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Charter (CHTR) Q2 Earnings Beat, Internet Revenues Rise Y/Y
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Charter Communications (CHTR - Free Report) delivered second-quarter 2024 earnings of $8.49 per share, which beat the Zacks Consensus Estimate by 12.5%. The reported figure increased 5.5% year over year.
Revenues of $13.68 billion increased 0.2% on a year-over-year basis, driven by growth in residential mobile service and Internet revenues, partly offset by lower residential video revenues. The top line beat the consensus mark by 0.2%.
Charter Communications, Inc. Price, Consensus and EPS Surprise
Residential revenues totaled $10.76 billion in the second quarter, which decreased 0.6% year over year.
Internet revenues grew 1.3% year over year to $5.8 billion, driven by promotional rate step-ups and rate adjustments, partly offset by lower bundled revenue allocation and retention offers extended to customers who previously received an Affordable Connectivity Program (ACP) subsidy.
Video revenues totaled $3.9 billion in the second quarter, which decreased 7.7% year over year, primarily due to a decline in video customers during the last year and a higher mix of lower-priced video packages within Charter's video customer base, partly offset by promotional rate step-ups and video rate adjustments that pass through programmer rate increases.
Voice revenue decreased 4.2% year over year to $350 million, owing to a decline in wireline voice customers over the last 12 months, partly offset by voice rate adjustments.
Second-quarter mobile service revenues totaled $737 million, which increased 36.9% year over year, driven by mobile line growth and higher bundled revenue allocation.
Commercial revenues increased 2.1% year over year to $1.8 billion, driven by enterprise and SMB revenue growth of 4.5% and 0.6% year over year, respectively. The year-over-year increase in the second quarter of 2024 in SMB revenues was driven by higher monthly SMB revenue per SMB customer, primarily due to rate adjustments and customer relationship growth.
Enterprise revenues, excluding wholesale, increased 5.9% year over year, mostly reflecting PSU growth.
Second-quarter advertising sales revenues of $397 million increased 3.3% year over year, primarily driven by higher political revenues. Excluding political revenues in both periods, advertising sales revenues decreased 2.2% year over year due to a more challenged advertising market, partly offset by higher advanced advertising revenues.
Other revenues totaled $706 million in the second quarter, which increased 6% from the second quarter of 2023, primarily driven by higher mobile device sales.
Subscriber Statistics
As of Jun 30, 2024, CHTR had a total of 31.8 million residential and SMB customer relationships, which excludes mobile-only relationships.
Second-quarter total residential and SMB Internet customers decreased 0.7% year over year to 30.36 million. Residential Internet customers decreased 154,000, largely attributable to the end of the FCC's ACP subsidies in the second quarter, against an increase of 70,000 during the second quarter of 2023.
Residential video customers decreased 9.6% year over year to 12.71 million.
Residential voice customers declined 14.9% year over year to 6.17 million. As of Jun 30, 2024, Charter had 6.2 million residential wireline voice customers, down 268K year over year.
Second-quarter total residential and SMB mobile lines increased 557K. As of Jun 30, 2024, Charter served a total of 8.8 million mobile lines. Spectrum Mobile is available to all new and existing Spectrum Internet customers and offers the fastest overall speeds, with plans that include 5G access, which do not require contracts and include taxes and fees in the price.
Second-quarter 2024 monthly residential revenue per residential customer totaled $120.77 and increased 0.4% year over year. The increase was due to promotional rate step-ups, rate adjustments and the growth of Spectrum Mobile, partly offset by a lower mix of video customer relationships, a higher mix of lower-priced video packages within Charter's video customer base and retention offers extended to customers who previously received an ACP subsidy.
SMB customer relationships increased 3,000 in the second quarter of 2024 compared with an increase of 4,000 SMB customer relationships in the second quarter of 2023. Enterprise PSUs grew 4,000 in the second quarter of 2024 compared with 6,000 added in the second quarter of 2023.
Operating Details
Total operating costs and expenses declined 1.4% year over year to $8.02 billion. Programming costs decreased $268 million, or 9.8%, from the year-ago quarter, reflecting fewer video customers and a higher mix of lower-cost packages within Charter's video customer base, partly offset by contractual programming rate increases and renewals.
