Comcast Reports 1st Quarter 2020 Results

PHILADELPHIA–(BUSINESS WIRE)–Comcast Corporation (NASDAQ: CMCSA) today reported results for the quarter ended March 31, 2020.

“Society is being challenged like never before in our lifetime, and I couldn’t be prouder of our company, our employees, and our leadership team across Comcast Cable, NBCUniversal, and Sky. Now more than ever the world needs to stay connected, and we’re extremely pleased that our investments in our network continue to pay off as we are handling significant increases in traffic and meeting our customers’ needs. While parts of our business have been more impacted by COVID-19 than others, we have continued to innovate. We are distributing our content in new ways, as evidenced by the recent launch of Peacock on X1 and Flex. We’ve also taken decisive action, having moved over 95% of our U.S. call-center employees to work from home and putting in place new procedures that have allowed more than 15,000 construction workers to safely come back to work to build our theme park in Beijing. All the divisions of our company are in constant communication, and the level of collaboration has been extraordinary. We have a strong balance sheet, terrific portfolio of assets, and a world-class management team. This is a moment in time; and when it passes, I am very confident that the decisions we are making now will enable us to emerge from this crisis as a healthy, strong company that is well positioned to continue to grow and succeed,” commented Brian L. Roberts, Chairman and Chief Executive Officer of Comcast Corporation.

 

 

 

 

 

 

 

($ in millions, except per share data)

 

 

 

 

 

 

1st Quarter

 

 

Consolidated Results

2020

2019

Growth

 

 

 

 

 

 

 

 

Revenue

$26,609

 

$26,859

 

(0.9

%)

 

 

Net Income Attributable to Comcast

$2,147

 

$3,553

 

(39.6

%)

 

 

Adjusted Net Income1

$3,266

 

$3,477

 

(6.1

%)

 

 

Adjusted EBITDA2

$8,130

 

$8,553

 

(4.9

%)

 

 

Earnings per Share3

$0.46

 

$0.77

 

(40.3

%)

 

 

Adjusted EPS1

$0.71

 

$0.76

 

(6.6

%)

 

 

Net Cash Provided by Operating Activities

$5,824

 

$7,231

 

(19.5

%)

 

 

Free Cash Flow4

$3,325

 

$4,592

 

(27.6

%)

 

 

 

 

 

 

 

For additional detail on segment revenue and expenses, customer metrics, capital expenditures, and free cash flow, please refer to the trending schedules on Comcast’s Investor Relations website at www.cmcsa.com.

1st Quarter 2020 Highlights:

  • Generated Consolidated Adjusted EBITDA of $8.1 Billion, Adjusted EPS of $0.71 and Free Cash Flow of $3.3 Billion
  • Total Customer Relationships Across Cable Communications and Sky Increased 2.6% Year-Over-Year to 55.8 Million
  • Cable Communications Total Customer Relationships Increased by 371,000 in the Quarter, the Best First Quarter Result on Record
  • Total High-Speed Internet Customer Net Additions Were 477,000 (Not Including 32,000 Free Internet Essentials Customers), the Best Quarterly Result in 12 Years
  • Cable Communications Adjusted EBITDA Increased 6.1% Driven by Strength in High-Speed Internet and Business Services

Key Responses to COVID-19:

  • Maintained Network Reliability: Since March 1, Cable Communications Has Seen a 33% Increase in Upstream Traffic and a 40% Increase in Wireless Data Usage Over WiFi
  • Keeping Customers Connected: Cable Communications and Sky are expanding access to vital internet and phone services, with Xfinity WiFi outdoor and business hotspots open in the U.S. for free, and Sky Talk offering free calls to UK landlines any time of day
  • Supporting our People: Across Cable Communications, NBCUniversal and Sky, we have committed $500 Million to support employees during this time. All employees who can work from home, are, including over 95% of Cable Communications’ call center employees, and ensuring customer-facing employees can do their job safely
  • See More About Comcast’s Response to COVID-19 – https://corporate.comcast.com/covid-19

COVID-19 Impacts

Our Cable Communications results, while strong in the first quarter 2020, will be negatively affected in the second quarter by the significant deterioration in domestic economic conditions in recent weeks and by the costs associated with our support of customer connectivity as the population increasingly works and learns remotely from home. NBCUniversal and Sky results also will be negatively impacted to a greater extent in the second quarter 2020. As a result, we expect the impacts of COVID-19 to increase in significance in the second quarter 2020 and to have a material adverse impact on our consolidated results of operations over the near-to-medium term.

