Comcast Corporation

Good morning, ladies and gentlemen, and welcome to Comcast's fourth quarter and full year 2022 earnings conference call. At this time, all participants are in a listen-only mode. Please note that this conference call is being recorded. I will now turn the call over to Executive Vice President, Investor Relations, Ms. Marci Reivicker. Please go ahead, Ms. Reivicker.

Thank you, Operator, and welcome, everyone. On this morning's call are Brian Roberts, Mike Kavanaugh, and Jason Armstrong. who are also joined by Dave Watson, Jeff Schell, and Dana Strong. Brian and Mike will make formal remarks, while Dave, Jeff, and Dana will also be available for Q&A. Let me now refer you to slide two, which contains our Safe Harbor disclaimer, and remind you that this conference call may include forward-looking statements subject to certain risks and uncertainties. In addition, during this call, we will refer to certain non-GAAP financial measures, ACR 8K and trending schedules, for the reconciliations of these non-GAAP financial measures to GAAP. With that, let me turn the call over to Brian Roberts for his comments. Brian.

Thanks, Marcy, and good morning, everyone. I'm really proud of how our team executed throughout 2022. We achieved the highest levels of revenue, adjusted EBITDA, and adjusted EPS in our company's history. And we returned a record $17.7 billion of capital to shareholders through both our recurring dividend which we just increased for the 15th consecutive year, and robust share repurchase activity. We did all this while accelerating investment in key growth initiatives, which are showing great progress, particularly our broadband network as we transition to 10G, but also in Xfinity Mobile, Peacock, and our theme parks. I attribute all this success to the incredible talent across our organizations, who work collaboratively to ensure we are constantly evolving and innovating so that our customers have the absolute best experience with us at every point of interaction. What also sets us apart is our very strong balance sheet, which when combined with the cost actions we have taken this past quarter, position us to perform well no matter what the macro environment might bring. I want to start with cable. where our financial performance both for the year and the fourth quarter confirmed that we are striking the right balance between rate and volume in residential broadband. We plan to continue to do so in 2023. At Xfinity Mobile and Comcast Business remain strong growth drivers, and that we have successfully identified the appropriate mix between cutting costs to drive efficiencies and investing for our future. We have always maintained an intense focus on providing the absolute best products and experiences, which comes down to having the highest capacity, most reliable, and most efficient broadband network. Our evolution to 10G and the unique way we are pursuing this through DOCSIS 4.0 is a huge benefit for our customers across the entire footprint, that they will all have access to an entire ecosystem built around multi-gigabit symmetrical speeds some as early as this year. It's also great for the company and our investors as our transition to a virtual software-based network infused with the marvelous AI capabilities will not only provide tangible benefits when it comes to operating and capital expenses, but it will enable us to innovate faster than ever before, solidifying our leadership position in broadband, which is extremely important given what is certain to be continued increases in demand for both speed and usage. In fact, we continue to see signs of this today. Our residential broadband-only customers are now consuming nearly 700 gigabytes of data every month, and customers on our Gigabit Plus products now comprise roughly one-third of our broadband subscribers. In addition to creating more value from our current customer base and further penetrating the total homes and businesses that we pass today, Another great opportunity is for us to extend our networks to homes and businesses in the U.S. that do not have the ability to receive our services. At that end, we increased our passings by 1.4% or 840,000 in 2022, and we expect to accelerate in 2023, where we are aiming to add around 1 million, while still maintaining the same CapEx intensity level we achieved in 2022. reaching nearly $62.5 million by the end of the year. We are taking a disciplined approach and will only pursue those areas that have a return profile similar to what we have been able to historically achieve. Wireless is playing an integral part of our overall strategy at cable, and it's an area where we continue to shine. This past quarter was another record in net line additions, bringing us to over 5 million total lines in just five years. With only 9% penetration of our current base of residential broadband customers, we have plenty of runway ahead, and we're just getting started in offering wireless to our commercial segment, which is another great example of how we are selling more products into our existing base of business customers. When you combine our broadband network, Wi-Fi overlay, and MVNO with Verizon, we are in the best position to win in convergence. We have a leg up on our competitors with a capital light strategy that does not involve customer or network trade-offs. At NBCUniversal, we are seeing some great momentum in Peacock and Parks, and across all of NBCUniversal, our intellectual property is really resonating. We had the number two studio in terms of worldwide box office in 2022, fueled by a strong slate including Jurassic, Minions, Note, Ticket to Paradise, Puss in Boots, Black Phone, Halloween, which have also had great carryover success to Peacock through our pay one window and select day and date releases. And our box office momentum continued into the first quarter with Megan. So all in all, a really strong film slate. Peacock ended the year with over 20 million paying subscribers, more than double where we started. And we added over 5 million paid subscribers in the fourth quarter alone. Our success was broad-based, fueled by some of the films I just mentioned, but also sporting events like the World Cup, NFL, Premier League, several new originals, and our exclusive next-day broadcasts of NBC and Bravo. Looking ahead and based on our experience to date, we expect our subscriber cadence will follow our content launches, which will fall more heavily in the second half of 23. And we continue to see positive trends in engagement, churn, and ARPU. Mark Woodbury had a fabulous first year as our CEO of the parks business, and we hit a number of new records this past quarter. It was the highest fourth quarter EBITDA for the entire segment, led by Orlando and Hollywood, and Japan had the best EBITDA performance since 2019. This was driven by attendance that far surpassed pre-pandemic levels at all three parks. While attendance at our park in Beijing was significantly impacted by COVID in 2022, we are seeing some exciting demand to start the year. Given the excellent returns we have generated to date, we continue to seek ways to expand our parks. I'm really excited about our two recently announced extensions. First Universal Park designed specifically for younger audiences near Dallas, and the first year-round horror entertainment experience in Las Vegas. These are new, innovative ways to utilize our substantial IP, including from DreamWorks and Illumination, while also extending our brand, both of which should help fuel growth in all of our parks. In our linear video business, we are managing subscriber declines by taking a disciplined approach to our cost base. We are continuing to invest in our global technology platform, and you will see a number of announcements from us in the weeks and months ahead. For example, in 2023, we will launch one global user interface for SkyGlass, Xfinity, X1, Flex, Zumo, and our U.S. and international partners. Every entertainment customer around the world will get the same Emmy Award-winning voice-controlled experience. This scale not only brings us operational efficiencies, but it also puts us in the enviable position when it comes to conversations with distributors, OEMs, programmers, app developers, and talent. At Sky, we are managing through the macroeconomic challenges in Europe, while staying intensely focused on retention and continuing to provide our customers with the best entertainment and connectivity experiences. We're seeing some encouraging results. In the UK, Sky Glass had the top-selling UHD TV model. Sky Mobile is the fastest-growing mobile provider, surpassing 3 million lines. And we are narrowing the gap between us and the current number one broadband provider with Sky Broadband, now sitting at over 6.5 million subscribers. So wrapping up, our consistently strong financial performance, healthy balance sheet, and record high return of capital to shareholders underscore how the scale, capabilities, and talent across our company enable us to successfully execute our long-term growth strategy. I'm convinced we are on the right path and that we have the right team to capture our many opportunities and overcome whatever challenges happen along the way. So before handing over the call, I want to congratulate Jason Armstrong, recently promoted to Chief Financial Officer, succeeding Mike Cavanaugh. He could not be more confident in the leadership team's ability to continue to drive us forward and create more value for our shareholders. Mike, over to you.