Verizon’s Internet of Things
In this part of the series, we will look at the performance of Verizon’s (VZ) IoT (Internet of Things) segment. It’s a small component for Verizon, but it is a growing revenue stream. The growth trend in the component’s revenue continued in 4Q15. On a sequential basis, Verizon’s IoT and Telematics revenue rose ~14.3% to reach ~$200 million during the quarter.
As per the company, overall in 2015, this component’s revenue has grown by ~18% YoY to ~$690 million. Earlier in 2014, the YoY growth figure here was ~45%. During the 4Q15 earnings conference call on January 21, 2016, Fran Shammo, the telecom company’s chief financial officer and executive vice president, highlighted some of Verizon’s recent efforts in the IoT domain.
He said, “We are focused on the telematics and transportation vertical and launched our direct-to-consumer product in the third quarter. We also announced our connected city strategy beginning with Savannah and introduced a suite of developer tools, ThingSpace, to accelerate innovative applications to come to market.”
Medium-term growth outlook in mobile IoT
The top US wireless carriers including Verizon, AT&T (T), T-Mobile (TMUS), and Sprint (S) are expected to benefit from the anticipated growth of IoT during the medium term. As per Cisco (CSCO), machine-to-machine modules that are mobile-connected are expected to increase at an average annual rate of ~65.8% in the 2014-2019 period in the US.
Instead of direct exposure to Verizon’s stock, you can get diversified exposure to the telecom company by investing in the SPDR Dow Jones Industrial Average ETF (DIA). The ETF held ~1.8% in the telecom company at the end of December 2015.