How VZ (Verizon Communications) Makes Money in 2026: A Deep-Dive With Income Statement

Welcome to the Value Sense Blog, your resource for insights on the stock market! At Value Sense, we focus on intrinsic value tools and offer stock ideas with undervalued companies. Dive into our research products and learn more about our unique approach at valuesense.io

Explore diverse stock ideas covering technology, healthcare, and commodities sectors. Our insights are crafted to help investors spot opportunities in undervalued growth stocks, enhancing potential returns. Visit us to see evaluations and in-depth market research.

Understanding how a telecommunications giant like Verizon makes money is essential for investors and anyone interested in the business of telecom. In this post, we break down Verizon's quarterly income statement (Q4 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 a leading telecommunications company providing wireless, wireline, and broadband services to consumers and businesses across the United States. Revenue comes primarily from wireless services, broadband internet, and enterprise solutions, with a focus on 5G networks and fiber-optic infrastructure. The company reports segments including Consumer and Business, though detailed Q4 2025 breakdowns aggregate into an "Other" category encompassing core operations.

Revenue Breakdown

• Total Revenue (Q4 2025): $36.4B (+7.6% YoY)
  • Other (Core Operations): $36.4B (100% of total)
  • Reported segments like Consumer Revenue, Business Revenue, Corporate and Other Revenue, and Eliminations show $0B in this data snapshot, indicating aggregation into primary telecom flows.
  • Growth is powered by strong wireless subscriber additions, 5G expansion, and broadband demand.

Gross Profit and Margins

• Gross Profit: $29.3B (80.5% gross margin)
  • Cost of Revenue: $7,098.0M (-60.5% YoY)
  • Verizon maintains robust margins due to its scalable network infrastructure, high fixed-cost leverage, and shift toward high-margin wireless services.
• Most costs come from network operations, equipment subsidies, and interconnection fees.

Operating Income and Expenses

• Operating Income: $5,004.0M (-38.3% YoY, 13.8% margin)
• Operating Expenses: $24.3B (+213.2% YoY)
  • R&D: Not specified — Investments focus on 5G and network upgrades.
  • SG&A: $10.4B (+33.9% YoY, 28.5% of revenue) — Covers sales, marketing, administrative functions, and customer support in competitive telecom markets.
  • Verizon continues to prioritize innovation while expanding operations amid rising competitive pressures.

Net Income

• Pre-Tax Income: $3,063.0M (-53.1% YoY, 8.4% margin)
• Income Tax: $615.0M (20.1% effective tax rate)
• Net Income: $2,342.0M (-52.7% YoY, 6.4% net margin)
• Verizon converts a moderate portion of sales into profit due to network scalability, pricing power in wireless, and efficiency in legacy operations.

Most investors waste time on the wrong metrics. We've spent 10,000+ hours perfecting our value investing engine to find what actually matters.

Want to see what we'll uncover next - before everyone else does?

Find Hidden Gems First!

What Drives Verizon's Money Machine?

• Wireless Services: 100%+ of revenue / Core driver from mobile plans, 5G data, and enterprise connectivity.
• Subscriber Growth and ARPU: Key metric with total revenue up 7.6% YoY, supported by postpaid phone net adds and fixed wireless access expansion.
• Network Investments: Heavy capex in 5G and fiber to support long-term bandwidth demand.
• Broadband Expansion: Growth areas like Fios and 5G Home internet, though integration costs pressure short-term profitability.

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 SG&A) taking the largest chunk.
• Even after significant investments, 6.4% of revenue drops to the bottom line.

Key Takeaways

• Verizon's money comes overwhelmingly from wireless and broadband services
• High gross and net margins illustrate the power of Verizon's asset-light network model
• Heavy investment in 5G infrastructure, balanced by efficiency in operating costs
• Ongoing growth is driven by subscriber additions and broadband penetration

Explore More Investment Opportunities

For investors seeking undervalued companies with high fundamental quality, our analytics team provides curated stock lists:

📌 50 Undervalued Stocks (Best overall value plays for 2026)

📌 50 Undervalued Dividend Stocks (For income-focused investors)

📌 50 Undervalued Growth Stocks (High-growth potential with strong fundamentals)

🔍 Check out these stocks on the Value Sense platform for free!

FAQ About Verizon's Income Statement

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

Verizon generates over 100% of its revenue from core telecom operations (Other category). This encompasses wireless services and broadband.

2. How profitable is Verizon in Q4 2025?

Verizon reported net income of $2,342.0M in Q4 2025, with a net margin of approximately 6.4%, reflecting moderate profitability driven by high gross margins offset by elevated operating expenses.

3. What are the largest expense categories for Verizon?

The biggest expenses on Verizon's income statement are operating expenses, particularly Sales, General & Administrative (SG&A) and overall operations. SG&A investment reached $10.4B in Q4 2025, as Verizon prioritizes customer acquisition and network support.

4. Why does Corporate and Other Revenue operate at a loss?

Corporate and Other, despite generating $0.0B in revenue, contributes to broader pressures with operating losses tied to net interest expenses of $1,759.0M. This is because Verizon aggressively invests in debt management and corporate overhead, believing these will drive long-term stability—even if unprofitable today.

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

Verizon's effective tax rate in Q4 2025 was 20.1%, consistent with previous years. This moderate rate is primarily due to standard corporate tax structures and deductions from operations.