VERIZON COMMUNICATIONS INC - Quarter Report: 2025 March (Form 10-Q)

Other, net ()Net cash used in investing activities()()Cash Flows from Financing ActivitiesProceeds from long-term borrowings Proceeds from asset-backed long-term borrowings Repayments of long-term borrowings and finance lease obligations()()Repayments of asset-backed long-term borrowings()()Dividends paid()()Other, net() Net cash used in financing activities()()Increase (decrease) in cash, cash equivalents and restricted cash() Cash, cash equivalents and restricted cash, beginning of period Cash, cash equivalents and restricted cash, end of period (Note 1)$ $

See Notes to Condensed Consolidated Financial Statements

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Notes to Condensed Consolidated Financial Statements (Unaudited)
Verizon Communications Inc. and Subsidiaries

Earnings Per Common Share

There were a total of approximately million and million outstanding dilutive securities, primarily consisting of performance stock units and restricted stock units, included in the computation of diluted earnings per common share for the three months ended March 31, 2025 and 2024, respectively.

$ $()Restricted cash:

Prepaid expenses and other

Other assets

Assets held for sale:

Prepaid expenses and other

Cash, cash equivalents and restricted cash$ $ $()

reportable segments that we operate and manage as strategic business units, Consumer and Business. Revenue is disaggregated by products and services within Consumer, and customer groups (Enterprise and Public Sector, Business Markets and Other, and Wholesale) within Business. See Note 10 for additional information on revenue by segment, including Corporate and other.

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At March 31, 2025, month-to-month service contracts represented approximately % of both our wireless postpaid contracts and our wireline Consumer and our Business Markets and Other contracts, compared to March 31, 2024, for which month-to-month service contracts represented approximately % of our wireless postpaid contracts and % of our wireline Consumer and our Business Markets and Other contracts.

Additionally, certain contracts provide customers the option to purchase additional services. The fees related to these additional services are recognized when the customer exercises the option (typically on a month-to-month basis).

Contracts for wireless services, with or without promotional credits that require maintenance of service, are generally either month-to-month and cancellable at any time, or considered to contain terms ranging from greater than to up to (typically under a device payment plan associated with a promotion or a fixed-term plan). Additionally, customers may incur charges based on usage or additional optional services purchased in conjunction with entering into a contract that can be cancelled at any time and therefore are not included in the transaction price. The transaction price allocated to service performance obligations, which are not satisfied or are partially satisfied as of the end of the reporting period, are generally related to contracts that are not accounted for as month-to-month contracts.

Our Consumer group customers also include traditional wholesale resellers that purchase and resell wireless service under their own brands to their respective customers. Reseller arrangements generally include a stated contract term, which typically extends longer than and, in some cases, include a periodic minimum revenue commitment over the contract term for which revenues will be recognized in future periods.

Consumer customer contracts for wireline services are generally month-to-month; however, they may have a service term of or shorter than . Certain contracts with Business customers for wireline services extend into future periods, contain fixed monthly fees and usage-based fees, and can include annual commitments in each year of the contract or commitments over the entire specified contract term; however, a significant number of contracts for wireline services with our Business customers have a contract term that is or less.

Additionally, there are certain contracts with Business customers for wireline services that have a contractual minimum fee over the total contract term. We cannot predict the time period when revenue will be recognized related to those contracts; thus, they are excluded from the expected recognition timeframe below. These contracts have varying terms spanning over approximately ending in September 2053 and have aggregate contract minimum payments totaling $ billion.

At March 31, 2025, the aggregate amount of the transaction price related to unsatisfied performance obligations was $ billion, of which we expect to recognize substantially all of the revenue from origination over the next , with the remainder recognized thereafter. Remaining performance obligation estimates are subject to change and are affected by several factors, including terminations and changes in the timing and scope of contracts, arising from contract modifications.

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Device payment plan agreement receivables(2)

(1)Balances do not include receivables related to the following: activity associated with certain vendor agreements, leasing arrangements (such as those for towers and equipment), captive reinsurance arrangements primarily related to wireless device insurance and device payment plan agreement receivables presented separately.

(2)Included in device payment plan agreement receivables presented in Note 6. Receivables derived from the sale of equipment on a device payment plan through an authorized agent are excluded.

2026 2027 2028 2029 2030

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% notes due 2025A$ $

Verizon % notes due 2025

Verizon floating rate notes due 2025

Open market repurchases of various Verizon notes

Total

(1) Represents amount paid to repay, redeem or repurchase, including any accrued interest. In addition, for securities denominated in a currency other than the U.S. dollar, amount paid is shown on a U.S. dollar equivalent basis and includes the amount payable per the derivatives entered into in connection with the transaction. See Note 7 for additional information on cross currency swap transactions related to the transaction.

In April 2025, we repaid at maturity € million of outstanding aggregate principal amount of % notes. We also redeemed all of the $ million outstanding aggregate principal amount of % notes due 2026. See Note 7 for additional information on derivative activity related to the transactions.

Issuances

In April 2025, we issued $ billion aggregate principal amount of notes due 2035, with an interest rate of % per year. We contributed $ million principal amount of the notes to our pension trust. See Note 8 for additional information.

Commercial Paper Program

During the three months ended March 31, 2025, we issued $ billion in net proceeds and made $ billion in principal repayments of commercial paper. These transactions were recorded within Other, net cash flow from financing activities in our condensed consolidated statements of cash flows on a net basis. As of March 31, 2025, we had commercial paper outstanding.

Asset-Backed Debt

As of March 31, 2025, the carrying value of our asset-backed debt was $ billion. Our asset-backed debt includes Asset-Backed Notes (ABS Notes) issued to third-party investors (Investors) and loans (ABS Financing Facilities) received from banks and their conduit facilities (collectively, the Banks). Our consolidated asset-backed debt bankruptcy remote legal entities (each, an ABS Entity, or collectively, the ABS Entities) issue the debt or are otherwise party to the transaction documentation in connection with our asset-backed debt transactions. Under the terms of our asset-backed debt, Cellco Partnership (Cellco), a wholly-owned subsidiary of the Company, and certain other Company affiliates (collectively, the Originators) transfer device payment plan agreement receivables and certain other receivables (collectively referred to as certain receivables) or a participation interest in certain other receivables to one of the ABS Entities, which in turn transfers such receivables and participation interest to another ABS Entity that issues the debt. Verizon entities retain the equity interests and residual interests, as applicable, in the ABS Entities, which represent the rights to all funds not needed to make required payments on the asset-backed debt and other related payments and expenses.

Our asset-backed debt is secured by the transferred receivables and participation interest, and future collections on such receivables and underlying receivables related to such participation interest. These receivables and participation interest transferred to the ABS Entities and related assets, consisting primarily of restricted cash, will only be available for payment of asset-backed debt and expenses related thereto, payments to the Originators in respect of additional transfers of certain receivables and participation interest, and other obligations arising from our asset-backed debt transactions, and will not be available to pay other obligations or claims of Verizon’s creditors until the associated asset-backed debt and other obligations are satisfied. The Investors or Banks, as applicable, which hold our asset-backed debt have legal recourse to the assets securing the debt, but do not have any recourse to Verizon with respect to the payment of principal and interest on the debt. Under a parent support agreement, the Company has agreed to guarantee certain of the payment obligations of Cellco and the Originators to the ABS Entities.

Cash collections on the receivables and on the underlying receivables related to the participation interest collateralizing our asset-backed debt securities are required at certain specified times to be placed into segregated accounts. Deposits to the segregated accounts are considered restricted cash and are included in Prepaid expenses and other and Other assets in our condensed consolidated balance sheets.

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$ B Junior class notes C Junior class notes

Series 2025-2

A Senior class notes B Junior class notes C Junior class notes

January 2025 total

March 2025

Series 2025-3

A-1a Senior class notes

A-1b Senior class notes

Compounded SOFR + (1)

B Junior class notes C Junior class notes

Series 2025-4

A Senior class notes

B Junior class notes

C Junior class notes

March 2025 total

Total$

(1) Compounded Secured Overnight Financing Rate (SOFR) is calculated using SOFR as published by the Federal Reserve Bank of New York in accordance with the terms of such notes.

