Verizon Posts Solid Q2 2015 Earnings As Revamped Partner Programs Flourish

Telecommunications giant Verizon Communications Tuesday said it grew both revenue and profits in the second quarter thanks in large part to its wireless and tablet sales.

Verizon posted earnings for the quarter, ended June 30, of $4.23 billion, or $1.04 a share, up from $4.21 billion, or $1.01 a share, in the same quarter a year ago. This is up from the $1.01 earnings that analysts expected Verizon to post, according to Thomson Reuters. Total operating revenues in the second quarter were $32.2 billion, a 2.4 percent increase compared with the second quarter 2014. Sales fell short of estimates of $32.4 billion.

Verizon generated revenue growth driven mostly by its wireless and FiOS cable and Internet subscription services. The carrier also pointed to emerging revenue streams from the Internet of Things (IoT) and continued strong cash flow from operating activities. According to Verizon, new revenue streams from IoT and telematics totaled approximately $165 million in the second quarter 2015. Operating revenue from Verizon's global enterprise business dropped more than 6 percent to $3.22 billion, down from $3.44 billion a year ago.

[Related: Verizon’s Partner Program is Paying Off]

’Verizon has delivered another quarter of strong financial and operational results, based on consistent network reliability and superior value that continues to attract new customers,’ said Verizon’s Chairman and CEO Lowell McAdam. ’In the second quarter, we again balanced quality Verizon Wireless connections growth with low churn and profitability,’ he said.

Kingcom, a Portland, Ore.-based national platinum partner and master agent for Verizon wasn't surprised that profits were up. "Overall, we were pleased with the first half of the year. We've seen growth month over month within all of the segments, said Michael Wolfington, vice president of West partner sales for Kingcom, which exclusively sells Verizon products and services to consumers, as well as SMB and enterprise customers through partnerships with VARs and managed service providers.

Similar to what other carriers are expecting, Verizon saw significant growth in tablets. The carrier added 852,000 new tablet subscriptions. In addition, Verizon’s wireless business grew with 321,000 postpaid phone net additions and 588,000 net smartphone additions, which were both offset by a net decline of 266,000 basic phones.

Verizon said it had its lowest churn rate -- the rate at which customers cancelled service -- in three years, down to 0.9 percent in the second quarter 2015 from 0.94 percent in the second quarter 2014. The wireless carrier said it added 1.1 million postpaid wireless subscribers this quarter. In the consumer space, Verizon is up against competitors such as T-Mobile and Sprint, which offer promotions for current Verizon subscribers to switch to their services. However, Verizon posted a net 26,000 new FiOS video subscribers and a net 72,000 new FiOS Internet subscribers.

Verizon finished its acquisition of AOL for $4.4 billion at the end of June. The acquisition of AOL will expand Verizon’s mobile-video offerings, but it had little effect on Verizon’s earnings this quarter because the deal closed a week before the reporting period ended.

Verizon's leadership, including the appointment of Adam Famularo to global channel vice president for Verizon Enterprise Solutions, has assured partners of an increased focus on the channel this year. The initiatives that have been put in place under Famularo, including the revamped Verizon Partner Program, is helping to reduce operational costs within the channel, Wolfington said.

"The changes that Verizon has made about a year ago within the channel have made a huge improvement in terms of our, and our partners' success," he said. Simplifying the process of working with Verizon has been extremely well-received by partners, and demand for Verizon products and services is increasing as a result, he said. "We have even greater expectations for the second half of this year," Wolfington said.

Verizon said it expects its revenue to grow 3 percent this year.

PUBLISHED JULY 21, 2015