Consolidated Financial Results

Revenue for the first quarter of 2020 decreased 0.9% to $26.6 billion. Net Income Attributable to Comcast decreased 39.6% to $2.1 billion. Adjusted Net Income decreased 6.1% to $3.3 billion. Adjusted EBITDA decreased 4.9% to $8.1 billion.

Earnings per Share (EPS) for the first quarter of 2020 was $0.46, a decrease of 40.3% compared to the first quarter of 2019. Adjusted EPS decreased 6.6% to $0.71.

Capital Expenditures decreased 10.1% to $1.9 billion in the first quarter of 2020. Cable Communications’ capital expenditures decreased 6.9% to $1.3 billion in the first quarter of 2020. NBCUniversal’s capital expenditures decreased 16.7% to $377 million. Sky’s capital expenditures decreased 24.1% to $197 million.

Net Cash Provided by Operating Activities was $5.8 billion in the first quarter of 2020. Free Cash Flow was $3.3 billion.

Dividends paid during the first quarter of 2020 totaled $977 million.

Cable Communications

 

 

 

 

 

 

 

 

($ in millions)

 

 

 

 

 

 

1st Quarter

 

 

 

2020

2019

Growth

 

 

Cable Communications Revenue

 

 

 

 

 

High-Speed Internet

$5,001

$4,577

9.3

%

 

 

Video

5,632

5,628

0.1

%

 

 

Voice

899

990

(9.2

%)

 

 

Wireless

343

225

52.1

%

 

 

Business Services

2,043

1,891

8.0

%

 

 

Advertising

557

556

0.3

%

 

 

Other

443

413

7.0

%

 

 

Cable Communications Revenue

$14,918

$14,280

4.5

%

 

 

 

 

 

 

 

 

Cable Communications Adjusted EBITDA

$6,076

$5,728

6.1

%

 

 

Adjusted EBITDA Margin

40.7

%

40.1

%

 

 

 

 

 

 

 

 

 

Cable Communications Capital Expenditures

$1,269

$1,363

(6.9

%)

 

 

Percent of Cable Communications Revenue

8.5

%

9.5

%

 

 

 

 

 

 

 

 

Revenue for Cable Communications increased 4.5% to $14.9 billion in the first quarter of 2020, driven primarily by increases in high-speed internet, business services and wireless revenue. High-speed internet revenue increased 9.3%, driven by an increase in the number of residential high-speed internet customers as well as an increase in average rates. Business services revenue increased 8.0%, reflecting an increase in average rates and an increase in the number of customers receiving our services. Wireless revenue increased 52.1%, primarily due to an increase in the number of customer lines. Other revenue increased 7.0%, primarily reflecting increases in revenue from our security and automation services and from licensing our X1 and technology platforms. Video revenue was consistent with the prior year period, due to an increase in average rates, offset by a decline in the number of residential video customers. Advertising revenue was consistent with the prior year period, primarily reflecting an increase in political advertising revenue, offset by reduced advertiser spending due to COVID-19. Excluding political advertising revenue, advertising revenue decreased 4.6%. Voice revenue decreased 9.2%, due to decreases in average rates and in the number of residential voice customers.

Total Customer Relationships increased by 371,000 to 31.9 million in the first quarter of 2020. Residential customer relationships increased by 360,000 and business customer relationships increased by 11,000. Total high-speed internet customer net additions were 477,000, total video customer net losses were 409,000 and total voice customer net losses were 89,000. In addition, Cable Communications added 216,000 wireless lines in the quarter.