Under the terms of each series of ABS Notes outstanding as of March 31, 2025, there is a revolving period of up to , , or , as applicable, during which we may transfer additional receivables to the ABS Entity. During the three months ended March 31, 2025, we made aggregate principal repayments of $ million in connection with an anticipated redemption of ABS Notes and notes that have entered the amortization period.

In April 2025, in connection with an anticipated redemption of ABS Notes, we made a principal repayment, in whole, for $ million.

ABS Financing Facilities

Under the loan agreements outstanding in connection with the ABS Financing Facility originally entered into in 2021 and most recently renewed in 2023 (2021 ABS Financing Facility), we prepaid an aggregate of $ million in February 2025 and we prepaid an aggregate of $ billion in March 2025. The aggregate outstanding balance under the 2021 ABS Financing Facility was $ billion as of March 31, 2025.

Under the loan agreement outstanding in connection with the ABS Financing Facility originally entered into in 2022 and most recently renewed in 2024 (2022 ABS Financing Facility), we prepaid an aggregate of $ million in February 2025 and we borrowed an additional $ million in March 2025. The aggregate outstanding balance under the 2022 ABS Financing Facility was $ billion as of March 31, 2025.

In April 2025, we prepaid an aggregate of $ million under the loan agreement outstanding in connection with the 2022 ABS Financing Facility.

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$ Prepaid expenses and other Other assets LiabilitiesAccounts payable and accrued liabilities Debt maturing within one year Long-term debt

The Accounts receivable, net amounts above do not include underlying receivables for which a participation interest has been transferred to the ABS Entities. See Note 6 for additional information on certain receivables and participation interest used to secure asset-backed debt.

$ $

Various export credit facilities(2)

2025 - 2031

Total$ $ $

The data presented in the table above was last updated on March 31, 2025.

Allowance for Credit Losses

The credit quality indicators are used in determining the estimated amount and the timing of expected credit losses for the device payment plan agreement and wireless service receivables portfolios.

For device payment plan agreement receivables, we record bad debt expense based on a default and loss calculation using our proprietary loss model. The expected loss rate is determined based on customer credit scores and other qualitative factors as noted above. The loss rate is assigned individually on a customer by customer basis and the custom credit scores are then aggregated by vintage and used in our proprietary loss model to calculate the weighted-average loss rate used for determining the allowance balance.

We monitor the collectability of our wireless service receivables as one overall pool. Wireline service receivables are disaggregated and pooled by the following types of customers and related contracts: consumer, small and medium business, enterprise, public sector and wholesale. For wireless service receivables and wireline consumer and small and medium business receivables, the allowance is calculated based on a 12 month rolling average write-off balance multiplied by the average life-cycle of an account from billing to write-off. The risk of loss is assessed over the contractual life of the receivables and is adjusted based on the historical loss amounts for current and future conditions based on management's qualitative considerations. For enterprise, public sector and wholesale wireline receivables, the allowance for credit losses is based on historical write-off experience and individual customer credit risk, if applicable.

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$ $ $ Foreign exchange forwards Interest rate caps Other assets:Fixed income securities Cross currency swaps Total$ $ $ $ Liabilities:Other current liabilities:Interest rate swaps$ $ $ $ Cross currency swaps Foreign exchange forwards Interest rate caps Other liabilities:Interest rate swaps Cross currency swaps Total$ $ $ $

(1)Quoted prices in active markets for identical assets or liabilities.

(2)Observable inputs other than quoted prices in active markets for identical assets and liabilities.

(3)Unobservable pricing inputs in the market.

The following table presents the balances of assets and liabilities measured at fair value on a recurring basis as of December 31, 2024:

(dollars in millions)

Level 1(1)

Level 2(2)

Level 3(3)

Total

Assets:

Prepaid expenses and other:

Fixed income securities

Interest rate caps

Other assets:

Fixed income securities

Cross currency swaps

Total

Liabilities:

Other current liabilities:

Interest rate swaps

Cross currency swaps

Foreign exchange forwards

Interest rate caps

Other liabilities:

Interest rate swaps

Cross currency swaps

Total

(1)Quoted prices in active markets for identical assets or liabilities.

(2)Observable inputs other than quoted prices in active markets for identical assets and liabilities.

(3)Unobservable pricing inputs in the market.

Certain of our equity investments do not have readily determinable fair values and are excluded from the tables above. Such investments are measured at cost, less any impairment, plus or minus changes resulting from observable price changes in

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million and $ million, respectively. During the three months ended March 31, 2025, there were insignificant adjustments due to observable price changes and there were impairment charges. As of March 31, 2025, cumulative adjustments due to observable price changes and impairment charges were $ million and $ million, respectively.

Fixed income securities consist primarily of investments in municipal bonds. The valuation of the fixed income securities is based on the quoted prices for similar assets in active markets or identical assets in inactive markets or models that apply inputs from observable market data. The valuation determines that these securities are classified as Level 2.

Derivative contracts are valued using models based on readily observable market parameters for all substantial terms of our derivative contracts and thus are classified within Level 2. We use mid-market pricing for fair value measurements of our derivative instruments. Our derivative instruments are recorded on a gross basis.

We recognize transfers between levels of the fair value hierarchy as of the end of the reporting period.

Fair Value of Short-term and Long-term Debt

The fair value of our debt is determined using various methods, including quoted prices for identical debt instruments, which is a Level 1 measurement, as well as quoted prices for similar debt instruments with comparable terms and maturities, which is a Level 2 measurement.

$ $ $ $ At December 31, 2024

Derivative Instruments

We enter into derivative transactions primarily to manage our exposure to fluctuations in foreign currency exchange rates and interest rates. We employ risk management strategies, which may include the use of a variety of derivatives including interest rate swaps, cross currency swaps, forward starting interest rate swaps, treasury rate locks, interest rate caps, swaptions and foreign exchange forwards. We do not hold derivatives for trading purposes.

$ Cross currency swaps Foreign exchange forwards

$ Notional value settled

Pre-tax gain recognized in Interest expense

Cross Currency Swaps:Notional value entered into Notional value settled

Pre-tax gain (loss) on cross currency swaps recognized in Interest expense

()

Pre-tax gain (loss) on hedged debt recognized in Interest expense

()

Excluded components recognized in Other comprehensive income (loss)

() Initial value of the excluded component amortized into Interest expense

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)$()

$ Cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged liabilities()()Cumulative amount of fair value hedging adjustment remaining for which hedge accounting has been discontinued

Interest Rate Swaps

We enter into interest rate swaps to achieve a targeted mix of fixed and variable rate debt. We principally receive fixed rates and pay variable rates, resulting in a net increase or decrease to Interest expense. These swaps are designated as fair value hedges and hedge against interest rate risk exposure of designated debt issuances. We record the interest rate swaps at fair value in our condensed consolidated balance sheets as assets and liabilities. Changes in the fair value of the interest rate swaps are recorded to Interest expense, which are primarily offset by changes in the fair value of the hedged debt due to changes in interest rates.

In April 2025, we settled interest rate swaps with a total notional amount of $ million.

Cross Currency Swaps

We have entered into cross currency swaps to exchange our British Pound Sterling, Euro, Swiss Franc, Canadian Dollar and Australian Dollar-denominated cash flows into U.S. dollars and to fix our cash payments in U.S. dollars, as well as to mitigate the impact of foreign currency transaction gains or losses. These swaps are designated as fair value hedges. We record the cross currency swaps at fair value in our condensed consolidated balance sheets as assets and liabilities. Changes in the fair value of the cross currency swaps attributable to changes in the spot rate of the hedged item and changes in the recorded value of the hedged debt due to changes in spot rates are recorded in the same income statement line item. We present exchange gains and losses from the conversion of foreign currency denominated debt as a part of Interest expense. During the three months ended March 31, 2025 and March 31, 2024, these amounts completely offset each other and net gain or loss was recorded.

