Charter Communications CHTR delivered third-quarter 2024 earnings of $8.82 per share, which beat the Zacks Consensus Estimate by 3.2%. The reported figure increased 6.9% year over year.
Revenues of $13.79 billion increased 1.6% on a year-over-year basis, driven by growth in residential mobile service and residential Internet revenues. The top line beat the consensus mark by 0.7%.
Charter Communications, Inc. Price, Consensus and EPS Surprise
Charter Communications, Inc. price-consensus-eps-surprise-chart | Charter Communications, Inc. Quote
Segmental Details
Residential revenues totaled $10.76 billion in the third quarter, which increased 0.3% year over year, driven by $63 million of residential customer credits in the prior-year period related to the temporary loss of Disney programming in September 2023.
Third-quarter 2024 monthly residential revenue per residential customer totaled $121.47 and increased 1.8% compared to the prior-year period. The growth was driven by promotional rate step-ups, rate adjustments, the growth of Spectrum Mobile and $63 million of residential customer credits in the prior-year period related to the temporary loss of Disney programming in September 2023, partly offset by a lower mix of video customer relationships and a higher mix of lower-priced video packages within Charter's video customer base.
Internet revenues grew by 1.7% year over year to $5.9 billion, driven by promotional rate step-ups and rate adjustments, partly offset by lower bundled revenue allocation and a decline in Internet customers during the last year.
Video revenues totaled $3.7 billion in the third quarter, reflecting a decrease of 6.7% compared to the prior-year period, primarily due to a decline in video customers during the last year and a higher mix of lower-priced video packages within Charter's video customer base, partly offset by promotional rate step-ups, video rate adjustments that pass through programmer rate increases and the aforementioned $63 million of residential customer credits recorded in September 2023.
Voice revenues decreased 5.0% year over year to $360 million due to a decline in wireline voice customers over the last 12 months, partly offset by voice rate adjustments.
Third-quarter mobile service revenues totaled $801 million, up 37.6% year over year, driven by mobile line growth and higher bundled revenue allocation.
Commercial revenues increased 2% year-over-year to $1.8 billion, driven by enterprise and SMB revenue growth of 3.7% and 1% year over year, respectively. The year-over-year increase in third-quarter 2024 SMB revenue was driven by higher monthly SMB revenue per SMB customer, primarily due to rate adjustments.
Enterprise revenues, excluding wholesale, rose 5.9% year over year, mostly reflecting PSU growth. Third-quarter advertising sales revenues of $452 million increased 18.1% compared to the year-ago quarter, primarily driven by higher political revenues.
Excluding political revenues in both periods, advertising sales revenues decreased 6.3% year over year due to a more challenged advertising market, partly offset by higher advanced advertising revenues.
Other revenues totaled $756 million in the third quarter, reflecting a rise of 11.6% compared to the third quarter of 2023, primarily driven by higher mobile device sales.
Subscriber Statistics
Third-quarter total residential and SMB Internet customers decreased 1.7% year over year to 31.68 million.
In September, Spectrum launched a new brand platform, Life Unlimited, which emphasizes the power of Spectrum’s advanced network and cutting-edge connectivity products and services to create opportunities and remove barriers to help customers live their best lives. As part of its new brand platform, Spectrum launched a new and simplified pricing strategy that better utilizes its seamless connectivity and entertainment products to offer lower promotional and persistent bundled pricing to drive growth. Additionally, Spectrum announced new customer commitments focused on reliable connectivity, transparency, exceptional service and a focus on always improving.
Third-quarter total Internet customers decreased 110,000 due to the end of the FCC's Affordable Connectivity Program in the second quarter compared with an increase of 63,000 during the third quarter of 2023. Spectrum Internet delivers the fastest Internet speeds in the nation. Spectrum is evolving its connectivity network to offer symmetrical and multi-gigabit Internet speeds across its entire footprint and has launched symmetrical Internet service in eight markets.
Unlike competitors, Spectrum upgrades its network for all households and can do so at a much lower cost. Spectrum Advanced WiFi, a managed WiFi service that provides customers with an optimized home network while providing greater control of connected devices with enhanced security and privacy, is available to all Spectrum Internet customers.
