By midday Friday, the broad market was little changed, with the S&P 500 modestly higher and the Nasdaq slightly lower. VZ gave investors a more concrete capital-allocation question: can it raise its 2026 buyback ceiling to $4.5 billion while still bringing down $128.7 billion of net unsecured debt?
Verizon had already repurchased $3.5 billion of stock through June, including $1.0 billion in the second quarter. Dividends and buybacks combined totaled $9.4 billion in the first half. The larger repurchase plan turns a better operating quarter into a clear wager that the company can fund shareholder returns, network spending, and debt reduction at the same time.
The cash flow supports that wager. The balance sheet sets its limits.
Cash flow gave Verizon room
Second-quarter free cash flow reached $6.4 billion, up 24.4% from a year earlier. First-half free cash flow was $10.2 billion, a 16.0% gain from the same period in 2025. Management now expects full-year free cash flow to grow 9% to 10%, raised from its earlier expectation of roughly 7% growth.
That upgrade matters because it came while Verizon continued to spend on its network. Cash flow from operations rose 9.9% to $18.4 billion through June, while capital spending totaled $8.2 billion. The company produced more cash after investment rather than simply getting there by pulling back on spending.
Operating profit also strengthened. Adjusted EBITDA, earnings before interest, taxes, depreciation, and amortization, rose 7.2% to a record $13.7 billion. Its margin reached a record 40.1%.
The revenue picture was less tidy. Total operating revenue declined 0.7% in the quarter, while mobility and broadband service revenue rose 2.8%. The service figure is the more useful measure of Verizon’s core customer business. Still, the split shows the turnaround is not broad-based across every revenue line.
That is a better quarter, not an all-clear.
Subscribers are the operating proof
Verizon added 184,000 postpaid phone customers and 348,000 broadband connections in the second quarter. Fiber accounted for 155,000 of those broadband additions. Total mobility and broadband connection adds exceeded 550,000, more than 230,000 above the year-earlier result.
Those additions help explain why service revenue and margins improved despite the decline in total operating revenue. New customers alone do not guarantee durable cash flow. The key is whether they keep producing enough service revenue to cover network investment and support the company’s wider capital demands.
That makes the buyback a useful test of management’s confidence. A repurchase reduces the share count, but it also uses cash that could otherwise strengthen the balance sheet. Verizon is choosing to do more of both, at least for now.
AT&T faces a similar fiber-and-buyback test, though the companies’ customer mix and balance sheets differ. In both cases, subscriber gains need to become lasting cash flow after network spending, not just a strong quarterly headline.
Debt decides whether the payout looks disciplined
Net unsecured debt fell from $130.1 billion at the end of the first quarter to $128.7 billion at the end of the second. Net debt also declined to 2.5 times adjusted operating earnings from 2.6 times. That is progress, but the debt burden remains large beside the new repurchase ceiling.
The strongest case for Verizon is straightforward. Higher service revenue, record profitability, and rising free cash flow could allow it to keep returning capital while leverage declines. If that pattern holds, the buyback will look like a measured use of improving cash generation.
The countercase is just as concrete. Verizon could meet its new cash-flow growth range while debt reduction slows or stops, leaving investors to question whether buybacks are getting priority over balance-sheet repair. A lower leverage ratio matters more than a completed repurchase authorization.
The next quarterly report is the check. Investors should watch whether free cash flow stays consistent with management’s new 9% to 10% growth range and whether net debt relative to operating earnings moves below the current level. Subscriber additions have improved the story. Sustained cash generation and falling leverage must finish it.
