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Comcast (CMCSA) Q1 Earnings Beat Estimates, Revenues Miss

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Comcast (CMCSA - Free Report) reported first-quarter 2020 adjusted earnings of 71 cents per share, beating the Zacks Consensus Estimate by 2.9% but decreasing 6.6% year over year.

Consolidated revenues slid 0.9% year over year to $26.61 billion and also missed the Zacks Consensus Estimate of $26.84 billion.

Cable Communication Revenue Details

Revenues climbed 4.5% from the year-ago quarter to $14.92 billion. Total Customer Relationships increased 371K to 31.9 million.

High-speed Internet revenues grew 9.3% year over year to $5 billion, primarily driven by increased residential high-speed Internet customers and rate adjustments. Total high-speed Internet customer net additions were 477K.
 

Comcast Corporation Price, Consensus and EPS Surprise

Comcast Corporation Price, Consensus and EPS Surprise

Comcast Corporation price-consensus-eps-surprise-chart | Comcast Corporation Quote

 

Business Services revenues were up 8% to $2.04 billion, driven by customer base expansion and higher average rates.

Wireless revenues jumped 52.1% to $343 million, supported by an increase in the number of customer lines. Comcast added 216K wireless lines in the reported quarter.

Advertising revenues inched up 0.3% to $557 million, primarily on solid political advertising revenues, offset by lower advertiser spending due to COVID-19. Excluding political revenues, advertising revenues declined 4.6%.

Voice revenues were $899 million, down 9.2% year over year due to a declining number of residential voice customers.

Video revenues slipped 0.1% to $5.63 billion, reflecting a decline in the residential video customer count.

Total video customer net losses were 409K while total voice customer net losses were 89K.

Other revenues increased 7% from the year-ago quarter to $443 million owing to higher security and automation services revenues as well as from licensing Comcast’s X1 and technology platforms.

NBCUniversal Revenues Decrease/Weaken Y/Y

Revenues declined 7% year over year to $7.73 billion.

Cable Networks’ revenues dipped 0.3% from the year-ago quarter to $2.89 billion, primarily due to lower advertising revenues (down 2.2%) and distribution revenues (down 1.5%).  

The year-over-year fall in advertising revenues reflects audience rating declines and reduced advertiser spending due to postponement of sports events in the wake of the COVID-19 pandemic.

Content licensing & other revenues increased 13% year over year.

Broadcast Television revenues improved 8.8% from the year-ago quarter to $2.68 billion, courtesy of higher content licensing revenues (up 31.3%) and distribution & other revenues (up 6.9%). Advertising revenues were flat on a year-over-year basis.

Filmed Entertainment revenues decreased 22.5% from the year-ago quarter to $1.56 billion. Theatrical revenues fell 28.8% from the year-ago quarter. Content licensing revenues dropped 15.4% on a year-over-year basis.

Theme Parks revenues were $869 million, down 31.9% year over year, primarily due to the closures of Universal Studios Japan in late February and Universal Orlando Resort and Universal Studios Hollywood in mid-March as a result of COVID-19.

Sky Revenue Details

Sky’s pro-forma revenues deteriorated 5.8% year over year to $4.52 billion. At constant currency (cc), revenues softened 3.7%.

Direct-to-consumer revenues were down 4% (down 1.9% at cc) from the year-ago quarter to $3.68 billion. This decline primarily reflected a decrease in average revenue per customer relationship due to the impact of COVID-19, which resulted in lower sports subscription revenues.

Content revenues fell 12.3% (down 10.5% at cc) to $325 million. This downside reflects the deferral of wholesale revenues from sports programming due to suspension of sports events following the COVID-19 outbreak.

Advertising revenues deteriorated 13.5% (down 11.6% at cc) from the year-ago quarter to $513 million, primarily due to overall market weakness, which worsened due to COVID-19 as well as the impact of a change in legislation related to gambling advertisements in the U.K. and Italy.

Pro-forma Total Customer Relationships decreased 65K to 23.9 million in the reported quarter.

Operating Details

Consolidated programming & production costs slipped 3.1% from the year-ago quarter to $8.30 billion. As a percentage of revenues, programming & production costs shrank 70 basis points (bps) on a year-over-year basis to 31.2%.

Consolidated adjusted EBITDA fell 4.9% from the year-ago quarter to $8.13 billion.

Segment-wise, Cable Communications’ adjusted EBITDA rose 6.1% from the year-ago quarter to $6.08 billion. Cable Communications operating expenses inched up 3.4% year over year on higher non-programming costs, technical and product support expenses and other expenses including a spike in administrative expenses.

Cable Communications results include a loss of $59 million from the wireless business compared with a loss of $103 million in the year-ago quarter.

NBCUniversal’s adjusted EBITDA decreased 25.3% from the year-ago quarter to $1.75 billion, reflecting a decline in Cable Networks (down 1.2%), Filmed Entertainment (down 70.9%) and Theme Parks (down 84.7%)-adjusted EBITDA. Broadcast Television-adjusted EBITDA increased 29.6% year over year.

Sky’s adjusted EBITDA declined 16.9% year over year (down 15.3% at cc) to $551 million. Notably, Sky’s operating costs and expenses fell 4.1% (down 1.9% at cc) to $3.97 billion.

Consolidated operating income declined 6.4% year over year to $4.85 billion. Moreover, operating margin contracted 110 bps from the year-ago quarter to 18.2%.

Cash Flow & Liquidity

As of Mar 31, 2020, cash and cash equivalents were $8.52 billion, up from $5.50 billion as of Dec 31, 2019.

Moreover, as of Mar 31, 2020, consolidated total debt was $103.58 billion, up from $102.22 billion as of Dec 31, 2019.

In first-quarter 2020, Comcast generated cash from operations of $5.82 billion, down 19.5% year over year.

Capital expenditures were down 10.1% to $1.9 billion. NBCUniversal’s capital expenditures decreased 6.9% to $1.3 billion. Sky reported capital expenditures of $197 million, down 24.1%. Moreover, Cable Communications’ capital expenditures decreased 6.9% to $1.3 billion.

Free cash flow was $3.33 billion in the reported quarter, down 27.6% year over year.

Dividends paid out in the first quarter were worth $977 million.

Zacks Rank & Stocks to Consider

Currently, Comcast carries a Zacks Rank #3 (Hold). Activision Blizzard (ATVI - Free Report) , Electronic Arts Inc. (EA - Free Report) and Adtalem Global Education Inc. (ATGE - Free Report) are some better-ranked stocks in the broader Consumer & Discretionary sector, all three carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Activision, Electronic Arts and Adtalem Global are all scheduled to report quarterly results on May 5.


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