Verizon Communications Inc.

Good morning and welcome to Verizon's third quarter 2026 earnings conference call. At this time, all participants have been placed in a listen-only mode and the call will be open for questions following the presentation. Today's conference is being recorded. If you have any objections, you may disconnect at this time. I would now like to turn the call over to Colleen Ostrowski, Senior Vice President, Treasurer, and Head of Investor Relations.

Thanks, Brad. Good morning, and welcome to our third quarter 2026 earnings call. I'm Colleen Ostrowski, and on the call with me this morning are our Chief Executive Officer, Dan Schulman, and Tony Skiadas, our CFO. Before we begin, I'd like to point you to our safe harbor statement, which can be found in the earnings presentation and on our investor relations website. Our comments this morning may include forward-looking statements, which are subject to risks and uncertainties. Factors that may affect future results are discussed in our SEC filings. This presentation also contains non-GAAP financial measures, and you can find reconciliations of these measures in the materials on our website. With that, I'll turn it over to Dan.

Thank you, Colleen, and good morning, everyone. Thanks for joining us. It's been just over a year since I had the privilege to become the CEO of Verizon. As I reflect on the past 12 months, I'm incredibly proud of the Verizon team. We made bold decisions, we dramatically turned up our collective intensity, we put our customers front and center, and we vowed to reclaim our market leadership and play to win. We have accomplished a lot, and today's Verizon is in a fundamentally better position, operationally, financially, and competitively. Q3 was another proof point that this is a structurally different Verizon. Our transformation has taken root and our results show it. In the third quarter, we delivered significantly improved performance across almost all of our key metrics. Our postpaid phone net additions were up 820% year-over-year to 406,000, our strongest Q3 in five years. Importantly, we also delivered 137,000 postpaid net account additions, our best quarterly net account performance in over a decade. This is growth that pays. Every new line we added delivered revenue. There were no free lines. We now expect our postpaid phone net ads for 2026 to be 1.1 to 1.2 million, more than three times last year's result. Overall, postpaid phone churn was 94 basis points. An improvement of four basis points year over year while consumer postpaid phone churn was at 87 basis points, also down four basis points from last year. Year over year, our Q3 promotional costs of acquisition and retention once again declined, acquisition by 41 percent and retention by 30 percent. In broadband, we delivered 314,000 net ads, and our mix is continuing to shift towards fiber, which now makes up nearly half of our broadband net ads. That is a deliberate choice we have made. Putting customers at the center of every decision we make has changed how we go to market and what we are willing to sell. Our operating philosophy is to deliver the connectivity experience that each customer segment demands, not simply the network and technologies we happen to have available. Between fiber and FWA, we have the assets to deliver great value in broadband. But it also demands a more sophisticated, segmented approach to FWA where we can't deliver the speed a particular segment of customers expects from Verizon. We won't sell it. We began to implement that philosophy earlier this quarter. And as I told the team, we should never drive for a net-add metric that runs counter to our customer-first philosophy. I'm very proud that our product and network teams have responded to our customers' need for greater FWA speed. Using our millimeter wave spectrum, We have developed an innovative solution that will enable us to deliver a one gig FWA product in metro areas across the country, complementing our fiber belts. Over the medium term, it is our goal to substantially increase the number of premises we can serve with one gig of speed by an incremental 10 to 15 million. through FWA, and that is over and above our 40 to 50 million fiber build. We will begin to scale our new high-speed FWA service beginning this quarter and throughout 2027 and beyond in order to deploy the enhanced capabilities and performance our customers expect from us. Our 1,700 megahertz of millimeter wave spectrum has suddenly become a differentiated and competitive advantage. And it also has a dual benefit in that it will create substantial incremental efficiencies and capacity in our existing C-band spectrum. This is a technological breakthrough for us. with significant positive implications. In addition to strong operational metrics, we also had a strong quarter from a financial perspective. Mobility and broadband service revenue grew 2.9%, a further improvement from the 2.8% we delivered in Q2 and the 1.6% we delivered in Q1. More importantly, we expect that Q4 mobility and broadband service revenue growth will accelerate to approximately 4%. Wireless service revenue once again improved sequentially and we expect to see year-over-year growth in Q4. Our Q3 adjusted EPS of $1.31 grew 8% year-over-year. and we now expect our 2026 full year adjusted EPS growth to be 7 to 7.5% up from our previous range of 6 to 7%. Free cash flow of 7.8 billion was our highest quarterly free cash flow since 2020, growing more than 12% year over year in Q3. Consequently, we are raising our full-year guidance for free cash flow growth to approach 12%, up from our previous guidance of 9% to 10%. We anticipate our full-year free cash flow will also be our highest total since 2020. To summarize, this quarter we delivered our strongest third quarter line and account growth in years, at our lowest cost to acquire and retain in more than three years. Our mobility and broadband service revenue growth continues to accelerate, and our free cash flow and adjusted EPS continue to grow. This is high-quality growth delivered in a fiscally responsible manner. We are not buying customers. We are winning them on revenue positive terms and keeping them longer. When you compound stronger net ads with net account growth, sequential ARPA growth, structurally lower churn and healthier unit economics, you get exactly the kind of operating leverage you're seeing in our adjusted EBITDA, adjusted EPS and free cash flow this quarter and in our raised full year guidance. Let me spend a moment on a few key strategic initiatives. First, the customer value proposition we launched in mid-June continues to deliver beyond our