Why Verizon Is Optimistic about Its Internet of Things Segment

Key Updates from Verizon at the Morgan Stanley TMT Conference PART 12 OF 15

By Andrew Smith  | Mar 10, 2017 2:44 pm EST

Verizon’s Internet of Things

The IoT (Internet of Things) is a small segment for Verizon (VZ). However, it’s a growing revenue stream. IoT remains an area of potential growth for Verizon, largely due to telematics. Currently, Verizon is by far the largest telematics company in the United States.

During the Morgan Stanley Technology, Media & Telecom Conference held on February 28, 2017, Matt Ellis, Verizon’s chief financial officer, spoke about the company’s telematics business. Ellis said that as the US wireless Smartphone market reaches the point of saturation, Verizon expects its Wireless Video and IoT businesses to drive data usage, revenue, and earnings.

Verizon is optimistic about digital media

As we can see in the chart above, although Verizon’s IoT and Telematics segment is growing, it’s still small in terms of revenue. In 4Q16, the IoT segment’s revenue rose 21% YoY (year-over-year) organically and contributed $243 million to the company’s overall revenue. AOL generated revenue of $532 million, in line with expectations.

Verizon sees its Yahoo! acquisition as part of its campaign to strengthen its position in the digital media and advertising sector. The company is hoping to become a significant digital advertising player along with industry giants Facebook (FB) and Alphabet (GOOGL).