 

 

 

 

 

 

 

 

 

(in thousands)

 

 

 

 

 

 

 

 

 

 

Net Additions

 

 

 

1Q20

1Q19

 

1Q20

 

1Q19

 

 

Customer Relationships

 

 

 

 

 

 

 

 

Residential Customer Relationships

29,509

 

28,385

 

 

360

 

276

 

 

 

Business Services Customer Relationships

2,408

 

2,327

 

 

11

 

25

 

 

 

Total Customer Relationships

31,917

 

30,712

 

 

371

 

300

 

 

 

 

 

 

 

 

 

 

 

 

Residential Customer Relationships Mix

 

 

 

 

 

 

 

 

One Product Residential Customers

10,801

 

9,295

 

 

554

 

280

 

 

 

Two Product Residential Customers

8,848

 

9,009

 

 

(75

)

17

 

 

 

Three or More Product Residential Customers

9,860

 

10,081

 

 

(119

)

(22

)

 

 

 

 

 

 

 

 

 

 

 

Residential High-Speed Internet Customers

26,880

 

25,449

 

 

466

 

352

 

 

 

Business Services High-Speed Internet Customers

2,226

 

2,148

 

 

11

 

23

 

 

 

Total High-Speed Internet Customers

29,106

 

27,598

 

 

477

 

375

 

 

 

 

 

 

 

 

 

 

 

 

Residential Video Customers

19,900

 

20,852

 

 

(388

)

(107

)

 

 

Business Services Video Customers

944

 

1,014

 

 

(22

)

(14

)

 

 

Total Video Customers

20,845

 

21,865

 

 

(409

)

(121

)

 

 

 

 

 

 

 

 

 

 

Residential Voice Customers

9,840

 

10,089

 

 

(94

)

(63

)

 

 

Business Services Voice Customers

1,347

 

1,307

 

 

5

 

10

 

 

 

Total Voice Customers

11,187

 

11,396

 

 

(89

)

(53

)

 

 

 

 

 

 

 

 

 

 

Total Wireless Lines

2,267

 

1,405

 

 

216

 

170

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA for Cable Communications increased 6.1% to $6.1 billion in the first quarter of 2020, reflecting higher revenue, partially offset by a 3.4% increase in operating expenses. Non-programming expenses increased 4.5%, primarily reflecting increases in technical and product support expenses and other operating costs, partially offset by a decrease in advertising, marketing and promotion costs. Technical and product support expenses increased 7.0%, primarily due to increased costs associated with our wireless phone service and additional compensation costs for certain personnel as a result of COVID-19. Other operating costs increased 7.1%, primarily due to an increase in the allowance for doubtful accounts as a result of COVID-19 and an increase in administrative expenses. Advertising, marketing and promotion costs decreased 1.9%, primarily due to a decrease in spending. Non-programming expenses per customer relationship increased 0.6%. Programming costs increased 1.7%, reflecting an increase in retransmission consent and sports programming fees, partially offset by video subscriber declines. This quarter’s Adjusted EBITDA per customer relationship increased 2.2%, and Adjusted EBITDA margin was 40.7%, compared to 40.1% in the first quarter of 2019. Cable Communications results include a loss of $59 million from our wireless business, compared to a loss of $103 million in the prior year period.

Capital Expenditures for Cable Communications decreased 6.9% to $1.3 billion in the first quarter of 2020. Cable capital expenditures represented 8.5% of Cable revenue in the first quarter of 2020 compared to 9.5% in last year’s first quarter.

