Verizon (VZ) Q3 2026: Shares Slip as Revenue Misses

Verizon beat Q3 2026 earnings and raised its full-year profit outlook, but a $34.31 billion revenue miss pushed VZ shares lower in Monday premarket trading.

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What Happened in Verizon's Third Quarter?

Verizon delivered its best subscriber quarter in years while revenue came in light. Postpaid phone net additions reached 406,000, up 820% from a year earlier and the strongest third quarter in five years. Postpaid account net additions of 137,000 were the best in more than a decade. Postpaid phone churn fell 4 basis points to 94 basis points. Broadband net additions totaled 314,000, with fiber nearly half of the mix.

Adjusted EBITDA rose 8% to $13.8 billion, a company-record margin of 40.2%, up 240 basis points. Free cash flow climbed 12% to $7.8 billion, the highest quarterly level since 2020. Wireless service revenue grew 2.9%, and management expects growth near 4% in the fourth quarter.

Why Did Verizon Shares Fall Despite the Beat?

Shares fell because revenue missed by about $460 million, and the market weighted top-line growth over margin gains. The miss came as Verizon cut the cost of acquiring customers by 41% and the cost of retaining them by 30%. CEO Dan Schulman said the company is winning customers on revenue-positive terms, stating that "every new line we added delivered revenue. There were no free lines." That approach lifts profitability but restrains headline sales, which leaves revenue below forecasts even as subscribers rise.

The decline also followed a year-to-date gain of about 10% for the stock, which left less room for a disappointment. Shares trade near 11.6 times earnings with a dividend yield of about 6.3%, and the 52-week range runs from $38.68 to $51.68.

How Much Did Verizon Raise Its 2026 Outlook?

Verizon raised nearly every profit and cash metric it guides. Adjusted EPS growth is now 7% to 7.5%, up from 6% to 7%, equal to $5.04-$5.06 per share and above the $5.02 consensus. Free cash flow growth is now approaching 12%, compared with a prior range of 9% to 10%. Postpaid phone net additions are forecast at 1.1 million to 1.2 million, roughly triple the 2025 level and up from an earlier range of 750,000 to 1 million.

Mobility and broadband service revenue growth is expected in the upper half of the 2.5% to 3% range. Capital expenditure guidance holds at $16 billion to $16.5 billion, with fiber passings set to exceed 32 million by year-end.

Strategic Context

The quarter reflects the strategy Schulman has pursued since taking over: cost discipline, a cleaner customer mix and more fiber. A $9 billion cost reduction program remains on track. The integration of Frontier is running ahead of plan, with more than $1 billion in run-rate operating cost synergies targeted by 2028.

Verizon is also building an AI infrastructure business. Its AI Connect unit has signed $4 billion in contracts, including a dark fiber agreement with Amazon (NASDAQ: AMZN) valued at more than $2 billion and a separate agreement with Alphabet's Google (NASDAQ: GOOG). A new 1-gigabit fixed wireless product using millimeter wave spectrum launches in the fourth quarter, with a target of adding 10 million to 15 million premises over time.

What Do Capital Returns Look Like?

Verizon has returned $12.8 billion to shareholders year to date, up 49% from a year earlier. That comprises $8.8 billion in dividends and $4 billion in share repurchases, with the full-year buyback target at up to $4.5 billion. The company has paid dividends for 43 consecutive years and raised them for 22 straight.

Outlook

Verizon enters the final quarter with improved margins, record cash generation and a higher profit floor, but with revenue growth that has yet to match the pace of subscriber and cost gains. The fourth quarter is the test: management expects wireless service revenue growth to accelerate to about 4%, and a visible lift would narrow the gap that pressured the stock. The fixed wireless launch and AI Connect contracts are the next sources of revenue to watch.