How VZ (Verizon Communications) Makes Money in 2025: A Deep-Dive With Income Statement

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Understanding how a telecommunications giant like Verizon (VZ) makes money is essential for investors and anyone interested in the business of connectivity. In this post, we break down Verizon’s quarterly income statement (Q3 2025) using a Sankey chart to visualize the financial flows — what comes in, where it goes, and what's left as profit.

Quick Verizon Overview

Verizon operates as one of the largest telecommunications providers in the United States, delivering wireless and wireline services to consumers and businesses. Revenue comes primarily from wireless service plans, equipment sales, and business solutions. The company’s business is divided into Consumer, Business, and Corporate & Other segments, with the Consumer segment dominating the revenue mix.

Revenue Breakdown

• Total Revenue (Q3 2025): $33.8B (+1.5% YoY)
  • Consumer Revenue: $26.1B (77.2% of total, +2.9% YoY)
  • Business Revenue: $7.14B (21.1% of total, -2.8% YoY)
  • Corporate and Other Revenue: $659M (1.9% of total, -3.8% YoY)
  • Eliminations from Revenue: -$85M (-0.3% of total, +28.8% YoY)
• Growth is powered by continued consumer wireless demand, partially offset by modest declines in business and corporate segments.

Gross Profit and Margins

• Gross Profit: $20.5B (60.5% gross margin)
  • Cost of Revenue: $13.3B (+0.8% YoY)
  • Verizon maintains robust gross margins due to its scalable network infrastructure and efficient cost management.
• Most costs come from network operations, equipment subsidies, and service delivery.

Operating Income and Expenses

• Operating Income: $8.1B (+36.8% YoY, 24.0% margin)
• Operating Expenses: $25.7B (+81.6% YoY)
  • SG&A: $7.75B (-20.1% YoY, 22.9% of revenue) — Reflects ongoing cost discipline in sales, general, and administrative functions.
  • Verizon continues to prioritize operational efficiency and cost control while investing in network upgrades and customer experience.
• R&D expenses are not separately broken out in the provided data, suggesting they are included within broader operating expense categories.

Net Income

• Pre-Tax Income: $6.53B (+51.7% YoY, 19.3% margin)
• Income Tax: $1.47B (22.5% effective tax rate)
• Net Income: $5.06B (+52.9% YoY, 14.9% net margin)
• Verizon converts a significant portion of sales into profit, driven by high gross margins and disciplined expense management.

What Drives Verizon’s Money Machine?

• Consumer Wireless: Over 77% of revenue comes from consumer services, highlighting Verizon’s core strength in mass-market connectivity.
• Network Scale: Large, reliable infrastructure allows Verizon to serve millions of customers efficiently, supporting high margins.
• Cost Control: Despite rising costs in some areas, Verizon has reduced SG&A expenses year-over-year, contributing to margin expansion.
• Business Services: While a smaller share of revenue, business solutions remain important, though this segment saw a slight decline in Q3 2025.
• Future Growth: Investments in 5G, fiber expansion, and digital services aim to sustain growth, though these initiatives may pressure margins in the short term.

Visualizing Verizon’s Financial Flows

The Sankey chart below visualizes how each dollar flows from gross revenue, through costs and expenses, down to net income. This helps investors spot where value is created, what areas weigh on profits, and how efficiently the company operates.

• Most revenue flows into gross profit, with operating expenses (especially network and SG&A costs) taking the largest chunk.
• Even after significant operating costs, nearly 15% of revenue drops to the bottom line as net income, reflecting Verizon’s ability to convert top-line growth into shareholder returns.

Key Takeaways

• Verizon’s money comes overwhelmingly from consumer wireless services, which account for over three-quarters of total revenue.
• High gross and net margins illustrate the power of Verizon’s scalable network and operational discipline.
• Heavy investment in network infrastructure is balanced by efficiency in operating costs, particularly SG&A.
• Ongoing growth is driven by consumer demand, partially offset by softer business segment performance.

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FAQ About Verizon’s Income Statement

1. What is the main source of Verizon’s revenue in 2025?

Verizon generates over 77% of its revenue from Consumer services, primarily wireless plans and related equipment sales. Business services contribute about 21%, with the remainder from corporate and other activities.

2. How profitable is Verizon in Q3 2025?

Verizon reported net income of $5.06B in Q3 2025, with a net margin of approximately 14.9%, reflecting strong profitability driven by high gross margins and effective cost management.

3. What are the largest expense categories for Verizon?

The biggest expenses on Verizon’s income statement are cost of revenue (network operations, equipment) and operating expenses, particularly Sales, General & Administrative (SG&A) costs. SG&A reached $7.75B in Q3 2025, as Verizon continues to prioritize operational efficiency.

4. Why does the Business segment operate at a lower growth rate?

The Business segment, despite generating $7.14B in revenue, posted a year-over-year decline of 2.8% in Q3 2025. This reflects competitive pressures and possibly slower enterprise spending, even as Verizon invests in next-generation solutions for corporate clients.

5. How does Verizon’s effective tax rate compare to previous years?

Verizon’s effective tax rate in Q3 2025 was 22.5%, consistent with typical rates for large U.S. corporations. This rate reflects the company’s domestic operations and available tax benefits.

Sankey Chart Image URL (to insert in article):
https://blog.valuesense.io/content/images/2025/11/VZincome1762085365.png

Source for all financial data: Verizon Q3 2025 Income Statement (as provided in JSON)

Visualization Note:
The Sankey diagram is a powerful tool for illustrating the flow of revenue through costs and down to net income, making complex financial statements accessible and engaging for investors[1][3]. By mapping each dollar’s journey, investors can quickly grasp where Verizon creates value and where expenses weigh on profits.