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Comcast (CMCSA) Q2 Earnings Top, Internet Subscribers Up Y/Y

ComcastCMCSA reported second-quarter 2018 adjusted earnings of 65 cents per share that beat the Zacks Consensus Estimate by 4 cents. The figure rose 25% year over year.

Revenues inched up 2.1% year over year to $21.74 billion. However, the figure lagged the Zacks Consensus Estimate of $21.86 billion.

Cable Communication Details

Revenues climbed 3.4% from the year-ago quarter to $13.71 billion.

High-speed Internet revenues increased 9.3% year over year to $4.26 billion, primarily driven by an increase in the number of residential high-speed Internet customers and rate adjustments.

Comcast Corporation Price, Consensus and EPS Surprise

Comcast Corporation Price, Consensus and EPS Surprise | Comcast Corporation Quote

Business Services revenues were up 11.1% to $1.76 billion, primarily due to increasing number of customers adopting small and medium-sized product offerings.

Advertising and other revenues advanced 6.4% and 6.9% to $666 million and $399 million, respectively, on a year-over-year basis. Advertising revenues were driven by higher political advertising revenues.

Growth in other revenues came on the back of strong adoption of Xfinity Home and synergies from X1 licensing agreements. At the end of the second quarter, 68.7% of Comcast's residential customers received at least two Xfinity products.

Voice revenues were $994 million, down 3.9% year over year, primarily due to declining number of residential voice customers. Video revenues also dipped 1.9% to $5.63 billion.

Total Customer Relationships increased by 182K. Total high-speed Internet customer net additions were 260K. Total security and automation customer net additions were 60K at the end of the quarter. Total video customer net losses were 140K, while total voice customer net losses were 16K.

NBCUniversal Details

Revenues remained almost flat year over year at $8.31 billion.

Cable Networks' revenues increased 8.2% from the year-ago quarter to $2.92 billion, primarily due to higher distribution (up 8.7%), content licensing & other revenues (surged 22.5%), and advertising revenues (up 3.6%).

Broadcast Television revenues climbed 6.7% from the year-ago quarter to almost $2.39 billion, primarily owing to higher advertising (up 9.2%), and distribution & other revenues (up 16.8%).

Filmed Entertainment revenues plunged 20.2% from the year-ago quarter to $1.71 billion. Theatrical revenues decreased 35.5%, due to weak performance from Jurassic World: Fallen Kingdom, as compared with year-ago quarter's strong release slate. Home Entertainment revenues decreased 32.8%, while content licensing revenues fell 5.3%.

Theme Parks revenues were $1.28 billion, increasing 3.6% year over year, primarily due to higher per capita spending, driven by the successful opening of several new attractions including Fast & Furious - Supercharged in Orlando.

Operating Details

Consolidated adjusted EBITDA increased 4.8% from the year-ago quarter to $7.4 billion. Moreover, adjusted EBITDA margin expanded 90 basis points (bps) to 33.2%.

Consolidated programming & production costs declined 0.5% from the year-ago quarter to $6.30 billion. As percentage of revenues, programming & production costs declined 80 bps on a year-over-year basis.

Cable Communications adjusted EBITDA increased 6.5% from the year-ago quarter to $5.64 billion. Adjusted EBITDA margin expanded 120 bps to 41.1%. Notably, adjusted EBITDA per Customer Relationship was up 3.7%.

Programming expenses were up 3% on a year-ago basis. Non-programming expenses remained flat, primarily due to increases in technical and product support expenses (up 3.1%), which was offset by lower advertising, marketing and promotion costs (down 0.5%) and other expenses (down 2.1%) and customer service expenses (down 0.8%).

NBCUniversal adjusted EBITDA increased 4.2% from the year-ago quarter to $2.16 billion. Cable Networks, Broadcast Television and Theme Parks adjusted EBITDA grew 12.5%, 0.2% and 3.4%, respectively. However, filmed Entertainment adjusted EBITDA plunged 52.1% year over year.

Consolidated operating income decreased 4.1% year over year to $2.40 billion. However, operating margin contracted 70 bps from the year-ago quarter to 11.1%.

Cash Flow & Liquidity

In second-quarter 2018, Comcast generated $7.06 billion of cash from operations compared with $5.50 billion in the previous quarter. Free cash flow was $4.30 billion compared with $3.10 billion in the previous quarter.

As of Jun 30, 2018, cash and cash equivalents were $5.73 billion, down from $6.03 billion as of Mar 31, 2018. Consolidated net debt was $59.4 billion, while consolidated net debt-adjusted EBITDA ratio was 2.1.

During second-quarter 2018, Comcast paid dividends totaling $878 million and repurchased shares worth $2.1 billion.

The company expects to repurchase at least $5 billion of its Class A common stock in 2018.

Zacks Rank & Key Picks

Currently, Comcast carries a Zacks Rank #3 (Hold).

AMC Networks AMCX , Activision ATVI and Weight Watchers International WTW are stocks worth considering in the broader consumer discretionary sector. All three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

Both AMC and Activision are set to report on Aug 2, while Weight Watchers is scheduled to report on Aug 6.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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