NBCUniversal

 

 

 

 

 

 

 

 

($ in millions)

 

 

 

 

 

 

1st Quarter

 

 

 

2020

2019

Growth

 

 

NBCUniversal Revenue

 

 

 

 

 

Cable Networks

$2,859

 

$2,868

 

(0.3

%)

 

 

Broadcast Television

2,684

 

2,467

 

8.8

%

 

 

Filmed Entertainment

1,370

 

1,768

 

(22.5

%)

 

 

Theme Parks

869

 

1,276

 

(31.9

%)

 

 

Headquarters, other and eliminations

(48

)

(66

)

NM

 

 

NBCUniversal Revenue

$7,734

 

$8,313

 

(7.0

%)

 

 

 

 

 

 

 

 

NBCUniversal Adjusted EBITDA

 

 

 

 

 

Cable Networks

$1,248

 

$1,262

 

(1.2

%)

 

 

Broadcast Television

501

 

387

 

29.6

%

 

 

Filmed Entertainment

106

 

364

 

(70.9

%)

 

 

Theme Parks

76

 

498

 

(84.7

%)

 

 

Headquarters, other and eliminations

(184

)

(174

)

NM

 

 

NBCUniversal Adjusted EBITDA

$1,747

 

$2,337

 

(25.3

%)

 

 

NM=comparison not meaningful.

 

 

 

 

 

 

 

 

 

 

Revenue for NBCUniversal decreased 7.0% to $7.7 billion in the first quarter of 2020. Adjusted EBITDA decreased 25.3% to $1.7 billion.

Cable Networks

Cable Networks revenue of $2.9 billion was consistent with the prior year period, reflecting decreases in distribution revenue and advertising revenue, offset by an increase in content licensing and other revenue. Distribution revenue decreased 1.5%, reflecting a decline in subscribers, partially offset by contractual rate increases and the timing of contract renewals. Advertising revenue decreased 2.2%, reflecting audience ratings declines and reduced advertiser spending resulting from the postponement of sports events due to COVID-19, partially offset by higher pricing. Content licensing and other revenue increased 13.0% due to the timing of content provided under licensing agreements. Adjusted EBITDA decreased 1.2% to $1.2 billion in the first quarter of 2020, reflecting flat revenue, and flat operating expenses, as higher other operating and administrative costs were offset by lower programming and production costs. The decline in programming and production costs was primarily due to decreases in the recognition of sports programming costs as a result of the postponement of sports events due to COVID-19.

Broadcast Television

Broadcast Television revenue increased 8.8% to $2.7 billion in the first quarter of 2020, reflecting increases in content licensing revenue and distribution and other revenue. Content licensing revenue increased 31.3% due to the timing of content provided under licensing agreements. Distribution and other revenue increased 6.9%, due to higher retransmission consent fees. Advertising revenue was consistent with the prior year period, reflecting higher pricing and local political advertising, offset by audience ratings declines and reduced advertiser spending due to COVID-19. Adjusted EBITDA increased 29.6% to $501 million in the first quarter of 2020, reflecting higher revenue, partially offset by an increase in operating costs and expenses. The increase in operating costs and expenses was primarily due to an increase in programming and production costs, which was partially offset by the favorable impact of adopting updated accounting guidance.

Filmed Entertainment

Filmed Entertainment revenue decreased 22.5% to $1.4 billion in the first quarter of 2020, reflecting decreases in theatrical revenue, content licensing revenue, home entertainment revenue and other revenue. Theatrical revenue decreased 28.8%, reflecting a difficult comparison to the success of films in the first quarter of 2019, including How to Train Your Dragon: The Hidden World, Us and Glass, partially offset by the performance of films in this year’s first quarter, including 1917, Dolittle and The Invisible Man. Content licensing revenue decreased 15.4%, driven by the timing of when content was made available under licensing agreements, partially offset by the performance of certain 2020 releases that were made available on premium video on demand after theater closures due to COVID-19, including The Invisible Man, Emma and The Hunt. Home entertainment revenue decreased 35.8%, reflecting the success of Dr. Seuss’ The Grinch, Halloween and Night School in last year’s first quarter, partially offset by the performance of 1917, Downton Abbey and Fast & Furious Presents: Hobbs & Shaw in this year’s first quarter. Other revenue decreased 20.3%, primarily due to decreases in revenue from our live stage play and movie ticketing and entertainment businesses, which were impacted by theater and entertainment venue closures as a result of COVID-19. Adjusted EBITDA decreased 70.9% to $106 million in the first quarter of 2020, reflecting lower revenue, partially offset by lower programming and production costs, as well as lower advertising, marketing and promotion costs.

