Verizon says SD-WAN solutions are gaining customer traction, helping offset legacy declines

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Verizon says that more of its customer base is finding utility with its new SD-WAN solutions, a movement that's helping the service provider stem some of its legacy business revenue bleeding. 

After launching the service in early 2016, Verizon has continued to ramp up its SD-WAN customer base.

The service provider has over 90 active SD-WAN implementations and 16 full-scale deployments. It also has 30 participants taking part in a universal CPE program trial.

RELATED: Verizon says SD-WAN dawn does not mark the end of MPLS services

Matt Ellis, CFO of Verizon, told investors during the MoffettNathanson Media and Communications Summit that the emergence of SD-WAN and other services like Ethernet are helping the company overcome its legacy service revenue challenges.

Verizon CFO Image: Verizon
Matt Ellis

“We were one of the first to deploy SD-WAN and we’re seeing great take rates from customers,” Ellis said. “We’ve got those product offerings out there that are really allowing us to offset some of the secular decline.”

Ellis added that “we see the things we’re doing in terms of new products and services providing enough of an offset to the decline of legacy services, but we don’t see any significant downward trend.”

Enterprise revenue challenges

At the same time, the service provider continues to see revenue challenges in the overall business segment as customers remain cautious on spending, a trend that was evident in Verizon’s first quarter results.

Verizon reported that first quarter Enterprise Solutions revenues were $2.47 billion, down 4.3% year-over-year from $2.53 billion in the first quarter of 2016.

“When you get to the enterprise space, you have some of those secular declines we have seen in the last few years,” Ellis said.

Despite the declines, Verizon Enterprise Solutions and Verizon Business Markets entered into new agreements or continued work with a number of clients, including Block Institute, the State of Connecticut, Georgetown University, HRC ManorCare and Xplor.

Serving SMBs, local governments

Business Markets, which serves government and education customers, saw revenues rise to $890 million, up year-over-year from $870 million in the same period a year ago.

The service provider recently realigned its business market segment by separating large enterprises and medium-sized businesses, including state and local government and school districts under the Business Markets segment.

Ellis said that the new Business Markets segment allows Verizon to develop tailored product offerings that are relevant to the state and local government and education verticals.  

“This group is very much focused on the small to medium business space, which includes state and local government and education institutions,” Ellis said. “Now that you got a group focused on that category we’re developing product offerings where you bundle voice and data needs of those customers in a product that fits them.”

Ellis added that “we’re optimistic that this new group will help offset the secular declines in legacy copper-based voice and data services.”