Common-Size Income Statement
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Verizon Communications Inc., common-size consolidated income statement
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
The common-size income statement reveals several noteworthy trends in the company’s financial performance between 2021 and 2025. Operating revenues are consistently represented as 100%, allowing for a clear view of the proportional contribution of each income statement item. A significant shift is observed in the cost structure and profitability over the analyzed period.
- Revenue Composition
- Service revenues and other consistently represent the majority of operating revenues, fluctuating between 80.11% and 82.78% over the five-year period. Wireless equipment revenues contribute a smaller, but notable, portion, ranging from 17.22% to 19.89%. A slight increase in the proportion of wireless equipment revenues is observed in 2025.
- Cost of Goods Sold
- The combined cost of services and wireless equipment as a percentage of operating revenues decreased from 43.21% in 2022 to 40.13% in 2024, before increasing slightly to 41.08% in 2025. This suggests improved cost management, particularly between 2022 and 2024. The cost of services alone also demonstrates a decreasing trend as a percentage of operating revenues, moving from -23.38% in 2021 to -20.11% in 2025.
- Profitability
- Gross profit as a percentage of operating revenues increased from 56.79% in 2022 to 59.87% in 2024, mirroring the cost of goods sold trend, before decreasing to 58.92% in 2025. Operating income experienced more volatility, declining from 24.29% in 2021 to a low of 17.08% in 2023, then recovering to 21.28% in 2024 and 21.17% in 2025. Net income attributable to Verizon followed a similar pattern, decreasing to 8.67% in 2023 before increasing to 12.99% in 2024 and 12.43% in 2025.
- Operating Expenses
- Selling, general and administrative expense increased consistently as a percentage of operating revenues from 21.45% in 2021 to 25.31% in 2024, before decreasing slightly to 24.47% in 2025. Depreciation and amortization expense also showed a steady increase, from 12.13% in 2021 to 13.28% in 2025. A significant, one-time Verizon Business Group goodwill impairment impacted operating income in 2023, representing -4.36% of operating revenues.
- Non-Operating Items
- Interest expense increased as a percentage of operating revenues from -2.61% in 2021 to -4.93% in 2024, before decreasing slightly to -4.84% in 2025. Net debt extinguishment gains (losses) fluctuated, with a loss in 2021 and 2022, a gain in 2023 and 2024, and a smaller gain in 2025. Other income (expense), net, also exhibited variability, with a notable increase in 2022 before returning to lower levels in subsequent years.
Overall, the period demonstrates a challenging 2023, likely influenced by the goodwill impairment, followed by a recovery in profitability in 2024 and 2025. While revenue composition remained relatively stable, the company experienced increases in operating expenses, particularly selling, general and administrative expenses, alongside rising interest expense. Cost of goods sold management appears to have improved between 2022 and 2024, contributing to increased gross profit margins.