Company DCF analysis file
Verizon DCF Analysis
Verizon’s DCF needs to distinguish service contribution from device economics and the cash required to fund the network. Equipment financing, software, spectrum and later acquisitions create different obligations from recognized service revenue. The annual income and cash bridges below define those populations before forecasting a sustainable investor cash stream.
Read service revenue together with device and network expense
Years ended December 31, 2024 and 2025; consolidated company. Amounts use the monetary scale stated in each table caption. Source: annual financial statements. Reported lines retain the issuer’s scope; derived ratios use the displayed denominators.
| Measure | FY2024 | FY2025 |
|---|---|---|
| Revenue | 134,788 | 138,191 |
| Cost of services excluding separately shown items | 27,997 | 27,789 |
| Cost of wireless equipment | 26,100 | 28,976 |
| Sales / general / administrative | 34,113 | 33,818 |
| Depreciation / amortization | 17,892 | 18,349 |
| Operating income | 28,686 | 29,259 |
| Consolidated net income | 17,949 | 17,608 |
| Parent-attributable net income | 17,506 | 17,174 |
| Operating margin: derived | 21.3% | 21.2% |
Device revenue and its direct cost have a different relationship from service receipts. Model equipment financing, promotional support and collection risk together with the customer service relationship. A larger equipment revenue line cannot be assigned the service contribution margin.
Depreciation and amortization are already deducted in operating income, while the investment cash arrives on a different timetable. Retain a network and software replacement case consistent with the assumed service proposition. Parent-attributable profit is also distinct from the consolidated earnings used in the cash reconciliation.
Separate direct service and device contribution before group support costs
The annual income statement supports these selected contributions. They exclude SG&A and separately disclosed depreciation, so they are not reportable segment profit or cash flow.
| Population | Revenue | Selected direct cost | Derived contribution |
|---|---|---|---|
| Service / other | 112,721 | 27,789 | 84,932 |
| Wireless equipment | 25,470 | 28,976 | -3,506 |
| Combined before SG&A / D&A | 138,191 | 56,765 | 81,426 |
The negative equipment contribution is not a complete customer-lifetime valuation: service retention and financing economics still matter. Conversely, the positive service contribution must fund selling, corporate support, depreciation and future network cash. Consumer, enterprise and wholesale relationships need consistent cost and retention assumptions within that group case.
Trace earnings into cash and reinvestment
Reconciliation source: annual earnings and cash-flow statements. Subtotals below are checkpoints, not extra amounts to add. Grouped adjustments are calculated from the disclosed cash-flow lines.
| Step | FY2025 |
|---|---|
| Operating income | 29,259 |
| Other income, net | 107 |
| Interest expense | -6,694 |
| Income tax | -5,064 |
| Consolidated net income: subtotal | 17,608 |
| Depreciation / amortization | 18,349 |
| Other reconciliation adjustments | 3,500 |
| Current operating asset / liability changes | -2,320 |
| Operating cash: subtotal | 37,137 |
| Capex including capitalized software | -17,011 |
| CFO less capex: derived subtotal | 20,126 |
| Wireless license purchases | -450 |
| After both investment deductions: derived | 19,676 |
Other reconciliation combines retirement benefits, deferred tax, credit-loss provisions, investee adjustments and the statement’s other line. The current operating-balance group combines receivables, inventories, prepayments and payables. Credit-loss expense is not collection, and device-backed borrowing is financing rather than recurring service cash.
The post-capex subtotal already deducts capitalized software; deducting the same software a second time would understate cash. Wireless licenses are a separate investing use. The final checkpoint still precedes other investing and financing flows, and the FY2025 scope does not include a full year of later acquired operations.
Stress service contribution on its own revenue population
Illustration: reduce selected service contribution by one percentage point of fixed service-and-other revenue, keeping equipment contribution and group SG&A and depreciation fixed. This is an operating sensitivity, not a customer-pricing or churn forecast.
| Measure | Historical basis | Illustrative case |
|---|---|---|
| Service / other revenue | 112,721 | 112,721 |
| Selected service contribution | 84,932 | 83,804.8 |
| Operating income | 29,259 | 28,131.8 |
The exact pre-tax reduction is $1,127.21 million, displayed to one decimal. Carry taxes, device funding, collections and network cash through the forecast separately. A contribution sensitivity does not establish an equal change in enterprise cash or equity value.
Keep interim reporting separate from the annual basis
Q2 2026 covers 2026-04-01 through 2026-06-30 and was released 2026-07-24. Revenue was $34,253 million in this quarter. Source: official Q2 2026 results.
The later quarter follows the annual closing date and a changed acquisition perimeter. Separate acquired and comparable operations, the related funding and integration costs before extending the annual margin. Do not treat spectrum payments or asset-backed financing proceeds as part of ordinary service growth.
Turn the financial basis into a DCF case
| Decision | Treatment |
|---|---|
| Service economics | Separate service, device and customer-population assumptions with appropriate cost and retention schedules. |
| Operating support | Retain sales, administration, depreciation and network upkeep consistent with the service case. |
| Investment | Deduct software within capex once and schedule wireless-license and other investment separately. |
| Financing | Distinguish device receivable collection, asset-backed borrowing and ordinary operating funding. |
| Equity bridge | Use the valuation-date business perimeter, financing claims, available cash, noncontrolling claims and dilution. |
A conventional enterprise forecast begins with operating income after an explicit operating tax assumption and funds the physical, software and operating-balance investment needed by the network. Reported CFO requires interest and tax reconciliation before serving that basis. The terminal case should sustain the service proposition and acknowledge the remaining obligations associated with financed devices and acquisitions.
The Verizon company analysis explains the wider operating context. Use the company forecast tool and DCF calculator with explicit assumptions. Use the historical financials to define an explicit operating and reinvestment case, then supply valuation-date capital costs, claims and diluted shares. Check that each cash claim is counted once before deriving a per-share value.
Company analysis