core problem was laid bare: another quarter of Consumer postpaid phone losses (-7k), the third in a row. Schulman declared that relying on price hikes is 'not a sustainable strategy' and announced a fundamental shift to a 'customer-first' culture focused on winning subscribers profitably. While financials remain solid, with strong free cash flow ($15.8B YTD) and deleveraging on track, the focus is now squarely on whether the new leadership can reverse the negative subscriber momentum without sacrificing margins.
🐂 Bull Case
New CEO Dan Schulman brings a strong consumer-brand background (PayPal, Amex) and a clear mandate to fix the subscriber growth issue. His plan to cut costs to fund customer-centric investments is a credible strategy to address the core problem.
The company added another 306,000 broadband subscribers, driven by Fixed Wireless Access (FWA). With a base of over 13.2 million, this segment provides a consistent source of revenue growth and a key pillar for the convergence strategy.
Despite operational issues, the company generates strong free cash flow ($15.8B YTD), allowing it to raise its dividend for the 19th consecutive year and reduce leverage to 2.2x, inside its target range ahead of schedule.
🐻 Bear Case
Losing subscribers in the core Consumer wireless phone business for three straight quarters is a major red flag that undermines the 'premium network' value proposition. The trend, while improving from deep losses in Q1, is still negative.
Pivoting a company of Verizon's size from a technology-centric to a customer-centric culture is a massive undertaking with significant execution risk. It will take time to see if the new strategy can produce tangible results in a highly competitive market.
Total wireless service revenue growth, the company's key metric, has decelerated for four consecutive quarters, from 3.1% in 24Q4 to 2.1% in 25Q3. The new strategy aims to re-accelerate this through volume, but that has yet to materialize.
⚖️ Verdict: ⚪
Mixed. The arrival of a new, experienced CEO with a clear and correct diagnosis of the company's main problem is a significant positive. However, the operational challenges are real and persistent, particularly the inability to grow the consumer phone subscriber base. The stock's future hinges entirely on Schulman's ability to execute this strategic pivot. For now, it's a 'show-me' story.
Key Themes
Consumer Postpaid Phone Base Continues to Shrink
For the third consecutive quarter, Verizon reported a net loss in its core consumer postpaid phone segment (-7k). This follows losses of 51k in Q2 and 356k in Q1. This data point is the primary justification for the new CEO's strategic shift. It indicates that the company's historical reliance on network quality and price increases is no longer sufficient to retain and attract customers in the current competitive environment. New CEO Schulman stated, 'a strategic approach that relies too much on price without subscriber growth is not a sustainable strategy.'
Strategic Overhaul Under New CEO Dan Schulman
The earnings call was dominated by new CEO Dan Schulman's vision to transform Verizon. He plans a 'fundamental change' from a technology-focused to a customer-focused company. Key pillars of his strategy include: 1) Growing the customer base profitably, 2) Aggressively reducing the cost base to fund investments in customer experience, and 3) Using AI to simplify offers and improve service. This represents the most significant strategic pivot for the company in years.
Broadband Growth Remains a Bright Spot
Verizon continues to execute well in broadband, adding 306,000 net new customers in Q3 (261k FWA, 61k Fios). The total broadband base has now grown 11.1% YoY to over 13.2 million subscribers. This segment is a key driver of service revenue and central to the company's convergence strategy, which Schulman highlighted as one of the 'most significant near-term growth opportunities,' especially with the pending Frontier acquisition.
Wireless Service Revenue Growth Continues to Decelerate
While still positive, the growth in total wireless service revenue, a key performance indicator, has slowed consistently. The 2.1% YoY growth in Q3 marks the fourth straight quarter of deceleration from a recent peak of 3.1% in Q4 2024. This trend highlights the pressure on ARPU and the need for the new strategy to successfully add paying subscribers to reverse the slowdown.
Emphasis on AI to Improve Experience and Efficiency
New CEO Schulman repeatedly highlighted Artificial Intelligence as a key tool in his transformation plan. He intends to use AI to simplify offers, create more personalized marketing, reduce churn through proactive engagement, and 'dramatically improve service of reducing cost and complexity.' This focus on leveraging AI is a core part of the plan to fund customer-facing investments through operational savings.
Weakness in the Business Segment
Total Verizon Business revenue declined 2.8% year-over-year to $7.1 billion. While phone net adds were positive at 51,000, management noted continued 'disconnect pressure in the public sector.' This segment remains a drag on overall growth, though operating income did improve due to cost management.
Other KPIs
Stable. Cash generation remains a core strength, increasing from $14.5 billion in the same period last year. This robust cash flow underpins the company's capital allocation priorities: funding investment, supporting the recently increased dividend, and deleveraging the balance sheet. The net unsecured debt to adjusted EBITDA ratio improved to 2.2x, now within the company's long-term target range.
Accelerating. The total broadband base grew by 1.3 million subscribers, or 11.1%, from a year ago. The Fixed Wireless Access base now stands at nearly 5.4 million subscribers, generating over $3 billion in annualized revenue. This demonstrates successful execution in capturing market share in the home internet market.
Reversing. The segments are moving in opposite directions on the top line. Consumer revenue growth was driven by wireless service revenue, while the Business segment continues to face headwinds from declines in wireline services and public sector pressure. This divergence highlights the challenge of turning around the entire portfolio.
Guidance
Stable. The company reiterated its full-year guidance across all key metrics, including wireless service revenue growth of 2.0%-2.8% and adjusted EBITDA growth of 2.5%-3.5%. This signals that despite the leadership change and strategic pivot, management expects the business to perform in line with previous expectations for the remainder of the year.
Decelerating. To achieve the midpoint of its guidance, Verizon's Q4 performance will likely show a deceleration in YoY growth compared to Q3. For example, hitting the 2.4% midpoint for wireless service revenue growth for the full year implies Q4 growth will be lower than the 2.1% reported in Q3, continuing the decelerating trend.
Accelerating. In his prepared remarks, CEO Dan Schulman stated, 'I expect the actions we are taking will enable us to generate higher free cash flow in 2026 and 2025, even when we include Frontier.' This is a significant forward-looking statement, suggesting confidence that cost-cutting and growth initiatives will more than offset integration costs and Frontier's current cash burn.
Key Questions
Path to Consumer Growth
You've stated that relying on price increases is unsustainable. What specific, non-price-related value proposition changes do you plan to implement in the next 6 months to reverse the trend of consumer postpaid phone losses without initiating a price war?
Quantifying Cost Transformation
You mentioned aggressive cost reductions to fund customer-facing investments. Can you provide a multi-year cost savings target and specify which areas (e.g., SG&A, network operations, customer care) will see the most significant changes?
Concrete AI Initiatives
Beyond generalities, can you share one or two concrete examples of AI-powered tools or processes you plan to launch in the near term that will tangibly improve the customer experience or reduce operational costs?
Frontier Integration & Convergence
With the Frontier deal expected to close in early 2026, what are the top integration priorities to ensure you can immediately begin executing on the wireless cross-sell opportunity and avoid the integration pitfalls that have challenged similar large deals?