Total video customers decreased 294,000 in the third quarter of 2024 compared to a decline of 327,000 in the third quarter of 2023. As of Sept. 30, 2024, Charter had 13 million total video customers. Spectrum TV Select video customers will soon receive up to $80 per month of programmers' streaming application retail value at no extra cost, including the ad-supported versions of Max, Disney+, Peacock, Paramount+, ESPN+, AMC+, Discovery+, BET+, ViX, and Tennis Channel Plus.
This programmer streaming application inclusion is part of Charter's broader video evolution strategy to provide flexible packages with enhanced value, whether through full packages with seamless entertainment, smaller video packages, or a suite of a-la-carte programmer application options for broadband-only customers.
During the third quarter of 2024, total wireline voice customers decreased 288,000 compared to a decline of 286,000 in the third quarter of 2023. As of Sept. 30, 2024, Charter had 7.2 million total wireline voice customers.
During the third quarter of 2024, Charter added 545,000 total mobile lines compared to growth of 594,000 during the third quarter of 2023. Spectrum MobileTM is available to all new and existing Spectrum Internet customers and offers the fastest overall speeds, with plans that include 5G access, do not require contracts and include taxes and fees in the price.
Spectrum Mobile is central to Charter's converged network strategy to provide consumers a differentiated connectivity experience with highly competitive, simple data plans and pricing. Charter continues to work with federal, state and local governments to bring Spectrum Internet to unserved and underserved communities.
During the third quarter of 2024, Charter activated 114,000 subsidized rural passings. Within Charter's subsidized rural footprint, total customer relationships increased by 41,000 in the third quarter of 2024.
Operating Details
Total operating costs and expenses increased 0.2% year over year to $8.14 billion. Third-quarter programming costs decreased $259 million, or 10.0% as compared to the third quarter of 2023, reflecting fewer video customers and a higher mix of lower cost packages within Charter's video customer base, partly offset by contractual programming rate increases and renewals and a $61 million benefit in the prior year period related to the temporary loss of Disney programming in September 2023.
Other costs of revenues increased $219 million, or 15.8% year over year, primarily driven by higher mobile device sales and mobile service direct costs.
Costs to service customers decreased $12 million, or 0.5% year over year, primarily due to lower labor costs.
Sales and marketing expenses increased $40 million, or 4.4% year over year, given Spectrum's continued focus on driving growth and the launch of its new brand platform, Life Unlimited.
Other expenses increased $25 million, or 2.3% as compared to the third quarter of 2023.
Balance Sheet & Cash Flow
As of Sept. 30, 2024, total principal amount of debt was $95.1 billion and Charter's credit facilities provided approximately $5.5 billion of additional liquidity in excess of Charter's $721 million cash position.
As of June 30, 2024, total principal amount of debt was $96.5 billion and Charter's credit facilities provided approximately $4.1 billion of additional liquidity in excess of CHTR's $602 million cash position.
During the third quarter of 2024, net cash flows from operating activities totaled $3.9 billion, in line with the prior-year quarter, with higher Adjusted EBITDA, offset by higher cash taxes.
Free cash flow in the third quarter of 2024 totaled $1.6 billion, representing an increase of $522 million compared to the third quarter of 2023. The year-over-year increase in free cash flow was primarily driven by lower capital expenditures and a more favorable change in accrued expenses related to capital expenditures.
In the reported quarter, Charter purchased 844 thousand shares of Charter Class A common stock and Charter Holdings common units for $262 million.
Zacks Rank & Stocks to Consider
Charter currently carries a Zacks Rank #3 (Hold).
Funko FNKO, Flutter Entertainment PLC FLUT and BlackLine BL are some better-ranked stocks that investors can consider in the Zacks Consumer Discretionary sector. FNKO, FLUT and BL sport a Zacks Rank #1 (Strong Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of Funko’s have gained 53.2% year to date. FNKO is set to report third-quarter 2024 results on Nov. 7.
Shares of Flutter Entertainment have jumped 21.5% year to date. FLUT is slated to report third-quarter 2024 results on Nov. 12.
Shares of BlackLine have plunged 11.3% year to date. BL is set to report third-quarter 2024 results on Nov. 7.
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