Verizon (VZ.US) Q3 Results Mixed, Signs Over $2 Billion AI Infrastructure Agreement with Amazon AWS

According to Zhitong Finance APP, before the US stock market opened on Monday, American telecommunications giant Verizon (VZ.US) released its Q3 2026 financial report. The report showed that Verizon's total revenue for the third quarter was $34.3 billion, an increase of 1.5% year-over-year, but below market expectations; adjusted earnings per share (EPS) was $1.31, beating expectations. Thanks to improvements in operational efficiency, the company's net profit and adjusted EBITDA both hit record highs, and for the third consecutive quarter, it raised its full-year guidance. Meanwhile, Verizon announced an expanded strategic partnership with Amazon AWS, reaching an artificial intelligence (AI) infrastructure agreement valued at over $2 billion. The stock rose nearly 1% in pre-market trading.

Strong Core Performance, Multiple Indicators Reach All-Time Highs

Mobile and broadband service revenue reached $23.5 billion, up 2.9% year-over-year, continuing the accelerated growth trend of the previous two quarters.

On the profitability front, the company demonstrated strong operational efficiency:

Net Profit: Reached $5.3 billion, up 5.2% year-over-year; net profit margin increased from 14.9% in the same period last year to 15.5%.

Adjusted EBITDA: Recorded at $13.8 billion, an 8.0% year-over-year increase, marking the highest quarterly result in company history.

Earnings Per Share (EPS): Was $1.25, an increase of 6.8% year-over-year; adjusted EPS was $1.31, up 8.3% year-over-year.

In terms of cash flow, operating cash flow in the third quarter reached $11.5 billion, up 2.2% year-over-year; free cash flow was $7.8 billion, a substantial increase of 12.1% year-over-year.

Explosive Growth in Mobile and Broadband Business, Churn Rate Hits Record Low

Verizon CEO Dan Schulman stated: "A year into our transformation, Verizon has become fundamentally stronger operationally, financially, and competitively. By prioritizing customer-centric services such as 'Simplicity' and loyalty programs rather than relying on high subsidies, we are winning high-value loyal customers, expanding profit margins, and reducing churn."

User data supports the success of this strategy:

Postpaid Mobile Users: Net increase of 406,000, a surge of over 820% year-over-year, marking the best third quarter performance in five years.

Postpaid Accounts: Net increase of 137,000, the best result in more than a decade.

Churn Rate: Postpaid mobile churn rate improved by 4 basis points year-over-year to 0.94%.

Broadband Business: Net increase of 314,000 users (including 159,000 fixed wireless users and 155,000 fiber users). The current total number of broadband connections is 17.4 million, with over half of new fiber users choosing speeds of 1G or higher. The company expects fiber coverage to exceed 32 million households by the end of this year.

Partnering with AWS, Focusing on AI Infrastructure

While its traditional telecommunications business continues to grow steadily, Verizon is actively expanding its technology infrastructure footprint. The company announced a cooperation agreement with Amazon Web Services (AWS) valued at over $2 billion. This agreement establishes a business framework aimed at expanding distributed computing capacity to meet the real-time demands of generative AI and Agentic AI workloads.

Schulman emphasized that tech giants are choosing Verizon's fiber network to power the next generation of AI infrastructure, opening up new growth opportunities for the company.

Financial Discipline Pays Off, Guidance Upgraded for Three Consecutive Quarters

Based on the strong performance in Q3, Verizon announced an upward revision of its full-year guidance for 2026, marking the company's third consecutive upgrade to key indicators this year:

Net Additions of Postpaid Mobile Users: Raised to 1.1-1.2 million (previous forecast was the upper half of the 750,000–1 million range), more than triple the increase compared to 2025.

Adjusted EPS: Raised to $5.04–$5.06 (up 7.0%–7.5% year-over-year), previously expected to rise by 6.0%–7.0%.

Free Cash Flow: Expected year-over-year increase approaching 12.0% (previously 9.0%–10.0%).

Capital Expenditures: Maintained at $16–16.5 billion, including performance-based investments targeting AI Connect.

Additionally, the report mentioned that, due to a longer device replacement cycle and the company’s deliberate reduction in device subsidies, device revenue in Q3 fell by 9.0% year-over-year. This reflects Verizon's evolution toward a more disciplined and structured business model. In terms of shareholder returns, in the first nine months of this year the company returned $12.8 billion to shareholders, an increase of 49% year-over-year.