Industry Insider: A Look Into Comcast’s 2023 Q2 Earnings Call

On July 27, Comcast held 2023’s Second Quarter Earnings Call, led by President and NBCUniversal’s CEO Mike Cavanagh, Comcast’s CEO Brian Roberts, and CFO Jason Armstrong. 

The protagonist of Comcast’s 23Q2’s Earnings Call is the company’s impressive revenue growth: this year’s $30.5 billion revenues topped 22Q2’s $30 billion, as well as Wall Street’s estimates for this quarter of $30.1 billion. But even more impressive is the increase in profits, from $3.2 billion in 2022 to $4.2 billion. The company’s EBITDA (Earnings Before Interest, Tax, Depreciation and Amortization) exceeded $10 billion for the first time in its history. Cavanagh indicates three main profit drivers: broadband, studios (specifically, animation), and parks.

Comcast offers broadband and wireless connectivity services under the brand Xfinity in the US and Sky in some European territories. With a 50% market share, it is the leading provider of internet cable access in the US. Revenue coming from the Connectivity and Platform division remained stable year-to-year, as the 7% increase in business services connectivity was offset by a 7% revenue decline in video advertising. Notably, residential wireless connectivity grew by 20%, international by 26%, and domestic broadband by 4%. 

“We continue to see the use cases for better and faster Internet increase. Demand for higher speeds is increasing, as is average network consumption, and our customers are hanging more devices off our network in their homes. [...] Nearly 3/4 of our broadband customers are now on speed plans of 400 megs and above. That's up from less than 50% last year, and less than 20% in 2020. We plan for our network and product capabilities to stay far ahead of demand, so that we maintain our position as a market leader delivering the best broadband possible.”

On the studio front, Universal’s theatrical revenues are up 66% from last year’s second quarter, almost reaching $1 billion thanks to the financial success of Super Mario Bros. ($1.3 billion at the global box office, the second highest grossing animation movie ever) and Fast X ($720 million). With more than $550 million at the global box office, Nolan’s Oppenheimer is yet another success, to such a great degree that theaters have extended its IMAX 70mm film run until the end of August - two weeks later than the original end date on August 17. Overall, the growth in theatrical revenues stems from the comparison of 23Q2 to 22Q2 in a business (that of theatrical releases) that is too volatile and singularity-based, as the contrast between the two quarters suggests an organic growth that is, however, the result of only an apparent correlation between them. Nonetheless, the change in executive structure in the company’s organization chart put Universal’s veteran Donna Langley at the very top by giving her the title of Chief Content Officer, thus possibly thrusting both Universal and the television studios into a new era of original storytelling that will continue to attract larger audiences.

Taking advantage of the success of the movie, Universal opened the new Super Nintendo World theme parks in Japan and Hollywood, which will be all the more populated after the boom of the movie and heavily contributed to the spike in revenues from the Theme Parks division. Later in the summer, Comcast also plans to open new attractions in Japan, Orlando, and Las Vegas.

One of the segments that could have seen a greater organic growth was the streaming service Peacock, which, however, only added 2 million new subscribers (still almost doubling its subscriber count on a year-to-year basis). Now with 24 million users, Peacock has a 1.1% share according to Nielsen’s “The Gauge”, a monthly analysis of viewership across broadcast and streaming platforms. While other streamers are trying to shift public perception of their success from subscriber count to revenue, Peacock is highlighting its growing audience because it is reporting a loss of $651 million in Q2, after losing $704 million in Q1 and $444 million last year.

Referring to the overall company strategy, Cavenagh stated:

“Importantly, the net effect of this approach is a path to sustained future revenue growth for the company in total, driving strong earnings and free cash flow growth - for what I expect to be many years to come.”