Changes in the fair value of cross currency swaps attributable to time value and cross currency basis spread are initially recorded to Other comprehensive income (loss). Unrealized gains or losses on excluded components are recorded in Other comprehensive income (loss) and are recognized into Interest expense on a systematic and rational basis through the swap accrual over the life of the hedging instrument.

On March 31, 2022, we elected to de-designate our cross currency swaps previously designated as cash flow hedges and re-designated these swaps as fair value hedges. The amount remaining in Accumulated other comprehensive loss related to cash flow hedges on the date of transition will be reclassified to earnings when the hedged item is recognized in earnings or when it becomes probable that the forecasted transactions will not occur. For the fair value hedges, we elected to exclude the change in fair value of the cross currency swaps related to both time value and cross currency basis spread from the assessment of hedge effectiveness (the excluded components). The initial value of the excluded components of $ billion as of March 31, 2022 will continue to be amortized into Interest expense over the remaining life of the hedging instruments. During the three months ended March 31, 2025 and March 31, 2024, the amortization of the initial value of the excluded component completely offset the amortization related to the amount remaining in Other comprehensive income (loss) related to cash flow hedges. See Note 9 for additional information. We estimate that $ million will be amortized into Interest expense within the next 12 months.

In April 2025, we settled cross currency swaps with a total notional amount of $ million.

Net Investment Hedges

We have designated certain foreign currency debt instruments as net investment hedges to mitigate foreign exchange exposure related to non-U.S. dollar net investments in certain foreign subsidiaries against changes in foreign exchange rates. The notional amount of Euro-denominated debt designated as a net investment hedge was € million as of both March 31, 2025 and December 31, 2024.

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$ Notional value settled

Pre-tax gain (loss) recognized in Other income, net

()

Treasury Rate Locks:

Notional value entered into

Notional value settled

Pre-tax gain recognized in Interest expense

Foreign Exchange Forwards

We entered into Euro foreign exchange forwards, and in prior periods, British Pound Sterling foreign exchange forwards to mitigate our foreign exchange rate risk related to non-functional currency denominated monetary assets and liabilities of international subsidiaries.

Treasury Rate Locks

We enter into treasury rate locks to mitigate our interest rate risk on future transactions.

Concentrations of Credit Risk

Financial instruments that subject us to concentrations of credit risk consist primarily of temporary cash investments, short-term and long-term investments, trade receivables, including device payment plan agreement receivables, certain notes receivable, including lease receivables, and derivative contracts.

t hold any collateral. At March 31, 2025, we posted $ billion of collateral related to derivative contracts under collateral exchange agreements, which was recorded as Prepaid expenses and other in our condensed consolidated balance sheet. At December 31, 2024, we did t hold any collateral. At December 31, 2024, we posted $ billion of collateral related to derivative contracts under collateral exchange agreements, which was recorded as Prepaid expenses and other in our condensed consolidated balance sheet. While we may be exposed to credit losses due to the nonperformance of our counterparties, we consider the risk remote and do not expect that any such nonperformance would result in a significant effect on our results of operations or financial condition due to our diversified pool of counterparties.

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$ $ $ Service cost - Selling, general and administrative expense Service cost$ $ $ $ Amortization of prior service cost (credit)$ $ $()$()Expected return on plan assets()()()()Interest cost Remeasurement gain, net ()

$()$ $())))()$()$ $()

The amounts presented above in Net other comprehensive income (loss) are net of taxes. The amounts reclassified to net income related to unrealized gain (loss) on cash flow hedges and unrealized gain (loss) on fair value hedges in the table above are included in Other income, net and Interest expense in our condensed consolidated statements of income. See Note 7 for additional information. The amounts reclassified to net income related to unrealized gain (loss) on marketable securities and defined benefit pension and postretirement plans in the table above are included in Other income, net in our condensed consolidated statements of income. See Note 8 for additional information.

reportable segments that we operate and manage as strategic business units, Consumer and Business. We measure and evaluate our reportable segments based on segment operating income, consistent with the chief operating decision maker's (CODM) assessment of segment performance.

The Company's CODM is the Chief Executive Officer. The CODM uses segment operating income to allocate resources (including employees, financial or capital resources) and to assess performance during the monthly and quarterly financial strategic review process. When assessing segment performance and how to allocate resources, the CODM focuses on evaluating whether revenues generated are sufficient to cover variable and fixed costs with an appropriate return on investment. Key decisions considered by the CODM using segment operating income include prioritization and timing of changes to network technologies, allocation of capital expenditures based on the Company's priorities, geographic expansion of wireline and wireless networks, establishment of key financial and operational targets, pricing decisions, branding matters and people management.

states in the Mid-Atlantic and Northeastern U.S., as well as Washington D.C., over our 100% fiber-optic network through our Verizon Fios product portfolio and over a traditional copper-based network to customers who are not served by Fios.Verizon
Business Group

Our Business segment provides wireless and wireline communications services and products, including FWA broadband, data, video and advanced communication services, corporate networking solutions, security and managed network services, local and long distance voice services and network access to deliver various Internet of Things services and products. We provide these products and services to businesses, public sector customers and wireless and wireline carriers across the U.S. and a subset of these products and services to customers around the world.

Our Consumer segment's wireless and wireline products and services are available to our retail customers, as well as resellers that purchase wireless network access from us on a wholesale basis. Our Business segment's wireless and wireline products

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reportable segments:

Three Months Ended March 31,

2025

2024

(dollars in millions)

Consumer

Business

Total
Reportable
Segments

Consumer

Business

Total
Reportable
Segments

External Operating Revenues

Service(1)

Wireless equipment

Other(1)(2)

Enterprise and Public Sector

Business Markets and Other

Wholesale

Intersegment revenues

Total Operating Revenues(3)

Operating Expenses(4)

Cost of wireless equipment

Centrally managed network and shared service costs(5)

Depreciation and amortization expense

Other segment expenses(6)

Total Operating Expenses

Operating Income

(1) Reflects the reclassification of recurring device protection and insurance related plan revenues from Other revenue into Wireless service revenue in the first quarter of 2025.

(2) Other revenue includes fees that partially recover the direct and indirect costs of complying with regulatory and industry obligations and programs, leasing and interest recognized when equipment is sold to the customer by an authorized agent under a device payment plan agreement.

(3) Service and other revenues and Wireless equipment revenues included in our Business segment were approximately $ billion and $ million, respectively, for the three months ended March 31, 2025 and were approximately $ billion and $ million, respectively, for the three months ended March 31, 2024.

(4) The significant expense categories and amounts align with the segment-level information that is regularly provided to the CODM. Intersegment expenses are included within the amounts shown.

(5) Centrally managed network and shared service costs include costs for network and leased assets, supply chain and other centralized services that are allocated to our Consumer and Business segments based on proportionate usage of services.

(6) Other segment expenses for each reportable segment include certain personnel, digital content, sales-related, overhead, other direct and operating costs.

The following table provides Fios revenue for our reportable segments and includes intersegment activity:


(dollars in millions)	2025	2024
Consumer	$	$
Business
Total Fios revenue	$	$

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reportable segments and includes intersegment activity:


(dollars in millions)	2025	2024
Consumer	$	$
Business
Total Wireless service revenue	$	$

Wireless service revenue reflects the reclassification of recurring device protection and insurance related plan revenues from Other revenue into Wireless service revenue in the first quarter of 2025.

Reconciliation to Consolidated Financial Information

The reconciliation of segment operating revenues and operating income to consolidated operating revenues and operating income below includes the effects of special items that the CODM does not consider in assessing segment performance, primarily because of their nature.

