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

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Understanding how a telecommunications giant like VZ Income Statement Overview makes money is essential for investors and anyone interested in the business of connectivity and digital services. In this post, we break down VZ'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 VZ Overview

VZ Income Statement Overview operates as a leading telecommunications provider, offering wireless, broadband, and enterprise connectivity solutions to consumers and businesses across the United States. Revenue comes primarily from wireless service subscriptions, device sales, and business connectivity solutions. The company is structured into Consumer, Business, and Corporate segments, each contributing distinct revenue streams and growth profiles.

Revenue Breakdown

• Total Revenue (Q3 2025): $33.8B (+1.5% YoY)
  • Consumer Revenue: $26.1B (77.2% of total)
  • Business Revenue: $7.14B (21.1% of total)
  • Corporate and Other Revenue: $659M (1.9% of total)
  • Eliminations from Revenue: -$85M (-0.3% of total)
• Growth is powered by steady expansion in wireless subscriptions and pricing optimization in consumer plans, partially offset by softness in business segment demand.

Gross Profit and Margins

• Gross Profit: $15.9B (46.9% gross margin)
  • Cost of Revenue: $18.0B (+35.7% YoY)
  • VZ maintains robust margins due to its scalable network infrastructure and operational efficiencies in service delivery.
• Most costs come from network operations, device procurement, and service delivery expenses.

Operating Income and Expenses

• Operating Income: $8.11B (+36.8% YoY, 24.0% margin)
• Operating Expenses: $7.75B (-45.3% YoY)
  • R&D: Not separately disclosed for Q3 2025
  • SG&A: $7.75B (-20.1% YoY, 22.9% of revenue) — Includes sales, marketing, administrative, and customer support costs
  • VZ continues to control costs while investing in customer experience and digital transformation, driving higher operating leverage.

Net Income

• Pre-Tax Income: $6.53B (+51.7% YoY, 19.3% margin)
• Income Tax: $1.47B (22.5% effective tax rate)
• Net Income: $4.95B (+49.7% YoY, 14.6% net margin)
• VZ converts a significant portion of sales into profit due to its scale, efficient cost structure, and pricing power in core markets.

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What Drives VZ's Money Machine?

• Consumer Wireless Services: 77%+ of revenue, driven by monthly subscriptions, device upgrades, and premium plan adoption
• Subscriber Growth and ARPU: Continued growth in postpaid subscribers and higher average revenue per user (ARPU) support top-line expansion
• Network Investment: Ongoing capital allocation to 5G and fiber infrastructure, enhancing service quality and future revenue potential
• Emerging Business Solutions: Business segment explores IoT, security, and enterprise connectivity, though not yet a major profit driver

Visualizing VZ'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 SG&A) taking the largest chunk.
• Even after significant network and customer support costs, 14.6% of revenue drops to the bottom line.

Key Takeaways

• VZ's money comes overwhelmingly from consumer wireless services and connectivity subscriptions
• High gross and net margins illustrate the power of VZ's scalable, infrastructure-driven business model
• Heavy investment in network infrastructure, balanced by efficiency in operating costs
• Ongoing growth is driven by subscriber additions, ARPU expansion, and digital service innovation

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FAQ About VZ's Income Statement

1. What is the main source of VZ's revenue in 2025?

VZ generates over 77% of its revenue from consumer wireless services, including monthly subscriptions and device sales. Business connectivity and corporate services contribute the remainder.

2. How profitable is VZ in Q3 2025?

VZ reported net income of $4.95B in Q3 2025, with a net margin of approximately 14.6%, reflecting strong profitability driven by scale, efficient operations, and pricing power.

3. What are the largest expense categories for VZ?

The biggest expenses on VZ's income statement are operating expenses, particularly Sales, General & Administrative (SG&A) costs. SG&A investment reached $7.75B in Q3 2025, as VZ prioritizes customer service, digital transformation, and operational support.

4. Why does the Business segment operate at a loss?

Business Revenue, despite generating $7.14B in revenue, faces margin pressure and posted lower profitability in Q3 2025. This is because VZ aggressively invests in enterprise solutions and new technologies, believing these will drive long-term growth—even if the division is less profitable today.

5. How does VZ's effective tax rate compare to previous years?

VZ's effective tax rate in Q3 2025 was 22.5%, consistent with previous years. This moderate rate is primarily due to the company's U.S.-centric operations and standard corporate tax planning.