Key Points
- Adjusted EPS exceeded estimates, reaching $1.21.
- Total revenue decreased by 2.7% year over year.
- Free cash flow dropped sharply by 60.9%.
Telecom giant Comcast (CMCSA -0.84%)reported mixed second-quarter earnings Tuesday morning with adjusted earnings per share (EPS) coming in at $1.21, surpassing analyst expectations of $1.12, and revenue down 2.7% year over year to total $29.7 billion. Revenue missed the consensus forecast of $30.0 billion. Further signs of a mixed quarterly performance can be seen in adjusted EBITDA margin improvement along with a steep decline in free cash flow.
| Metric | Q2 2024 | Analyst Estimate | Q2 2023 | Change (YOY) |
|---|---|---|---|---|
| Revenue | $29.7 billion | $30.0 billion | $30.5 billion | (2.7%) |
| Adjusted EPS | $1.21 | $1.12 | $1.13 | 7% |
| Free cash flow | $1.34 billion | N/A | $3.42 billion | (60.9%) |
| Net income | $3.93 billion | N/A | $4.25 billion | (7.5%) |
Source: Comcast. Note: Analyst estimates provided by Factset. YOY = Year over year.
Comcast's business overview
Comcast is a conglomerate that operates in the connectivity and entertainment sectors, with services ranging from broadband and wireless communications to film studios and television networks to media production and streaming services to theme park operations. The company focuses on technological advancements, content creation, and competitive growth.
In recent quarters, Comcast has concentrated on enhancing its broadband infrastructure, expanding its wireless offerings, and increasing its market share through technological improvements. The company's success depends on its ability to maintain robust connectivity services and captivating content across various platforms.
Quarterly highlights
Comcast's fiscal 2024's second quarter included several notable metrics:
- Broadband and wireless growth: Domestic broadband revenue increased by 3% year over year to $6.6 billion. Domestic wireless lines saw a 20% growth, reaching 7.2 million with 322,000 net additions.
- Content & Experience segment shortfalls: Overall revenue for this segment was down 7.5% to $10.1 billion. But within this, media revenue increased by 2.1% driven by a 28% growth in Peacock's revenue. What drew the overall figure down were studios (hit by competitive pressures) and theme parks (foreign currency impact).
- Profitability: Net income attributable to Comcast dropped by 7.5% to $3.9 billion, while adjusted net income saw a slight 0.2% increase to $4.7 billion. Free cash flow plummeted by 60.9%, impacted by higher tax payments.
- New developments and investments: On the telecom side of the operation, Comcast's Mid-Split Technology to enhance broadband services is now deployed in 42% of its potential market. Elsewhere, Comcast added 302,000 new homes and businesses to its connectivity infrastructure in Q2.
Notable one-time events and strategic moves for the quarter included entering into a partnership with Alphabet's Google for AI-powered coverage of the upcoming 2024 Olympics, boosting potential content viewership and engagement. Comcast also raised prices for the premium tier of its Peacock streaming TV service, aiming to maximize revenue from its growing subscriber base ahead of the Olympics.
Looking ahead
Management expressed cautious optimism for the coming quarters, with significant events like the Paris Summer Olympics expected to drive viewership, advertising revenue, and platform engagement. However, ongoing competitive pressures, particularly in its broadband and wireless segments, along with unpredictable macroeconomic conditions, could pose challenges.
Investors should watch for updates on Comcast's connectivity infrastructure, content monetization strategies, and competitive positioning. Any developments in regulatory policies affecting broadband services could also impact future performance. Management's forward guidance highlights a continued focus on technology upgrades and strategic content initiatives.