Corporate and other

Eliminations

()()Total consolidated operating revenues$ $

$ Corporate and other()()Other components of net periodic benefit charges (Note 8)()()

Legacy legal matter

()Total consolidated operating income Equity in earnings (losses) of unconsolidated businesses ()Other income, net Interest expense()()Income Before Provision For Income Taxes$ $

No single customer accounted for more than 10% of our total operating revenues during the three months ended March 31, 2025 or 2024.

The CODM does not review disaggregated assets on a segment basis; therefore, such information is not presented. Depreciation and amortization included in the measure of segment profitability is primarily allocated based on proportional usage, and is included within Total reportable segments operating income.

million and $ million, respectively, remained as confirmed obligations outstanding related to suppliers participating in the supplier finance program.

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federal district court actions alleging that Verizon is infringing various patents. Most of these cases are brought by non-practicing entities and effectively seek only monetary damages; a small number are brought by companies that have sold products and could seek injunctive relief as well. These cases have progressed to various stages and a small number may have gone to trial or may go to trial in the coming 12 months if they are not otherwise resolved.

In connection with the execution of agreements for the sales of businesses and investments, Verizon ordinarily provides representations and warranties to the purchasers pertaining to a variety of nonfinancial matters, such as ownership of the securities being sold, as well as indemnity from certain financial losses. From time to time, counterparties may make claims under these provisions, and Verizon will seek to defend against those claims and resolve them in the ordinary course of business.

As of March 31, 2025, Verizon had renewable energy purchase agreements (REPAs) with third parties. Each of the REPAs is based on the expected operation of a renewable energy-generating facility and has a fixed price term of to years from the commencement of the facility's entry into commercial operation. of the facilities have entered into commercial operation, and the remainder are under development. The REPAs generally are expected to be financially settled based on the prevailing market price as energy is generated by the facilities.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations


Overview

Verizon Communications Inc. (the Company) is a holding company that, acting through its subsidiaries (together with the Company, collectively, Verizon), is one of the world's leading providers of communications, technology, information and streaming products and services to consumers, businesses and government entities. With a presence around the world, we offer data, video and voice services and solutions on our networks and platforms that are designed to meet customers’ demand for mobility, reliable network connectivity and security.

To compete effectively in today's dynamic marketplace, we are focused on the capabilities of our high-performing networks to drive growth based on delivering what customers want and need in the digital world. We are consistently deploying new network architecture and technologies to secure our leadership in both fifth-generation (5G) and fourth-generation (4G) wireless networks. Our network quality is the hallmark of our brand and the foundation for the connectivity, platforms and solutions upon which we build our competitive advantage. In 2025, we are focused on enhancing our networks, offering innovative services and products, growing and maintaining a high-quality customer base and delivering strong financial and operating results.

Our strategy requires significant capital investments primarily to acquire wireless spectrum, put the spectrum into service, provide additional capacity for growth in our networks, invest in the fiber that supports our businesses, evolve and maintain our networks and develop and maintain significant advanced information technology systems and data system capabilities. We believe that our C-Band spectrum, together with our industry leading millimeter wave spectrum holdings and our 4G Long-Term Evolution (LTE) network and fiber infrastructure, will drive innovative products and services and fuel our growth.

Highlights of Our Financial Results for the Three Months Ended March 31, 2025 and 2024

(dollars in millions)

Business Overview

We have two reportable segments that we operate and manage as strategic business units - Verizon Consumer Group (Consumer) and Verizon Business Group (Business).

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Revenue by Segment for the Three Months Ended March 31, 2025 and 2024

———

Note: Excludes eliminations.

Verizon Consumer Group

Our Consumer segment provides consumer-focused wireless and wireline communications services and products. Our wireless services are provided across one of the most extensive wireless networks in the United States (U.S.) under the Verizon family of brands and through wholesale and other arrangements. We also provide fixed wireless access (FWA) broadband through our 5G or 4G LTE networks as an alternative to traditional landline internet access. Our wireline services are provided in nine states in the Mid-Atlantic and Northeastern U.S., as well as Washington D.C., over our 100% fiber-optic network through our Verizon Fios product portfolio and over a traditional copper-based network to customers who are not served by Fios.

Customers can obtain our wireless services on a postpaid or prepaid basis. Our postpaid service is generally billed one month in advance for a monthly access charge in return for access to and usage of network services. Our prepaid service is offered only to Consumer customers and enables individuals to obtain wireless services without credit verification by paying for all services in advance. The Consumer segment also offers several categories of wireless equipment to customers, including a variety of smartphones and other handsets, wireless-enabled internet devices, such as tablets, and other wireless-enabled connected devices, such as smart watches.

In addition to wireless services and equipment for retail customers, the Consumer segment sells residential fixed connectivity solutions, including internet, video and voice services, and wireless network access to resellers on a wholesale basis.

The Consumer segment's operating revenues for the three months ended March 31, 2025 totaled $25.6 billion, representing an increase of 2.2% compared to the similar period in 2024. See "Segment Results of Operations" for additional information regarding our Consumer segment’s operating performance and selected operating statistics.

Verizon Business Group

Our Business segment provides wireless and wireline communications services and products, including FWA broadband, data, video and advanced communication services, corporate networking solutions, security and managed network services, local and long distance voice services and network access to deliver various Internet of Things (IoT) services and products. We provide these products and services to businesses, public sector customers and wireless and wireline carriers across the U.S. and a subset of these products and services to customers around the world.

The Business segment's operating revenues for the three months ended March 31, 2025 totaled $7.3 billion, representing a decrease of 1.2% compared to the similar period in 2024. See "Segment Results of Operations" for additional information regarding our Business segment’s operating performance and selected operating statistics.

Corporate and Other

Corporate and other primarily includes device insurance programs, investments in unconsolidated businesses and development stage businesses that support our strategic initiatives, as well as unallocated corporate expenses, certain pension and other employee benefit related costs and interest and financing expenses. Corporate and other also includes the historical results of divested businesses and other adjustments and gains and losses that are not allocated or used in assessing segment performance due to their nature. Although such transactions are excluded from the business segment results, they are included in reported consolidated earnings. Gains and losses from these transactions that are not individually significant are included in segment results and therefore are included in the chief operating decision maker’s (CODM) assessment of segment performance. See "Consolidated Results of Operations" for additional information regarding Corporate and other results.

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Capital Expenditures and Investments

We continue to invest in our wireless networks, high-speed fiber and other advanced technologies to position ourselves at the center of growth trends for the future. During the three months ended March 31, 2025, these investments included $4.1 billion for capital expenditures. See "Cash Flows Used in Investing Activities" for additional information. Capital expenditures for 2025 are expected to be in the range of $17.5 billion to $18.5 billion.

Global Networks and Technology

We consider the reliability, speed, capacity, coverage and security of our wireless network to be key factors in our continued success. We are evolving and transforming our networks to ensure our customers receive access to the best network possible. Over the past several years, we have been leading the development of 5G wireless technology industry standards and the ecosystems for fixed and mobile 5G wireless services. Our evolution to 5G with its new architecture allows us to simplify operations by eliminating legacy network elements.

While we continue to improve our 5G wireless service coverage, we are also adding capacity and density to our networks. Network densification enables us to increase coverage, improve quality of service and add capacity to accommodate an increasing number of users.

In addition to enhancing our wireless service, our wireless mobility investments provide the foundation for our growing FWA broadband business. We are also continuing to expand our fiber-based networks, as customers increasingly value the ability to obtain wireless and wireline broadband services from the same provider. In September 2024, we entered into an agreement to acquire Frontier Communications Parent, Inc. (Frontier), a U.S. provider of broadband internet and other communication services, as part of our fiber expansion strategy, and we expect to increase the capital expenditures we devote to our fiber networks in 2025.

Tariffs and Other Government Initiatives

The U.S. government recently announced tariffs on goods imported from various countries to the U.S. Countries subject to such tariffs have imposed or may in the future impose reciprocal or retaliatory tariffs and other trade measures. We are actively monitoring the tariff developments and analyzing the potential impacts on our business, cost structure, supply chain and broader economic environment. We are also working closely with our strategic suppliers to manage the potential impacts.