Other costs of revenues increased $171 million, or 12.6%, year over year, primarily driven by higher mobile service direct costs and mobile device sales.
Costs to service customers decreased $88 million, or 4.2%, year over year, primarily due to lower labor costs and lower bad debt expenses.
Sales and marketing expenses increased $17 million, or 1.9%, year over year, primarily due to higher marketing costs.
Other expenses increased $51 million, or 4.7%, from the year-ago quarter, mostly driven by an insurance expense benefit in the year-ago quarter.
Second-quarter adjusted EBITDA of $5.7 billion grew 2.6% year over year. Adjusted EBITDA margin expanded 10 basis points on a year-over-year basis to 41.4%.
Balance Sheet & Cash Flow
As of Jun 30, 2024, total principal amount of debt was $96.5 billion and Charter's credit facilities provided approximately $4.1 billion of additional liquidity in excess of CHTR's $602 million cash position.
As of Mar 31, 2024, total principal amount of debt was $97.8 billion and Charter's credit facilities provided approximately $2.9 billion of additional liquidity in excess of Charter's $661 million cash position.
Second-quarter net cash flows from operating activities totaled $3.9 billion, compared with $3.3 billion in the prior year.
Free cash flow totaled $1.29 billion, which increased significantly from $668 million reported in the second quarter of 2023. The year-over-year increase in free cash flow was primarily due to higher adjusted EBITDA, a more favorable change in working capital and lower cash taxes due to timing.
In the reported quarter, the company purchased 1.5 million shares of Charter Class A common stock and Charter Holdings common units for $404 million.
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Charter (CHTR) Q2 Earnings Beat, Internet Revenues Rise Y/Y
Charter Communications (CHTR - Free Report) delivered second-quarter 2024 earnings of $8.49 per share, which beat the Zacks Consensus Estimate by 12.5%. The reported figure increased 5.5% year over year.
Revenues of $13.68 billion increased 0.2% on a year-over-year basis, driven by growth in residential mobile service and Internet revenues, partly offset by lower residential video revenues. The top line beat the consensus mark by 0.2%.
Charter Communications, Inc. Price, Consensus and EPS Surprise
Charter Communications, Inc. price-consensus-eps-surprise-chart | Charter Communications, Inc. Quote
Segmental Details
Residential revenues totaled $10.76 billion in the second quarter, which decreased 0.6% year over year.
Internet revenues grew 1.3% year over year to $5.8 billion, driven by promotional rate step-ups
and rate adjustments, partly offset by lower bundled revenue allocation and retention offers extended to customers who previously received an Affordable Connectivity Program (ACP) subsidy.
Video revenues totaled $3.9 billion in the second quarter, which decreased 7.7% year over year, primarily due to a decline in video customers during the last year and a higher mix of lower-priced video packages within Charter's video customer base, partly offset by promotional rate step-ups and video rate adjustments that pass through programmer rate increases.
Voice revenue decreased 4.2% year over year to $350 million, owing to a decline in wireline
voice customers over the last 12 months, partly offset by voice rate adjustments.
Second-quarter mobile service revenues totaled $737 million, which increased 36.9% year over year, driven by mobile line growth and higher bundled revenue allocation.
Commercial revenues increased 2.1% year over year to $1.8 billion, driven by enterprise and SMB revenue growth of 4.5% and 0.6% year over year, respectively. The year-over-year increase in the second quarter of 2024 in SMB revenues was driven by higher monthly SMB revenue per SMB customer, primarily due to rate adjustments and customer relationship growth.
Enterprise revenues, excluding wholesale, increased 5.9% year over year, mostly reflecting PSU growth.
Second-quarter advertising sales revenues of $397 million increased 3.3% year over year, primarily driven by higher political revenues. Excluding political revenues in both periods, advertising sales revenues decreased 2.2% year over year due to a more challenged advertising market, partly offset by higher advanced advertising revenues.
Other revenues totaled $706 million in the second quarter, which increased 6% from the second quarter of 2023, primarily driven by higher mobile device sales.
