10-QPeriod: Q3 FY2018

COMCAST CORP Quarterly Report for Q3 Ended Sep 30, 2018

Filed October 25, 2018For Securities:CMCSACCZ

Summary

Comcast Corporation's (CMCSA) third-quarter 2018 report shows solid revenue growth, driven by its Cable Communications and NBCUniversal segments. Total revenue increased by 5.0% year-over-year for the three months ended September 30, 2018, reaching $22.1 billion, and by 5.9% for the nine-month period to $66.7 billion. Net income attributable to Comcast Corporation also saw a significant rise, up 9.3% for the quarter to $2.9 billion and 19.2% for the nine months to $9.2 billion. A major development during the period was Comcast's acquisition of a controlling interest in Sky plc in early October 2018, a transaction valued at approximately $39.4 billion. This strategic move, detailed in the 'Significant Transactions' note, is expected to significantly expand Comcast's international presence. While the Sky acquisition significantly impacted financing activities and debt levels, the company is also planning to pause its share repurchase program in 2019 to accelerate debt reduction related to this acquisition.

Financial Highlights

51 data points
Beta

Revenue

$22.14B

Net Income

$2.89B

13.0% Net Margin

EPS (Diluted)

$0.62

Total Assets

$200.63B

Cash & Equivalents

$10.62B

Free Cash Flow

$3.59B

Financial Statements
Beta
Revenue$22.14B
Operating Expenses$17.30B
Operating Income$4.84B
Interest Expense$830.00M
Net Income$2.89B
EPS (Basic)$0.63
EPS (Diluted)$0.62
Shares Outstanding (Basic)4.56B
Shares Outstanding (Diluted)4.62B

Key Highlights

  • 1Total revenue increased by 5.0% to $22.1 billion for the third quarter and by 5.9% to $66.7 billion for the first nine months of 2018.
  • 2Net income attributable to Comcast Corporation grew by 9.3% to $2.9 billion for the quarter and 19.2% to $9.2 billion for the nine months.
  • 3The company completed the acquisition of a controlling interest in Sky plc for approximately $39.4 billion, a significant strategic expansion into European markets.
  • 4Cable Communications segment revenue grew by 3.4% to $13.8 billion for the quarter, driven by increases in High-Speed Internet, Business Services, and Advertising revenue.
  • 5NBCUniversal segment revenue increased by 8.1% to $8.6 billion for the quarter, with strong performance in Cable Networks and Broadcast Television.
  • 6The company repurchased $4.0 billion of common stock in the first nine months of 2018 but plans to pause its share repurchase program in 2019 to focus on debt reduction from the Sky acquisition.
  • 7Adjusted EBITDA, a key non-GAAP metric, increased by 2.5% to $7.3 billion for the quarter and 4.0% to $22.0 billion for the nine months.

Frequently Asked Questions

The acquisition of a controlling interest in Sky plc, valued at approximately $39.4 billion, was completed shortly after the quarter end (October 9, 2018). While the full financial impact will be reflected in future periods, financing activities in the third quarter included substantial borrowings to fund the acquisition. Comcast plans to pause its share repurchase program in 2019 to accelerate the reduction of debt incurred for this acquisition. Sky's results will be consolidated starting in the fourth quarter of 2018.

The Cable Communications segment demonstrated robust growth, with revenue increasing by 3.4% to $13.8 billion for the third quarter. Key drivers included a 9.6% increase in High-Speed Internet revenue and an 11.2% increase in Business Services revenue, indicating continued demand for broadband and business solutions. Video revenue saw a slight decline, as expected due to competitive pressures, but was offset by growth in other areas.

Comcast expects continued declines in residential video customers and revenue due to intense competition from traditional and new distribution platforms. Conversely, High-Speed Internet revenue saw significant growth (9.6% for the quarter), driven by increasing customer numbers and rate adjustments, reflecting strong consumer demand for broadband services.

The NBCUniversal segments collectively showed strong performance, with revenue up 8.1% to $8.6 billion for the third quarter. Cable Networks revenue increased by 10.8%, driven by distribution and content licensing. Broadcast Television revenue grew by 15.4%, benefiting from advertising, content licensing, and distribution. The Filmed Entertainment segment's Adjusted EBITDA declined due to the performance of film releases, while Theme Parks saw a slight revenue decrease.