expectations. Simplicity, Verizon One, and our loyalty program are resonating with our customers. Our loyalty program enrollment is scaling quickly across our base, and the customer feedback data whether it be net promoter score, overall customer satisfaction, or first call resolution is moving in the right direction on every dimension we track. All of our extensive efforts to focus on the end-to-end customer experience are paying off and showing up in our year-over-year improvements in our churn rate, our increasing postpaid phone net ads and accounts, and the simultaneous reduction in our cost to acquire and retain customers. This is a fundamentally different financial and operational model than in years past. Second, convergence continues to compound. Our frontier integration remains ahead of plan. Postpaid phone customers are attaching our broadband solutions and our broadband customers are attaching postpaid phone service with both cohorts churning materially less than single product customers. And we are seeing over 55% of our new fiber broadband customers take one gig or more download speeds, driving significant incremental ARPA and customer satisfaction. In Q3, Our overall broadband ARPU increased year over year. We continue to anticipate our fiber passings will exceed 32 million by year end. And over the medium term, we remain on track to deliver 40 to 50 million fiber passings with an incremental 10 to 15 million premises covered by our new high-speed FWA technology. Our goal is to have the largest footprint in the country of premises covered with at least one gig of download speeds. Third, our transformation program is on track and it is delivering results earlier than we initially expected. The 10 transformation work streams we launched earlier in the year are producing tangible improvements for customers and meaningful cost reductions across the business. Our $9 billion cost reduction plan across our OpEx and CapEx remains fully on track, and the operating leverage in this quarter results reflects the pace at which those savings are showing up. We are increasingly running our transformation through our newly completed AI tech stack for applications that help us better serve customers, increase our network performance, and drive cost reductions and productivity increases. Fourth, our network performance continues to improve. Customers notice and they're voting with their wallets by staying. The spectrum we won in the AWS3 auction is already enhancing our network and it will enable us to further improve our capabilities and performance in key metro areas as we continue to deploy it. Finally, AI infrastructure is becoming a real growth driver for Verizon. Today, we announced that we have signed a dark fiber agreement with Amazon Web Services valued at over $2 billion. Building on the Google agreement we announced last quarter, These two contracts are a clear signal that the largest builders of AI infrastructure in the world are choosing Verizon as a strategic connectivity partner. We now have an active pipeline of additional hyperscalers, neocloud providers, and large enterprise clients who are in negotiations to have us supply them with either dark or lit fiber connectivity. I'm also pleased to report that we are seeing momentum with numerous partners to use our network hubs for AI inference edge computing. And that momentum is already turning into signed deals. Our first long-term contracts are expected to generate hundreds of millions of dollars in revenue over their term. We now have signed contracts for approximately $4 billion. and based on the demand we are seeing, we expect both our fiber and edge computing to add meaningfully to our future growth. All of these revenues come with attractive margins and we will begin to see their impact in 2027. These are long duration contracts with high quality counterparties that leverage our fiber capabilities and existing real estate assets. The incremental capital required to deliver against these agreements is modest and success-based and tied to defined contracts. And we've locked in the fiber to deliver. Last month, we announced a multi-year, multi-billion-dollar agreement with Corning for more than 80 million miles of fiber through 2032, supporting both our fiber broadband expansion and the long-haul backbone that AI hyperscalers need. Taken together, this opportunity significantly extends our addressable market, our revenues and our profits, and we will talk about how it helps to drive our 2027 growth on our next earnings call. In the past year, we have delivered on our promises and raised the bar every single quarter. Given the strength of the third quarter and our visibility into the fourth, we are raising our annual guidance for postpaid phone net ads, adjusted EPS and free cash flow, and we now expect mobility and broadband service revenue growth to be in the upper half of our 2.5 to 3% range. We are growing the right way through healthier customer relationships, stronger network performance, Discipline Execution, Lower Costs with Revenue Positive Net Ads, and now Account Growth. In many ways, we have redefined how we compete with a new business model for the mobile industry. When we put our customers front and center, the aperture for growth at Verizon opens substantially. We believe that the momentum we are seeing in Q3 will continue. Our leading indicators churn, net ads, customer satisfaction, network performance, broadband cross-sell, cost-out execution, and our hyperscaler pipeline all point in the same positive direction. This is a multi-year story, and we are just getting started. We have not yet captured the full multi-year benefit of the $9 billion cost transformation. We have not yet fully scaled our new consumer value proposition. We have not yet begun to recognize significant revenue from our AI-connected business. And we have meaningful additional capacity to return capital to shareholders through both our growing dividend and incremental buybacks. Each of those is a tailwind into 2027 and we look forward to sharing our 2027 outlook with you at our next earnings call. I'd like to thank all of our employees. Your efforts to satisfy our customers are inspiring. The customer-first mindset, the operational rigor and the urgency you are bringing every day, that is what is showing up in our results. And to our shareholders, We are hyper-focused on earning your confidence with continued execution. Over the past year, we have delivered a step function improvement in our competitive positioning and our financial profile. And we believe the trajectory from here is even more compelling. And with that, let me turn the call over to Tony.