Theme Parks

Theme Parks revenue decreased 31.9% to $869 million in the first quarter of 2020, 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. Adjusted EBITDA decreased 84.7% to $76 million in the first quarter of 2020, reflecting lower revenue and higher operating costs. The increase in operating costs was primarily due to increases in employee-related costs and pre-opening costs associated with the Universal Beijing Resort and Super Nintendo WorldTM in Universal Studios Japan, partially offset by lower park operation costs due to the park closures.

Headquarters, Other and Eliminations

NBCUniversal Headquarters, Other and Eliminations include overhead and eliminations among the NBCUniversal businesses. For the quarter ended March 31, 2020, NBCUniversal Headquarters, Other and Eliminations Adjusted EBITDA loss was $184 million, compared to a loss of $174 million in the first quarter of 2019.

Sky

 

 

 

 

 

 

 

 

 

($ in millions)

 

 

 

 

 

 

 

1st Quarter

 

 

 

2020

2019

Growth

Constant

Currency

Growth5

 

 

Sky Revenue

 

 

 

 

 

 

Direct-to-Consumer

$3,679

$3,834

(4.0

%)

(1.9

%)

 

 

Content

325

370

(12.3

%)

(10.5

%)

 

 

Advertising

513

593

(13.5

%)

(11.6

%)

 

 

Sky Revenue

$4,517

$4,797

(5.8

%)

(3.7

%)

 

 

 

 

 

 

 

 

 

Sky Operating Costs and Expenses

$3,966

$4,134

(4.1

%)

(1.9

%)

 

 

 

 

 

 

 

 

 

Sky Adjusted EBITDA

$551

$663

(16.9

%)

(15.3

%)

 

 

Adjusted EBITDA Margin

12.2

%

13.8

%

 

 

 

 

 

 

 

 

 

 

 

Revenue for Sky decreased 5.8% to $4.5 billion in the first quarter of 2020. Excluding the impact of currency, revenue decreased 3.7%, reflecting lower direct-to-consumer revenue, advertising revenue and content revenue. Direct-to-consumer revenue decreased 1.9% to $3.7 billion, primarily reflecting a decrease in average revenue per customer relationship due to the impact of COVID-19, which has resulted in lower sports subscription revenues, partially offset by an increase in customer relationships over the last twelve months. Advertising revenue decreased 11.6% to $513 million, primarily due to overall market weakness, which was worsened by COVID-19, as well as an unfavorable impact from a change in legislation related to gambling advertisements in the UK and Italy. Content revenue decreased 10.5% to $325 million, primarily reflecting the deferral of wholesale revenue from sports programming as a result of the postponement of sports events due to COVID-19.

Total Customer Relationships decreased by 65,000 to 23.9 million in the first quarter of 2020, reflecting the postponement of sports events and the suspension of certain sales channels due to COVID-19.

 

 

 

 

 

 

 

 

 

(in thousands)

 

 

 

 

 

 

 

 

Customers

 

Net Additions

 

 

 

1Q20

 

1Q19

 

 

1Q20

 

1Q19

 

 

Total Customer Relationships

23,930

 

23,712

 

 

(65)

 

112

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA for Sky decreased 16.9% to $551 million in the first quarter of 2020. Excluding the impact of currency, Adjusted EBITDA decreased 15.3%, reflecting lower revenue, partially offset by a decrease in operating expenses. The decrease in operating expenses was primarily due to a decrease in the recognition of sports programming costs as a result of the postponement of sports events due to COVID-19.

Corporate, Other and Eliminations

Corporate, Other and Eliminations primarily relate to corporate operations, our streaming service, Peacock, and Comcast Spectacor, as well as eliminations among Comcast’s businesses. For the quarter ended March 31, 2020, the Corporate, Other and Eliminations Adjusted EBITDA loss was $244 million, an increase of $69 million compared to 2019, primarily driven by start-up costs associated with Peacock.

