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DISH Network (DISH) Q2 Earnings Beat, Sling TV Subscribers Up

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DISH Network (DISH - Free Report) reported second-quarter 2018 earnings of 83 cents per share that comfortably surpassed the Zacks Consensus Estimate of 69 cents.

The company reported earnings of 9 cents per share in the year-ago quarter including litigation charges of $295.7 million.

Revenues slumped 5% year over year to $3.46 billion, beating the Zacks Consensus Estimate of $3.43 billion.

Shares jumped 5.7% in pre-market trading. DISH has lost 37.5% on a year-to-date basis compared with the industry’s decline of 14.8%.



Segment Details

Subscriber-related revenues (98.8% of revenues) declined 5.4% from the year-ago quarter to $3.42 billion.

Pay-TV video and related revenues fell 4.6% to $3.35 billion. Broadband revenues plunged 33.5% year over year to $67.4 million.

Equipment sales and other revenues surged 39.8% to $41.1 million.

The United States contributed 99.7% of revenues, which declined 5% year over year to $3.45 billion. Canada and Mexico contributed the rest of the revenues, which plunged 12.3% from the year-ago quarter to $10 million.

Pay-TV Subscriber Loss Continues

DISH exited the quarter with 10.653 million DISH TV subscribers and 2.344 million Sling TV subscribers. Total Pay-TV subscribers were 12.997 million, down from 13.148 million in the previous quarter and 13.332 million a year ago.

Net Pay-TV subscribers declined approximately 151K. The number was much higher than 94K subscribers lost in the previous quarter. The company lost 196K subscribers in the year-ago quarter.

Moreover, the company lost 192K net DISH TV subscribers in the quarter. The number was higher than 185K subscribers lost in the previous quarter.

Sling TV subscribers increased 41K. However, the number is much lower than 91K added in the previous quarter. The company attributed the slowdown in subscriber addition to intensifying competition from the likes of Netflix (NFLX - Free Report) , Hulu, HBO, Amazon (AMZN - Free Report) and other digital media providers.

Notably, in June 2018, DISH launched additional Sling TV services, which include offering consumers a la carte channel subscriptions, access to pay-per-view events and movies, and access to free content.

Pay-TV average revenue per user (ARPU) was $85.54, better than $84.50 reported in the previous quarter.

DISH TV's average monthly subscriber churn rate was 1.46%, better than 1.47% reported in the previous quarter and 1.83% in the year-ago quarter.

Operating Details

In the second quarter, subscriber-related expenses declined 3.7% year over year to $2.16 billion. However, as percentage of revenues, subscriber-related expenses increased 80 basis points (bps) on a year-over-year basis to 62.4%.

Total subscriber acquisition costs (SACs) plunged 33.5% from the year-ago quarter to $183.2 million. As percentage of revenues, SACs declined 230 bps to 5.3%.

Operating income surged 127.2% year over year to $572.7 million. Operating margin expanded 960 bps to 16.5% in the reported quarter.

Balance Sheet & Cash Flow

As of Mar 31, 2018, cash & cash equivalents (including marketable investment securities) were $2.35 billion compared with $2.35 billion as of Mar 31, 2018.

Cash flow from operating activities was $751.6 million, while free cash flow was $387 million.

Zacks Rank & Stocks to Consider

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

Comcast (CMCSA - Free Report) , with a Zacks Rank #2 (Buy), is a stock worth considering in the same sector. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term earnings growth rate for Comcast is currently pegged at 11.2%.

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