Subscriber Statistics
As of Jun 30, 2024, CHTR had a total of 31.8 million residential and SMB customer relationships, which excludes mobile-only relationships.
Second-quarter total residential and SMB Internet customers decreased 0.7% year over year to 30.36 million. Residential Internet customers decreased 154,000, largely attributable to the end of the FCC's ACP subsidies in the second quarter, against an increase of 70,000 during the second quarter of 2023.
Residential video customers decreased 9.6% year over year to 12.71 million.
Residential voice customers declined 14.9% year over year to 6.17 million. As of Jun 30, 2024, Charter had 6.2 million residential wireline voice customers, down 268K year over year.
Second-quarter total residential and SMB mobile lines increased 557K. As of Jun 30, 2024, Charter served a total of 8.8 million mobile lines. Spectrum Mobile is available to all new and existing Spectrum Internet customers and offers the fastest overall speeds, with plans that include 5G access, which do not require contracts and include taxes and fees in the price.
Second-quarter 2024 monthly residential revenue per residential customer totaled $120.77 and increased 0.4% year over year. The increase was due to promotional rate step-ups, rate adjustments and the growth of Spectrum Mobile, partly offset by a lower mix of video customer relationships, a higher mix of lower-priced video packages within Charter's video customer base and retention offers extended to customers who previously received an ACP subsidy.
SMB customer relationships increased 3,000 in the second quarter of 2024 compared with an increase of 4,000 SMB customer relationships in the second quarter of 2023. Enterprise PSUs grew 4,000 in the second quarter of 2024 compared with 6,000 added in the second quarter of 2023.
Operating Details
Total operating costs and expenses declined 1.4% year over year to $8.02 billion. Programming costs decreased $268 million, or 9.8%, from the year-ago quarter, reflecting fewer video customers and a higher mix of lower-cost packages within Charter's video customer base, partly offset by contractual programming rate increases and renewals.
Other costs of revenues increased $171 million, or 12.6%, year over year, primarily driven by higher mobile service direct costs and mobile device sales.
Costs to service customers decreased $88 million, or 4.2%, year over year, primarily due to lower labor costs and lower bad debt expenses.
Sales and marketing expenses increased $17 million, or 1.9%, year over year, primarily due to higher marketing costs.
Other expenses increased $51 million, or 4.7%, from the year-ago quarter, mostly driven by an insurance expense benefit in the year-ago quarter.
Second-quarter adjusted EBITDA of $5.7 billion grew 2.6% year over year. Adjusted EBITDA margin expanded 10 basis points on a year-over-year basis to 41.4%.
Balance Sheet & Cash Flow
As of Jun 30, 2024, total principal amount of debt was $96.5 billion and Charter's credit facilities provided approximately $4.1 billion of additional liquidity in excess of CHTR's $602 million cash position.
As of Mar 31, 2024, total principal amount of debt was $97.8 billion and Charter's credit facilities provided approximately $2.9 billion of additional liquidity in excess of Charter's $661 million cash position.
Second-quarter net cash flows from operating activities totaled $3.9 billion, compared with $3.3 billion in the prior year.
Free cash flow totaled $1.29 billion, which increased significantly from $668 million reported in the second quarter of 2023. The year-over-year increase in free cash flow was primarily due to higher adjusted EBITDA, a more favorable change in working capital and lower cash taxes due to timing.
In the reported quarter, the company purchased 1.5 million shares of Charter Class A common stock and Charter Holdings common units for $404 million.
Zacks Rank & Stocks to Consider
Charter currently carries a Zacks Rank #3 (Hold).
Bally’s (BALY - Free Report) , Cinemark (CNK - Free Report) and Crocs (CROX - Free Report) are some better-ranked stocks that investors can consider in the Zacks Consumer Discretionary sector. BALY, CNK and CROX carry a Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Shares of Bally’s have gained 21.3% year to date. BALY is set to report second-quarter 2024 results on Jul 31.
Shares of Cinemark have jumped 51.2% year to date. CNK is slated to report second-quarter 2024 results on Aug 2.
Shares of Crocs have gained 34% year to date. CROX is set to report second-quarter 2024 results on Aug 1.