Comcast announced second-quarter revenue and profitability that exceeded analyst expectations, but for the first time ever, the cable operator failed to add internet users in a quarter.
According to FactSet, Comcast’s high-speed internet users in the quarter were unchanged and underperformed the 84,000 average analyst projection. Theme parks and studios operated by NBCUniversal contributed to the revenue increase of 5.1 percent to $30.02 billion over the prior year. Adjusted EBITDA, also known as earnings before interest, taxes, depreciation, and amortization, increased 10.1% to $9.8 billion.
Comcast’s stock fell by approximately 3% in premarket trade.
The market for high-speed broadband, Comcast’s most lucrative commodity, is becoming more competitive. The home broadband market has been dominated by the cable industry for more than a decade, but cellular providers like T-Mobile are now competing by providing 5G home internet services. In the second quarter, T-Mobile attracted 560,000 broadband subscribers, far more than the 338,000 it added in the first.
These are the crucial figures:
- According to Refinitiv, the company’s EPS was $1.01 compared to estimates of 92 cents.
- Revenue: $30.02 billion, compared to Refinitiv’s estimate of $29.68 billion
- According to FactSet’s survey of analysts, the average estimate for high-speed internet users is 0 vs. 84,000 net additions.
In a statement, Comcast Chief Executive Officer Brian Roberts described the decline as temporary because macroeconomic factors including increasing inflation are limiting the company’s ability to add new connections. Due to higher rates and more residential users than a year ago, broadband revenue jumped 6.8% year over year to $6.1 billion in the quarter.
“We achieved our highest adjusted EBITDA margin on record even amid a unique and evolving macroeconomic environment that is temporarily putting pressure on the volume of our new customer connects,” Roberts said.
More than 3 million new broadband subscribers have joined Comcast since March 2020.
The Fall of Video Customers
In the first six months of 2022, Comcast lost 1 million television subscribers after losing 521,000 consumers in the previous quarter. Faster than ever, consumers are cancelling their traditional pay-TV subscriptions in favour of streaming services like Netflix, Disney+, HBO Max, and NBCUniversal’s Peacock.
While wireless subscribers increased by 317,000 in the quarter, voice consumers decreased by 286,000. To $722 million, wireless revenue increased by nearly 30% year over year. The value of business services increased 10% to $2.4 billion.
To $9.4 billion, NBCUniversal’s revenue increased 18.7% during the quarter. Adjusted EBITDA at NBCUniversal increased 19.5 percent to $1.9 billion.
The global box office success of “Jurassic World: Dominion,” which has over $900 million, helped fuel a more than 33 percent increase in studio revenue to $3 billion.
The Universal theme park industry kept bouncing back from the pandemic slump of the previous year. The amount of revenue increased by nearly 65% to $1.8 billion. The parks segment experienced its highest-ever second-quarter adjusted EBITDA of $632 million.
13 million Peacock paying subscribers remain unchanged, following a 4 million increase in the previous quarter. “Jurassic World: Dominion,” “Minions: The Rise of Gru,” and Jordan Peele’s “Nope,” three movies that were released in theatres in the third quarter, are expected to increase Peacock subscriptions when they stream on the service after their box office windows close. Later this year, “Sunday Night Football” and The World Cup, which begins on November 21, should also help increase Peacock’s subscriber numbers, according to Comcast.
Here is how each Comcast segment fared for the quarter in comparison to the same period last year:
- A $1.8 billion increase in revenue was reported by theme parks, up 64.8%.
- Cable Communications brought in $16.6 billion in revenue this year, up 3.7% from last year.
- The company’s revenue decreased by 13.8% to $4.5 billion.
- Studios brought in over $3 billion, which is a 33.3% increase.
- The media made $5.3 billion, up 3.6%.