 
Notes:
1

We define Adjusted Net Income and Adjusted EPS as net income attributable to Comcast Corporation and diluted earnings per common share attributable to Comcast Corporation shareholders, respectively, adjusted to exclude the effects of the amortization of acquisition-related intangible assets, investments that investors may want to evaluate separately (such as based on fair value) and the impact of certain events, gains, losses or other charges that affect period-over-period comparisons. See Table 5 for reconciliations of non-GAAP financial measures.

 

2

We define Adjusted EBITDA as net income attributable to Comcast Corporation before net income (loss) attributable to noncontrolling interests and redeemable subsidiary preferred stock, income tax expense, investment and other income (loss), net, interest expense, depreciation and amortization expense, and other operating gains and losses (such as impairment charges related to fixed and intangible assets and gains or losses on the sale of long-lived assets), if any. From time to time, we may exclude from Adjusted EBITDA the impact of certain events, gains, losses or other charges (such as significant legal settlements) that affect the period-to-period comparability of our operating performance. See Table 4 for reconciliation of non-GAAP financial measure.

 

3

All earnings per share amounts are presented on a diluted basis.

 

4

We define Free Cash Flow as net cash provided by operating activities (as stated in our Consolidated Statement of Cash Flows) reduced by capital expenditures and cash paid for intangible assets. From time to time, we may exclude from Free Cash Flow the impact of certain cash receipts or payments (such as significant legal settlements) that affect period-to-period comparability. Cash payments for acquisitions and construction of real estate properties and the construction of Universal Beijing Resort are presented separately in our Consolidated Statement of Cash Flows and are therefore excluded from capital expenditures for Free Cash Flow. See Table 4 for reconciliation of non-GAAP financial measure.

 

 

5

Sky constant currency growth rates are calculated by comparing the current period results to the comparative period results in the prior year adjusted to reflect the average exchange rates from the current year period rather than the actual exchange rates in effect during the respective prior year periods. See Table 6 for reconciliation of Sky’s constant currency growth.

 

All percentages are calculated on whole numbers. Minor differences may exist due to rounding.

Conference Call and Other Information

Comcast Corporation will host a conference call with the financial community today, April 30, 2020 at 8:30 a.m. Eastern Time (ET). The conference call and related materials will be broadcast live and posted on its Investor Relations website at www.cmcsa.com. Those parties interested in participating via telephone should dial (800) 263-8495 with the conference ID number 9334849. A replay of the call will be available starting at 12:00 p.m. ET on April 30, 2020, on the Investor Relations website or by telephone. To access the telephone replay, which will be available until Thursday, May 7, 2020 at midnight ET, please dial (855) 859-2056 and enter the conference ID number 9334849.

From time to time, we post information that may be of interest to investors on our website at www.cmcsa.com and on our corporate website, www.comcastcorporation.com. To automatically receive Comcast financial news by email, please visit www.cmcsa.com and subscribe to email alerts.

Caution Concerning Forward-Looking Statements

This press release contains forward-looking statements. Readers are cautioned that such forward-looking statements involve risks and uncertainties that could cause actual events or our actual results to differ materially from those expressed in any such forward-looking statements. Readers are directed to Comcast’s periodic and other reports filed with the Securities and Exchange Commission (SEC) for a description of such risks and uncertainties. We undertake no obligation to update any forward-looking statements.

Non-GAAP Financial Measures

In this discussion, we sometimes refer to financial measures that are not presented according to generally accepted accounting principles in the U.S. (GAAP). Certain of these measures are considered non-GAAP financial measures under the SEC regulations; those rules require the supplemental explanations and reconciliations that are in Comcast’s Form 8-K (Quarterly Earnings Release) furnished to the SEC.

Contacts

Investor Contacts:
Marci Ryvicker (215) 286-4781

Jane Kearns (215) 286-4794

Marc Kaplan (215) 286-6527

Press Contacts:
Jennifer Khoury (215) 286-7408

John Demming (215) 286-8011

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