In addition, the U.S. presidential administration is seeking to implement significant changes to the size and scope of the federal government, which may include reduction of the federal government workforce, changes in budgetary priorities and other cost efficiency measures. We began seeing some impact from these efforts in our federal government business in the first quarter of 2025.

While these developments have not had a material impact on our financial condition or results of operations to date, due to their evolving nature, we cannot predict with certainty the ultimate impacts they may have on our business and results in the future but those impacts could be material.


Consolidated Results of Operations

In this section, we discuss our overall results of operations and highlight special items, some of which are not included in our segment results. In "Segment Results of Operations" we review the performance of our two reportable segments in more detail.

Consolidated Operating Revenues


	Three Months Ended
	March 31,				Increase/
(dollars in millions)	2025		2024		(Decrease)
Consumer	$	25,618	$	25,057	$	561	2.2	%
Business	7,286		7,376		(90)		(1.2)
Corporate and other	660		611		49		8.0
Eliminations	(79)		(63)		(16)		25.4
Consolidated Operating Revenues	$	33,485	$	32,981	$	504	1.5

Consolidated operating revenues increased during the three months ended March 31, 2025 compared to the similar period in 2024 primarily due to revenue increases in our Consumer segment, partially offset by revenue decreases in our Business segment.

Revenues for our segments are discussed separately below under the heading "Segment Results of Operations."

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Consolidated Operating Expenses


	Three Months Ended
	March 31,				Increase/
(dollars in millions)	2025		2024		(Decrease)
Cost of services	$	6,950	$	6,967	$	(17)	(0.2)	%
Cost of wireless equipment	6,106		5,905		201		3.4
Selling, general and administrative expense	7,874		8,143		(269)		(3.3)
Depreciation and amortization expense	4,577		4,445		132		3.0
Consolidated Operating Expenses	$	25,507	$	25,460	$	47	0.2

Operating expenses for our segments are discussed separately below under the heading "Segment Results of Operations."

Cost of Services

Cost of services includes the following costs directly attributable to a service: salaries and wages, benefits, materials and supplies, content costs, contracted services, network access and transport costs, customer provisioning costs, computer systems support and costs to support our outsourcing contracts and technical facilities. Aggregate customer service costs, which include billing and service provisioning, are allocated between Cost of services and Selling, general and administrative expense.

Cost of services remained relatively flat during the three months ended March 31, 2025 compared to the similar period in 2024.

Cost of Wireless Equipment

Cost of wireless equipment increased during the three months ended March 31, 2025 compared to the similar period in 2024 primarily due to an increase of $201 million driven by a shift to higher priced equipment in the mix of wireless devices sold.

Selling, General and Administrative Expense

Selling, general and administrative expense includes salaries and wages and benefits not directly attributable to a service or product, the provision for credit losses, taxes other than income taxes, advertising and sales commission costs, call center and information technology costs, regulatory fees, professional service fees and rent and utilities for administrative space. Also included is a portion of the aggregate customer care costs as discussed above in "Cost of Services."

Selling, general and administrative expense decreased during the three months ended March 31, 2025 compared to the similar period in 2024 primarily due to:

•a decrease of $162 million in personnel costs related to workforce changes primarily due to the voluntary separation program that was announced in June of 2024 and completed in March of 2025; and

•a decrease of $106 million related to a legacy legal matter from 2024 that did not reoccur.

See "Special Items" for additional information on the legacy legal matter.

Depreciation and Amortization Expense

Depreciation and amortization expense increased during the three months ended March 31, 2025 compared to the similar period in 2024 primarily due to the change in the mix of net depreciable and amortizable assets, including the amortization period of certain acquisition-related intangible assets, and the continued deployment of C-Band network assets.

Other Consolidated Results

Other Income, Net


	Three Months Ended
	March 31,				Increase/
(dollars in millions)	2025		2024		(Decrease)
Interest income	$	63	$	78	$	(15)	(19.2)	%
Other components of net periodic benefit cost	(94)		—		(94)		nm
Net debt extinguishment gains	90		110		(20)		(18.2)
Other, net	62		10		52		nm
Other Income, Net	$	121	$	198	$	(77)	(38.9)

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Other income, net, reflects certain items not directly related to our core operations, including interest income, debt extinguishment gains, components of net periodic pension and postretirement benefit cost and income and certain foreign exchange gains and losses.

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Other income, net decreased during the three months ended March 31, 2025 compared to the similar period in 2024 primarily due to a decrease of $94 million in other components of net periodic benefit cost primarily driven by lower plan assets on which to earn expected returns in our pension and postretirement plans compared to the prior year along with a net pension remeasurement gain in 2024 that did not reoccur, partially offset by a decrease in interest costs.

See Note 8 to the condensed consolidated financial statements for more information on the other components of net periodic benefit cost.

Interest Expense


	Three Months Ended
	March 31,
(dollars in millions)	2025			2024			(Decrease)
Total interest costs on debt balances	$	1,829		$	1,909		$	(80)	(4.2)	%
Less capitalized interest costs	197			274			(77)		(28.1)
Interest Expense	$	1,632		$	1,635		$	(3)	(0.2)

Average debt outstanding(1)(3)	$	144,024		$	152,754
Effective interest rate(2)(3)	5.1		%	5.0		%

(1)The average debt outstanding is a financial measure and is calculated by applying a simple average of prior months end balances of total short-term and long-term debt, net of discounts, premiums and unamortized debt issuance costs.

(2)The effective interest rate is the rate of actual interest incurred on debt. It is calculated by dividing the total interest costs on debt balances by the average debt outstanding.

(3)We believe that this measure is useful to management, investors and other users of our financial information in evaluating our debt financing cost and trends in our debt leverage management.

Total interest expense remained relatively flat during the three months ended March 31, 2025 compared to the similar period in 2024.

Provision for Income Taxes


	Three Months Ended
	March 31,
(dollars in millions)	2025			2024			Increase
Provision for income taxes	$	1,490		$	1,353		$	137	10.1	%
Effective income tax rate	23.0		%	22.3		%

The effective income tax rate is calculated by dividing the provision for income taxes by income before the provision for income taxes. The increase in the provision for income taxes during the three months ended March 31, 2025 compared to the similar period in 2024 was primarily due to the increase in income before income taxes in the current period. The increase in the effective income tax rate during the three months ended March 31, 2025 compared to the similar period in 2024 was primarily due to higher tax benefits from the favorable resolution of various income tax matters in the prior period.

Unrecognized Tax Benefits

Unrecognized tax benefits were $2.6 billion at both March 31, 2025 and December 31, 2024. Interest and penalties related to unrecognized tax benefits were $649 million (after-tax) and $684 million (after-tax) at March 31, 2025 and December 31, 2024, respectively.

Verizon and/or its subsidiaries file income tax returns in the U.S. federal jurisdiction, and various state, local and foreign jurisdictions. As a large taxpayer, we are under audit by the Internal Revenue Service and multiple state and foreign jurisdictions for various open tax years.

Consolidated Net Income, Consolidated EBITDA and Consolidated Adjusted EBITDA

Consolidated earnings before interest, taxes, depreciation and amortization expense (Consolidated EBITDA) and Consolidated Adjusted EBITDA, which are presented below, are non-GAAP financial measures that we believe are useful to management, investors and other users of our financial information in evaluating operating profitability on a more variable cost basis as they exclude the depreciation and amortization expense related primarily to capital expenditures and acquisitions that occurred in prior years, as well as in evaluating operating performance in relation to Verizon's competitors. Consolidated EBITDA is calculated by adding back interest, taxes, depreciation and amortization expense to net income.

