Comcast Corporation

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

Thank you, Operator, and welcome, everyone. Joining us on today's call are Brian Roberts, Mike Cavanaugh, Jason Armstrong, and Dave Watson. 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. Across the company, our team is managing extremely well in a highly competitive and evolving marketplace. We have a clear vision for how we are going to compete now and into the future, combined with a sharp focus on execution. Equally important, our disciplined capital allocation strategy, coupled with our strong balance sheet, puts us in an enviable position relative to our peers to invest organically and aggressively in our six scaled and diverse growth businesses, namely residential broadband, wireless, business services, theme parks, studios, and streaming. These businesses comprise more than 55% of the company's total revenue today, and that proportion will only grow over time. In the first quarter, These businesses generated a high single-digit increase in revenue on a trailing 12-month basis, and when combined with our substantial share repurchase activity, enabled us to deliver double-digit adjusted EPS growth, as well as significant growth in free cash flow per share. In fact, since 2018, we grew adjusted EPS over 50%, and free cash flow per share nearly 25%. Now, for some of the highlights of the first quarter, I'll start with broadband. The broadband market remains extremely competitive, particularly within the market for more price-conscious consumers. We continue to be intensely focused on segmentation, providing customers with options that meet both their lifestyle and budget. Importantly, we are striking the right balance between ARPU and subscribers, which is clearly reflected in our first quarter results. where, despite modest subscriber losses, ARPU grew over 4%, driving mid-single-digit growth in residential broadband revenue to over $6.5 billion. We continue to see extremely encouraging broadband consumption trends across our base of 32 million customers. Usage on our network rose double digits year over year, with broadband-only households consuming over 700 gigabytes of data each month. and our broadband customers continue to value faster speeds. Today, over 70% of our residential subscribers receive speeds of 500 megabits per second or higher, and around one-third are getting a gig or more. We believe that consumers' expectations for their broadband experience in terms of speed, reliability, security, and performance will only increase over time. It is extremely important to us that our network upgrades stay well ahead of this demand. Our deployment of mid-splits doubled year over year and now reach 40% of the footprint. The investments we are making to increase capacity and incorporate multi-gigabit symmetrical speeds everywhere we offer service put us in a great position to capitalize on these very favorable consumer trends. And when combined with our rapid footprint expansion, set us up to gain market share and return to broadband subscriber growth over time. Turning to wireless, we increased our domestic customer lines by 21% year-over-year to nearly 7 million. Yet with wireless penetration of our residential broadband customer base still only 11%, we have plenty of room to grow. We continue to see the benefit of bundling broadband and mobile, which decreases churn and improves customer lifetime value. Our customers also benefit by being connected to our Wi-Fi network, which is the largest in the nation. In fact, 90% of all Xfinity mobile traffic is delivered over Wi-Fi, not cellular, and we are constantly adding new features to further differentiate the experience. The most recent example is our introduction of Wi-Fi Boost, which enables any Xfinity mobile customer to experience speeds of up to a gig whenever they connect to our 23 million hotspots at no additional cost. Across our connectivity and platforms business, we're focused on profitably serving each segment of the market from our premium and traditional customers who want fully featured products to more price-driven consumers. With regard to the latter, we are introducing now a new brand and product portfolio targeting the prepaid market that delivers high-quality, low-cost internet, mobile, and streaming TV products with simple, all-in pricing. Now, Internet and mobile will be particularly helpful to those Americans impacted by the end of ACP, bringing them another option for affordable, reliable connectivity and supplementing our Internet Essentials program, which we offer to eligible households as part of our longstanding commitment to help close the digital divide in America. Turning to content and experiences, let's start with parks. We continue to see strong underlying demand in both Hollywood and Japan, where healthy attendance and per-cap levels were once again driven by the success of Super Nintendo World. Building on our momentum, later this year we're opening our newest Nintendo-themed land, Donkey Kong Country, which will increase the size of Super Nintendo World in Japan by 70%. Switching gears to Orlando, we started to feel some pressure on attendance levels late in the first quarter, which tends to occur in tandem with the ebbs and flows of new attractions in the market. Right now, we happen to be lapping the multi-year surge in attendance from our opening of new attractions in prior periods, but we remain confident about our longer-term growth opportunities, especially as we look ahead to next year with the opening of Epic Universe. With three new hotels and five immersive worlds featuring more than 50 attractions, entertainment, dining, and shopping experiences, it will be the most technologically advanced park in the world. Together with our three current gates in Orlando, Epic will enable us to offer a full week's vacation experience to even more guests. Moving to studios, we're incredibly proud of our film team and our recent ranking as the number one global studio by worldwide box office, and winner of eight Academy Awards, including Best Picture for Christopher Nolan's Oppenheimer. On the back of our fantastic performance in 2023, the power of our studios continued this quarter with the theatrical release of Kung Fu Panda 4, which has grossed over $480 million in worldwide box offices to date. And we have an exciting slate still ahead. For the third year in a row, we'll release more movies than any other major studio, with The Fall Guy, an action thriller starring Ryan Gosling and Emily Blunt, coming this May, Despicable Me 4, Illumination's newest installment of this heist-grossing animated franchise, as well as our adaptation of Twisters, both debuting in July, and Wicked, one of the most highly anticipated movies of 2024, coming in November. Finally, in media, we are successfully managing the segment as one business across linear and streaming. By providing the tens of millions of traditional pay TV subscribers, as well as streamers, with choice in how they engage with us, we continue to generate significant audience for our programming. Big events like the Olympics, Sunday Night Football, Big Ten, top entertainment shows like Saturday Night Live, and Law & Order. With strong consumer demand for our content, we're well positioned to evolve with the changing markets. Our exclusively streamed NFL wildcard game was a big success this past quarter. We added and then retained even more new Peacock subscribers than we expected. Overall, people are staying with us to engage in a broad range of content, spending 90% of their time on the platform viewing non-sports programming. This includes scripted shows like TED and reality shows like The Traitors, both of which ranked within Nielsen's streaming top ten. and our award-winning collection of films like Oppenheimer, which premiered exclusively on Peacock in February and was the most-watched film across all streaming in its first seven days on the platform. Clearly, Peacock has been on a great trajectory since our launch four years ago. We're at 34 million paid subscribers, having grown 12 million year-over-year, and at a $10 ARPU. Looking ahead, our content offering provides such great value proposition that we should have some real pricing power over time. Of course, sports also play an important role in our media business, and that's especially true this year. Following the Kentucky Derby in May, we'll have the Paris Olympics for 17 nights this summer. With more programming hours on the NBC broadcast network than any previous Olympics and over 5,000 hours of live coverage on Peacock, the games are on track to generate the most advertising revenue in history with $1.2 billion in ad sales commitments. Right after the Olympics, we have the return of football with Big Ten, Sunday Night Football, and the NFL's first ever Friday night opening game from Sao Paulo streaming exclusively on Peacock. So wrapping up, I am really proud of the work that our teams across the company are doing. Together, we're executing at the highest level and positioning ourselves for growth in a challenging and dynamic marketplace.