Comcast Corporation

Good morning, ladies and gentlemen, and welcome to Comcast's second quarter 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 Reibacher. Please go ahead, Ms. Reibacher.

Thank you, Operator, and welcome to our second quarter 2023 earnings call. You'll first hear from Mike Cavanaugh and Jason Armstrong. then Brian Roberts and Dave Watson will join us and be available for Q&A. I will now refer you to slide two of the presentation accompanying this call, which can also be found on our investor relations website and which contains our Safe Harbor disclaimer. 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. Please see our 8K and trending schedule issued earlier this morning for the reconciliations of these non-GAAP financial measures to GAAP. With that, I'll turn the call over to Mike.

Thanks, Marcy, and good morning, everyone. I'm very pleased with our second quarter results, which again demonstrate that our focused efforts to invest and innovate in businesses that offer significant revenue growth while we carefully manage the contiguous areas with structurally lower growth is paying off. Total revenue grew 2%, and the six growth priority areas we have outlined, residential broadband, wireless, business services, theme parks, streaming, and premium content creation in our studios, grew nearly 10% year over year and now represent 55% of total revenue. This revenue growth, combined with careful management of margins across all businesses, generated mid-single-digit EBITDA growth and double-digit earnings per share growth. Looking farther into the future, we expect to continue to drive significant growth in these areas and to continue to identify and invest in organic growth opportunities across our strong portfolio of businesses. We are also very clear-eyed about the challenges that we and our competitors face in other business lines and have established thoughtful plans which will enable these businesses to continue to meaningfully contribute both financially and strategically. 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. Significantly, we have by far the strongest balance sheet among our core competitors, which allows us to continue to invest for growth while returning substantial capital to shareholders through both dividends and buybacks, which will drive excellent free cash flow and earnings per share growth. Now let me call out a few highlights from the quarter. For the first time in the company's history, we generated over $10 billion in quarterly EBITDA. And while the diversification of our businesses means there were several significant contributors, I would highlight three that stand out to me in the quarter and reflect the consistency of our investments and the resulting durability of our growth profile. The first is broadband ARPU growth of 4.5%. Stepping back, I am confident we have a winning hand in convergence. We're the largest broadband provider with a high-quality, ubiquitous network and the most cost-efficient upgrade path to higher speeds. In addition, we can compete effectively in wireless with a capital-light approach and a very strong value proposition for our customers. We also have a long history of consistently surrounding our products with industry-leading features and capabilities, ranging from the coverage and control aspects of our Wi-Fi experience to content aggregation through our X1 and Flex platforms, which is how we have been able to achieve near-record low levels of churn and grow ARPU consistently quarter after quarter. This second quarter's 4.5% growth was no exception and is a testament to our ability to appropriately balance rate and volume, to effectively segment the market and surround our broadband product with industry-leading products and capabilities. The broadband market remains highly competitive, but we have and will continue to invest to sustain our position as a market leader. Second is our parks, which continues to be such a great story for us. Our teams have consistently introduced new and innovative attractions, leveraging both our owned or licensed IP. We opened Super Nintendo World at both Universal Hollywood in Japan, which helped drive the record results in the quarter. Later this summer, we'll be opening a new Minion Land in Orlando, and we look forward to Donkey Kong in Japan next year, as well as starting the previously announced Kids Theme Park in Texas and the Halloween Horror Experience in Las Vegas. And I couldn't be more excited about the opening of Epic Universe in Orlando in 2025. Third is the strength of our film studios, and in particular, our animation business. Super Mario Brothers crossed over $1.3 billion in worldwide box office to date, making it the second highest grossing animated film ever. This is another incredible achievement by Illumination and Chris Melendandri. We also invest in successful franchises like Fast, highlighted by the successful launch of the latest installment with Fast 10 during the quarter. Of course, we just released Oppenheimer, which grossed about $180 million this past weekend, to tremendous acclaim from critics and moviegoers alike. Oppenheimer is such a powerful and impactful movie, and we at Comcast couldn't be more proud to work with Christopher Nolan to bring such an important movie to audiences globally. We have the very best roster of creative partners, and these innovative filmmakers enable us to invest in a strategic slate which is one of the keys to our continued box office success, where we remain number two in box office year to date. All of these results and accomplishments, from broadband differentiation to studio leadership to our part success, are a function of our focused leadership team, commitment to innovation, strong balance sheet, and disciplined approach to capital allocation. As I look at our company, I am extremely bullish on the durability of growth drivers we've invested in so consistently and in our continued ability to invest and deliver through a variety of businesses and economic cycles. This was also my first quarter with direct responsibility for NBCUniversal. As I observed in a note announcing some organizational changes a few weeks ago, NBCU is a very special place with tremendous opportunities ahead. I could not be more impressed with the depth of talent and particularly with our leadership team. And I'm very confident that the new streamlined organization we have just put in place, and which has been very well received, will help us move even faster and make even better decisions. As you know, NBCU operates a diverse array of businesses, each with leading market positions. In addition to film and parks, which I referenced earlier, we have the number one TV portfolio by total audience, and our TV studio is award-winning and prolific. We're the number one most-watched news organization in the U.S., and sports continues to be a huge driver with the NFL, NASCAR, golf, Premier League, the World Cup on Telemundo, including the Women's World Cup going on right now, Big Ten starting this fall, and the Paris Olympics coming up next year. I am also confident that we have the right strategy for the future. We produce premium content through our studios, distribute it through our TV networks, Peacock and third parties, and further monetize this content with our theme parks and consumer products. In streaming, we launched Peacock as an ad-supported model that is an extension of our existing business. We set out a plan, which we have adapted as needed, and Peacock is strong and growing. We gained 2 million paid subscribers in the second quarter, going from 22 million to 24 million paid subscribers. This growth was largely driven by conversion of Comcast subs to paying relationships, which started in June, and we're very pleased with the results so far. Without a doubt, consumer trends such as cord cutting and new competitors, particularly from the technology sector, present challenges for us, and we are facing an uncertain macro environment, which continues to pressure linear advertising. but I firmly believe that we have the business strategy, management depth, and financial strength to emerge as long-term winners and value creators as the landscape evolves at NBCUniversal and across the company. Another challenge in the near term are the writers' and actors' strikes. We remain committed to reaching a fair deal as soon as possible so we can get back to doing what we do best, which is making great content together. With that, let me turn it over to Jason.