Consolidated Adjusted EBITDA is calculated by excluding from Consolidated EBITDA the effect of the following non-operational items: equity in earnings and losses of unconsolidated businesses and other income and expense, net, as well as the effect of

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certain special items. We believe that this measure is useful to management, investors and other users of our financial information in evaluating the effectiveness of our operations and underlying business trends. We believe that Consolidated Adjusted EBITDA is widely used by investors to compare a company’s operating performance to its competitors by minimizing impacts caused by differences in capital structure, taxes, and depreciation and amortization policies. Further, the exclusion of non-operational items and special items enables comparability to prior period performance and trend analysis. See "Special Items" for additional information.

It is management's intent to provide non-GAAP financial information to enhance the understanding of Verizon's GAAP financial information, and it should be considered by the reader in addition to, but not instead of, the financial statements prepared in accordance with GAAP. Each non-GAAP financial measure is presented along with the corresponding GAAP measure so as not to imply that more emphasis should be placed on the non-GAAP measure. We believe that providing these non-GAAP measures in addition to the GAAP measures allows management, investors and other users of our financial information to more fully and accurately assess both consolidated and segment performance. The non-GAAP financial information presented may be determined or calculated differently by other companies and may not be directly comparable to that of other companies.


(dollars in millions)	2025		2024
Consolidated Net Income	$	4,983	$	4,722
Add:
Provision for income taxes	1,490		1,353
Interest expense	1,632		1,635
Depreciation and amortization expense(1)	4,577		4,445
Consolidated EBITDA	$	12,682	$	12,155

Add (Less):
Other income, net	$	(121)	$	(198)
Equity in (earnings) losses of unconsolidated businesses	(6)		9
Legacy legal matter	—		106
Consolidated Adjusted EBITDA	$	12,555	$	12,072

(1) Includes Amortization of acquisition-related intangible assets, which were $190 million and $221 million during the three months ended March 31, 2025 and 2024, respectively. See "Special Items" for additional information.

The changes in Consolidated Net Income, Consolidated EBITDA and Consolidated Adjusted EBITDA in the table above during the three months ended March 31, 2025 compared to the similar period in 2024 were primarily a result of the factors described above in connection with consolidated operating revenues and consolidated operating expenses.


Segment Results of Operations

We have two reportable segments that we operate and manage as strategic business units - Consumer and Business. We measure and evaluate our segments based on segment operating income. The use of segment operating income is consistent with the CODM's assessment of segment performance.

To aid in the understanding of segment performance as it relates to segment operating income, management uses the following operating statistics to evaluate the overall effectiveness of our segments. We believe these operating statistics are useful to investors and other users of our financial information because they provide additional insight into drivers of our segments' operating results, key trends and performance relative to our peers. These operating statistics may be determined or calculated differently by other companies and may not be directly comparable to those statistics of other companies.

Wireless retail connections are retail customer device postpaid and prepaid connections as of the end of the period. Retail connections under an account may include those from smartphones and basic phones (collectively, phones), postpaid and prepaid FWA, as well as tablets and other internet devices, wearables and retail IoT devices. Wireless retail connections are calculated by adding total retail postpaid and prepaid new connections in the period to prior period retail connections, and subtracting total retail postpaid and prepaid disconnects in the period.

Wireless retail postpaid connections are retail postpaid customer device connections as of the end of the period. Retail postpaid connections under an account may include those from phones, postpaid FWA, as well as tablets and other internet devices, wearables and retail IoT devices. Wireless retail postpaid connections are calculated by adding retail postpaid new connections in the period to prior period retail postpaid connections, and subtracting retail postpaid disconnects in the period.

Wireless retail prepaid connections are retail prepaid customer device connections as of the end of the period. Retail prepaid connections may include those from phones, prepaid FWA, as well as tablets and other internet devices, and wearables.

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Wireless retail prepaid connections are calculated by adding retail prepaid new connections in the period to prior period retail prepaid connections, and subtracting retail prepaid disconnects in the period.

Wireless retail core prepaid connections are wireless retail prepaid customer device connections, excluding our SafeLink brand, as of the end of the period. Retail core prepaid connections may include those from phones, prepaid FWA, as well as tablets and other internet devices, and wearables. Wireless retail core prepaid connections are calculated by adding retail core prepaid new connections in the period to prior period retail core prepaid connections, and subtracting retail core prepaid disconnects in the period.

Fios internet connections are the total number of connections to the internet using Fios internet services as of the end of the period. Fios internet connections are calculated by adding Fios internet new connections in the period to prior period Fios internet connections, and subtracting Fios internet disconnects in the period.

Fios video connections are the total number of connections to traditional linear video programming using Fios video services as of the end of the period. Fios video connections are calculated by adding Fios video net additions in the period to prior period Fios video connections. Fios video net additions are calculated by subtracting the Fios video disconnects from the Fios video new connections.

Total broadband connections are the total number of connections to the internet using Fios internet services, Digital Subscriber Line (DSL), and postpaid, prepaid and IoT FWA as of the end of the period. Total broadband connections are calculated by adding total broadband connections, net additions in the period to prior period total broadband connections.

FWA broadband connections are the total number of postpaid and prepaid connections to the internet through our 5G or 4G LTE wireless networks as of the end of the period. FWA broadband connections are calculated by adding FWA broadband connections, net additions in the period to prior period FWA broadband connections.

Wireline broadband connections are the total number of connections to the internet using DSL and Fios internet services as of the end of the period. Wireline broadband connections are calculated by adding wireline broadband connections, net additions in the period to prior period wireline broadband connections.

Wireless retail connections, net additions are the total number of additional retail customer device postpaid and prepaid connections, less the number of device disconnects in the period. Wireless retail connections, net additions in each period presented are calculated by subtracting the total retail postpaid and prepaid disconnects, net of certain adjustments, from the total retail postpaid and prepaid new connections in the period.

Wireless retail postpaid connections, net additions are the total number of additional retail customer device postpaid connections, less the number of device disconnects in the period. Wireless retail postpaid connections, net additions in each period presented are calculated by subtracting the retail postpaid disconnects, net of certain adjustments, from the retail postpaid new connections in the period.

Wireless retail prepaid connections, net additions are the total number of additional retail customer device prepaid connections, less the number of device disconnects in the period. Wireless retail prepaid connections, net additions in each period presented are calculated by subtracting the retail prepaid disconnects, net of certain adjustments, from the retail prepaid new connections in the period.

Wireless retail core prepaid connections, net additions are the total number of additional retail customer device core prepaid connections, less the number of device disconnects in the period. Wireless retail core prepaid connections, net additions in each period presented are calculated by subtracting the retail core prepaid disconnects, net of certain adjustments, from the retail core prepaid new connections in the period.

Wireless retail postpaid phone connections, net additions are the total number of additional retail customer postpaid phone connections, less the number of phone disconnects in the period. Wireless retail postpaid phone connections, net additions in each period presented are calculated by subtracting the retail postpaid phone disconnects, net of certain adjustments, from the retail postpaid phone new connections in the period.

Total broadband connections, net additions are the total number of additional total broadband connections, less the number of total broadband disconnects in the period. Total broadband connections, net additions in each period presented are calculated by subtracting the total broadband disconnects, net of certain adjustments, from the total broadband new connections in the period.

FWA broadband connections, net additions are the total number of additional FWA broadband connections, less the number of FWA broadband disconnects in the period. FWA broadband connections, net additions in each period presented are calculated by subtracting the FWA broadband disconnects, net of certain adjustments, from the FWA broadband new connections in the period.

Wireline broadband connections, net additions are the total number of additional wireline broadband connections, less the number of wireline broadband disconnects in the period. Wireline broadband connections, net additions in each period presented

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are calculated by subtracting the wireline broadband disconnects, net of certain adjustments, from the wireline broadband new connections in the period.

Wireless churn is the rate at which service to retail, retail postpaid, or retail postpaid phone connections is terminated on average in the period. The churn rate in each period presented is calculated by dividing retail disconnects, retail postpaid disconnects, or retail postpaid phone disconnects by the average retail connections, average retail postpaid connections, or average retail postpaid phone connections, respectively, in the period.

