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Verizon matches earnings, beats revenue expectations in first full quarter with unlimited data plans

Key Points
  • EPS: 96 cents per share vs. 96 cents expected, according to Thomson Reuters
  • Revenue: $30.55 billion vs. $29.91 billion expected, according to Thomson Reuters
  • Verizon started offering unlimited data plans in February, during the first quarter. Thursday's announcement will reflect Verizon's first full quarter where unlimited plans were offered.
Pedestrians cross Herald Square in front of a Verizon Wireless store in New York.
Richard Levine | Corbis | Getty Images

Verizon earnings met analyst expectations and beat revenue projections for its second quarter, helping the company's stock rebound from a disappointing year.

Earnings per share were up slightly at 96 cents compared with 94 cents in the year-ago quarter. Revenue rose modestly to $30.55 billion from $30.53 billion. Analysts expected profit per share of 96 cents and revenue of $29.91 billion.

Shares of the company were up nearly 6 percent Thursday, cutting its year-to-date drop to a decline of 12 percent. The company's stock hit a 52-week intraday low of $42.80 earlier this month.

Verizon's second-quarter earnings represented the first full quarter that it offered unlimited data plans. It started selling such plans in February, during the first quarter.

"The market's figuring out that the competitive wave that T-Mobile and Sprint had launched against Verizon and AT&T has crested and it's over," said Charlie Smith, chief investment officer of Fort Pitt Capital Group.

T-Mobile and Sprint introduced unlimited data plans in August. Upon the announcements, T-Mobile CEO John Legere told CNBC that Verizon's and AT&T's network and technology would not allow them to follow suit.

Verizon and AT&T did not follow — at least not for a few months. They both announced they would offer unlimited plans in February.

On Thursday, the company reported that its introduction of unlimited data plans increased LTE network usage year over year. Service revenue was down 6.7 percent to $15.6 billion. Verizon Chief Financial Officer Matt Ellis attributed some of the decrease to overage fee losses as more customers upgrade to unlimited plans.

Verizon added 633,000 wireless customers, up from 585,000.

"As expected, the introduction of the unlimited pricing plan increased the LTE network usage as our customers enjoy the experience of consuming more data throughout the day on the industry-leading wireless network," Ellis said on an earnings call.

Verizon is mitigating lost overage fee revenue from customers creating new accounts and buying more expensive plans, Ellis said. He also said he expects the decline to shrink to inside 4 percent by the end of the fourth quarter.

Retail postpaid churn rates, or the percentage of subscribers who cancel their service, was 0.94 percent. The total was lower, therefore better, than Wall Street's expectation for 1.08 percent.

Total wireless revenue dropped 1.9 percent to $21.3 billion from the year-ago quarter.

The company's shares rose more than 3 percent in premarket trading after the announcement.

"Verizon reignited its growth engine in the quarter, both adding and retaining wireless customers while scaling our media business and continuing to invest in our superior networks," Verizon CEO Lowell McAdam said in a statement.

Trials for Verizon's 5G technology are underway in 8 of 11 planned markets, but the company won't see results until later in the year, Ellis said. Verizon signed a $1.05 billion fiber-optic cable deal with Corning earlier this year to help build the network.

Verizon expects its full-year revenue to be "fairly consistent" with last year and its adjusted earnings per share to be similar to revenue trends. Wall Street projects full-year earnings per share of $3.75 and revenue of $122.47 billion.

AT&T reported its second-quarter earnings earlier in the week. The telecommunications company beat analysts' expectations, posting earnings per share of 79 cents, compared with projections for 73 cents, and revenue of $39.84 billion, compared with expectations for $39.79 billion.

Earlier in the week, a Citigroup analyst said Comcast should buy Verizon. Spokespeople for both companies declined to comment on the note.

Verizon completed its $4.48 billion acquisition of Yahoo last month.

Earlier this month, Verizon suffered a data breach it says exposed the data of 6 million customers. The company maintains no data was lost or stolen.

Disclosure: Comcast is the owner of NBCUniversal, the parent company of CNBC and