Wireless retail postpaid ARPA is the calculated average retail postpaid service revenue per account (ARPA) from retail postpaid accounts in the period. Wireless retail postpaid service revenue does not include recurring device payment plan billings related to the Verizon device payment program, insurance or regulatory fees. Wireless retail postpaid ARPA in each period presented is calculated by dividing retail postpaid service revenue by the average retail postpaid accounts in the period.

Wireless retail postpaid accounts are wireless retail customers that are directly served and managed under the Verizon brand and use its services as of the end of the period. Accounts include unlimited plans, shared data plans and corporate accounts, as well as legacy single connection plans and multi-connection family plans. A single account may include monthly wireless services for a variety of connected devices. Wireless retail postpaid accounts are calculated by adding retail postpaid new accounts to the prior period retail postpaid accounts.

Wireless retail postpaid connections per account is the calculated average number of retail postpaid connections per retail postpaid account as of the end of the period. Wireless retail postpaid connections per account is calculated by dividing the total number of retail postpaid connections by the number of retail postpaid accounts as of the end of the period.

Segment operating income margin reflects the profitability of the segment as a percentage of revenue. Segment operating income margin is calculated by dividing total segment operating income by total segment operating revenues.

Segment earnings before interest, taxes, depreciation and amortization (Segment EBITDA), which is presented below, is a non-GAAP measure and does not purport to be an alternative to operating income (loss) as a measure of operating performance. We believe this measure is useful to management, investors and other users of our financial information in evaluating operating profitability on a more variable cost basis as it excludes the depreciation and amortization expense related primarily to capital expenditures and acquisitions that occurred in prior years, as well as in evaluating operating performance in relation to our competitors. Segment EBITDA is calculated by adding back depreciation and amortization expense to segment operating income (loss). Segment EBITDA margin is calculated by dividing Segment EBITDA by total segment operating revenues.

See Note 10 to the condensed consolidated financial statements for additional information.

Verizon Consumer Group

Our Consumer segment provides consumer-focused wireless and wireline communications services and products. Our wireless services are provided across one of the most extensive wireless networks in the U.S. under the Verizon family of brands and through wholesale and other arrangements. We also provide FWA broadband through our 5G or 4G LTE networks as an alternative to traditional landline internet access. Our wireline services are provided in nine states in the Mid-Atlantic and Northeastern U.S., as well as Washington D.C., over our 100% fiber-optic network through our Verizon Fios product portfolio and over a traditional copper-based network to customers who are not served by Fios.

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Operating Revenues and Selected Operating Statistics


	Three Months Ended
	March 31,						Increase/
(dollars in millions, except ARPA)	2025			2024			(Decrease)
Service(1)	$	20,066		$	19,624		$	442	2.3%
Wireless equipment	4,532			4,490			42		0.9
Other(1)	1,020			943			77		8.2
Total Operating Revenues	$	25,618		$	25,057		$	561	2.2

Revenue Statistics:
Wireless service revenue(1)	$	17,199		$	16,760		$	439	2.6
Fios revenue	$	2,896		$	2,896		$	—	—

Connections (‘000):(2)
Wireless retail	115,084			114,809			275		0.2
Wireless retail postpaid	94,854			93,905			949		1.0
Wireless retail core prepaid(3)	18,977			18,717			260		1.4

Fios internet	7,176			7,025			151		2.1
Fios video	2,626			2,883			(257)		(8.9)

FWA broadband	2,914			2,070			844		40.8
Wireline broadband	7,330			7,227			103		1.4
Total broadband	10,244			9,297			947		10.2





Net Additions in Period (‘000):
Total wireless retail	(159)			(141)			(18)		(12.8)
Wireless retail postpaid	(253)			75			(328)		nm
Wireless retail postpaid phone	(356)			(194)			(162)		(83.5)
Wireless retail core prepaid(3)	137			(131)			268		nm


FWA broadband	199			203			(4)		(2.0)
Wireline broadband	31			36			(5)		(13.9)
Total broadband	230			239			(9)		(3.8)

Churn Rate:
Wireless retail	1.57		%	1.62		%
Wireless retail postpaid	1.13		%	1.03		%
Wireless retail postpaid phone	0.90		%	0.83		%

Account Statistics:
Wireless retail postpaid ARPA(1)	$	146.46		$	141.31		$	5.15	3.6

Wireless retail postpaid accounts (‘000)(2)	32,620			32,876			(256)		(0.8)
Wireless retail postpaid connections per account(2)	2.91			2.86			0.05		1.7

(1)Reflects the reclassification of recurring device protection and insurance related plan revenues from Other revenue into Wireless service revenue in the first quarter of 2025.

(2) As of end of period.

(3) Represents total prepaid results excluding our SafeLink brand.

Where applicable, the operating results reflect certain adjustments, including those related to the reclassification of connections associated with Verizon’s second number offering, migration activity among different types of devices and plans, customer profile changes, and adjustments in connection with mergers, acquisitions and divestitures. Where applicable, historical results have been recast to conform to the current period presentation.

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Consumer's total operating revenues increased during the three months ended March 31, 2025 compared to the similar period in 2024 as a result of increases in Service, Wireless equipment and Other revenues.

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Service Revenue

Service revenue increased during the three months ended March 31, 2025 compared to the similar period in 2024 primarily driven by an increase in Wireless service revenue.

Wireless service revenue increased during the three months ended March 31, 2025 compared to the similar period in 2024 primarily as a result of:

•an increase of $407 million in postpaid revenue primarily related to pricing actions, higher adoption of perks and premium MyPlan offerings, and a 41% increase in our FWA subscriber base. These increases were partially offset by the amortization of wireless equipment sales promotions;

•an increase of $143 million related to growth in non-retail service revenue; and

•a decrease of $112 million primarily driven by the termination of the Affordable Connectivity Program in the second quarter of 2024, partially offset by an increase in the core prepaid subscriber base.

Wireless Equipment Revenue

Wireless equipment revenue remained relatively flat during the three months ended March 31, 2025 compared to the similar period in 2024.

Other Revenue

Other revenue includes fees that partially recover the direct and indirect costs of complying with regulatory and industry obligations and programs, leasing and interest recognized when equipment is sold to the customer by an authorized agent under a device payment plan agreement.

Other revenue increased during the three months ended March 31, 2025 compared to the similar period in 2024 primarily due to an increase of $53 million driven by regulatory surcharges primarily related to a higher net Federal Universal Service Fund rate.

Operating Expenses


	Three Months Ended
	March 31,
(dollars in millions)	2025		2024		Increase
Cost of services	$	4,574	$	4,537	$	37	0.8	%
Cost of wireless equipment	4,912		4,750		162		3.4
Selling, general and administrative expense	5,165		5,089		76		1.5
Depreciation and amortization expense	3,543		3,309		234		7.1
Total Operating Expenses	$	18,194	$	17,685	$	509	2.9

Cost of Services

Cost of services remained relatively flat during the three months ended March 31, 2025 compared to the similar period in 2024.

Cost of Wireless Equipment

Cost of wireless equipment increased during the three months ended March 31, 2025 compared to the similar period in 2024 primarily due to:

•an increase of $148 million due to a shift to higher priced equipment in the mix of wireless devices sold; and

•an increase of $14 million driven by a higher volume of wireless devices sold.

Selling, General and Administrative Expense

Selling, general and administrative expense increased during the three months ended March 31, 2025 compared to the similar period in 2024 primarily due to an increase of $66 million in advertising costs related to various marketing campaigns in the first quarter of 2025.

Depreciation and Amortization Expense

Depreciation and amortization expense increased during the three months ended March 31, 2025 compared to the similar period in 2024 driven by the change in the mix of total Verizon depreciable and amortizable assets and Consumer's usage of those assets.

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Segment Operating Income and EBITDA


	Three Months Ended
	March 31,
(dollars in millions)	2025			2024			Increase
Segment Operating Income	$	7,424		$	7,372		$	52	0.7	%
Add Depreciation and amortization expense	3,543			3,309			234		7.1
Segment EBITDA	$	10,967		$	10,681		$	286	2.7

Segment operating income margin	29.0		%	29.4		%
Segment EBITDA margin	42.8		%	42.6		%

The changes in the table above during the three months ended March 31, 2025 compared to the similar period in 2024 were primarily a result of the factors described in connection with Consumer operating revenues and operating expenses.

Verizon Business Group

Our Business segment provides wireless and wireline communications services and products, including FWA broadband, data, video and advanced communication services, corporate networking solutions, security and managed network services, local and long distance voice services and network access to deliver various IoT services and products. We provide these products and services to businesses, public sector customers and wireless and wireline carriers across the U.S. and a subset of these products and services to customers around the world. The Business segment is organized in three customer groups: Enterprise and Public Sector, Business Markets and Other, and Wholesale.

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Operating Revenues and Selected Operating Statistics


	Three Months Ended
	March 31,						Increase/
(dollars in millions)	2025			2024			(Decrease)
Enterprise and Public Sector	$	3,457		$	3,587		$	(130)	(3.6)	%

Business Markets and Other	3,314			3,195			119		3.7
Wholesale	515			594			(79)		(13.3)
Total Operating Revenues(1)	$	7,286		$	7,376		$	(90)	(1.2)

Revenue Statistics:
Wireless service revenue(2)	$	3,565		$	3,467		$	98	2.8
Fios revenue	$	310		$	311		$	(1)	(0.3)

Connections (‘000):(3)
Wireless retail postpaid	30,890			29,947			943		3.1

Fios internet	405			389			16		4.1
Fios video	52			59			(7)		(11.9)

FWA broadband	1,931			1,358			573		42.2
Wireline broadband	459			458			1		0.2
Total broadband	2,390			1,816			574		31.6





Net Additions in Period (‘000):
Wireless retail postpaid	94			178			(84)		(47.2)
Wireless retail postpaid phone	67			80			(13)		(16.3)

FWA broadband	109			151			(42)		(27.8)
Wireline broadband	—			(1)			1		nm
Total broadband	109			150			(41)		(27.3)

Churn Rate:
Wireless retail postpaid	1.52		%	1.51		%
Wireless retail postpaid phone	1.15		%	1.13		%

(1) Service and other revenues included in our Business segment were approximately $6.4 billion and $6.5 billion for the three months ended March 31, 2025 and 2024, respectively. Wireless equipment revenues included in our Business segment were $866 million and $871 million for the three months ended March 31, 2025 and 2024, respectively.

(2) Reflects the reclassification of recurring device protection and insurance related plan revenues from Other revenue into Wireless service revenue in the first quarter of 2025.

(3) As of end of period.

nm - not meaningful

Business's total operating revenues decreased during the three months ended March 31, 2025 compared to the similar period in 2024 as a result of decreases in Enterprise and Public Sector and Wholesale revenues, partially offset by an increase in Business Markets and Other revenue.

Enterprise and Public Sector

Enterprise and Public Sector offers wireless products and services as well as wireline connectivity such as broadband and managed solutions to our large business and private sector customers. Large businesses are identified based on their size and volume of business with Verizon. Public sector customers include U.S. federal, state and local governments and educational institutions. Our offerings to this customer group include plans with features and pricing designed to address their specific needs.

Enterprise and Public Sector revenues decreased during the three months ended March 31, 2025 compared to the similar period in 2024 primarily due to a decrease of $119 million in wireline revenue primarily driven by declines in networking, traditional data

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and voice communication services along with related professional services, due to secular market pressure and technology shifts, coupled with lower customer premise equipment sales volumes.

Business Markets and Other

Business Markets and Other offers wireless services (including FWA broadband), wireless equipment, advanced communication services, tailored voice and networking products, Fios services, advanced voice solutions and security services to businesses that ordinarily do not meet the requirements to be categorized as Enterprise and Public Sector, as described above. Business Markets and Other also includes solutions that support mobile resource management.

Business Markets and Other revenues increased during the three months ended March 31, 2025 compared to the similar period in 2024 primarily due to an increase of $129 million in Wireless service revenue driven by pricing actions and an increase in our FWA subscriber base partially offset by the amortization of wireless equipment sales promotions.

Wholesale

Wholesale offers wireline communications services including data, voice, local dial tone and broadband services primarily to local, long distance, and wireless carriers that use our facilities to provide services to their customers.

Wholesale revenues decreased during the three months ended March 31, 2025 compared to the similar period in 2024 primarily due to a decrease of $79 million related to declines in traditional data and voice communication services and network connectivity as a result of technology substitution.

Operating Expenses


	Three Months Ended
	March 31,				Increase/
(dollars in millions)	2025		2024		Decrease
Cost of services	$	2,376	$	2,432	$	(56)	(2.3)	%
Cost of wireless equipment	1,194		1,155		39		3.4
Selling, general and administrative expense	2,032		2,262		(230)		(10.2)
Depreciation and amortization expense	1,020		1,128		(108)		(9.6)
Total Operating Expenses	$	6,622	$	6,977	$	(355)	(5.1)

Cost of Services

Cost of services decreased during the three months ended March 31, 2025 compared to the similar period in 2024 primarily as a result of:

•a decrease of $25 million in customer premise equipment costs due to lower volumes sold; and

•a decrease of $15 million in rent and lease expense primarily driven by a change in Business's proportionate usage of shared leased assets and new lease activity.

Cost of Wireless Equipment

Cost of wireless equipment remained relatively flat during the three months ended March 31, 2025 compared to the similar period in 2024.

Selling, General and Administrative Expense

Selling, general and administrative expense decreased during the three months compared to the similar period in 2024 primarily due to a decrease of $144 million in personnel costs related to the impact of workforce changes primarily due to the voluntary separation program that was announced in June of 2024 and completed in March of 2025.

Depreciation and Amortization Expense

Depreciation and amortization expense decreased during the three months ended March 31, 2025 compared to the similar period in 2024 driven by the change in the mix of total Verizon depreciable and amortizable assets and Business's usage of those assets.

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Segment Operating Income and EBITDA


	Three Months Ended
	March 31,						Increase/
(dollars in millions)	2025			2024			Decrease
Segment Operating Income	$	664		$	399		$	265	66.4	%
Add Depreciation and amortization expense	1,020			1,128			(108)		(9.6)
Segment EBITDA	$	1,684		$	1,527		$	157	10.3

Segment operating income margin	9.1		%	5.4		%
Segment EBITDA margin	23.1		%	20.7		%

The changes in the table above during the three months ended March 31, 2025 compared to the similar period in 2024 were primarily a result of the factors described in connection with Business operating revenues and operating expenses.


Special Items

Special items included in Income Before Provision For Income Taxes were as follows:


(dollars in millions)	2025		2024
Amortization of acquisition-related intangible assets(1)
Depreciation and amortization expense	$	190	$	221
Legacy legal matter
Selling, general and administrative expense	—		106
Total	$	190	$	327

(1) Amounts are included in segment results of operations.

Consolidated Adjusted EBITDA, a non-GAAP measure discussed in the section titled "Consolidated Net Income, Consolidated EBITDA and Consolidated Adjusted EBITDA" as part of Consolidated Results of Operations, excludes all of the amounts included above.

The income and expenses related to special items included in our condensed consolidated results of operations were as follows:


(dollars in millions)	2025		2024
Within Total Operating Expenses	$	190	$	327
Total	$	190	$	327

Pursuant to Regulation S-K, Item 601(b)(4)(iii)(A), certain instruments which define the rights of holders of long-term debt of Verizon Communications Inc. and its consolidated subsidiaries are not filed herewith, and the Company hereby agrees to furnish a copy of any such instrument to the SEC upon request.

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Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

VERIZON COMMUNICATIONS INC.

Date: April 25, 2025

By:

/s/

Mary-Lee Stillwell

Senior Vice President and Controller

(Principal Accounting Officer)

VERIZON COMMUNICATIONS INC - Quarter Report: 2025 March (Form 10-Q)

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