Yahoo Finance Charter (CHTR) Q1 Earnings Miss, Internet Revenues Rise Y/Y
Charter Communications CHTR delivered first-quarter 2024 earnings of $7.55 per share, which missed the Zacks Consensus Estimate by 2.8%. The reported figure increased 13.5% year over year.
Revenues of $13.67 billion increased 0.2% on a year-over-year basis, driven by growth in residential mobile service, residential Internet and advertising sales revenues, partly offset by lower residential video revenues. The top line missed the consensus mark by 0.1%.
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 $10.8 billion in the first quarter, which decreased 0.4% year over year.
Internet revenues grew 1.9% year over year to $5.8 billion, driven by promotional rate step-ups
and rate adjustments, partly offset by lower bundled revenue allocation.
Video revenues totaled $3.9 billion in the first quarter, which decreased 8.1% 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 revenues rose 0.3% year over year to $374 million, driven by voice rate adjustments,
mostly offset by a decline in wireline voice customers over the last 12 months.
First-quarter mobile service revenues totaled $685 million, which increased 37.8% year over year,
driven by mobile line growth and higher bundled revenue allocation.
Commercial revenues increased 1.3% year over year to $1.8 billion, driven by enterprise revenue growth of 3.8% year over year, partly offset by a decrease of 0.3% in SMB revenues. The year-over-year decrease in SMB revenues was due to lower monthly SMB revenue per SMB customer, primarily attributed to a higher mix of lower-priced video packages and a decline in the number of voice lines per SMB customer relationship, partly offset by customer relationship growth.
Enterprise revenues, excluding wholesale, increased 5.5% year over year, mostly reflecting PSU growth.
First-squarter advertising sales revenues of $391 million climbed 10% from the year-ago quarter’s level, primarily driven by higher political revenues. Excluding political revenues in both periods, advertising sales revenues rose 0.3% year over year, primarily due to higher advanced advertising revenues, mostly offset by a more challenged advertising market.
Other revenues totaled $699 million in the first quarter, which increased 2.4% compared with the first quarter of 2023, primarily driven by higher mobile device sales.
Subscriber Statistics
First-quarter total residential and SMB Internet customers decreased 72K. As of Mar 31, 2024, Charter served a total of 30.5 million residential and SMB Internet customers.
First-quarter total residential and SMB mobile lines increased 486K. As of Mar 31, 2024, the company served a total of 8.3 million mobile lines.
As of Mar 31, 2024, CHTR had a total of 32 million residential and SMB customer relationships, which excludes mobile-only relationships.
Residential video customers decreased 392K. As of Mar 31, 2024, Charter had 13.1 million residential video customers.
During the first quarter, the company launched two new value-oriented Internet-delivered streaming TV packages, Spectrum TV Stream and Spectrum Stream Latino, for Spectrum Internet customers. Spectrum TV Stream features many of the most popular news and entertainment networks, and Spectrum Stream Latino adds another option for Hispanic audiences to take advantage of Charter’s robust programming lineup.
Residential wireline voice customers declined 274K. As of Mar 31, 2024, CHTR had 6.4 million residential wireline voice customers. During the first quarter, CHTR added 473K residential mobile lines. Spectrum MobileTM 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.
First-quarter monthly residential revenue per residential customer totaled $120.48, and decreased 0.1% compared with the prior-year period, given a lower mix of video customer relationships and a higher mix of lower-priced video packages within Charter's video customer base, mostly offset by promotional rate step-ups, rate adjustments and the growth of Spectrum Mobile.
SMB customer relationships declined 3K while enterprise PSUs grew 5K. Charter activated 73K subsidized rural passings. Within Charter's subsidized rural footprint, total residential and SMB customer relationships increased 35K in the first quarter of 2024.
Operating Details
Total operating costs and expenses declined 1.5% year over year to $8.18 billion. Programming costs decreased 8.2% year over year to $2.57 billion, 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, renewals and adjustments. First-quarter 2024 programming costs include $28 million of favorable adjustments compared with $50 million of favorable adjustments in the prior-year period.
Other costs of revenues were $1.45 billion, up 9.8% year over year, primarily driven by higher mobile service direct costs and mobile device sales.
Costs to service customers remained flat year over year at $2.09 billion, with additional activity to support the growth of Spectrum Mobile and higher bad debt expense, offset by productivity improvements.
Sales & marketing costs were $920 million, down 2.7% year over year, primarily due to lower labor costs.
Other expenses increased 0.5% year over year at $1.14 billion.
Adjusted EBITDA rose 2.8% year over year to $5.5 billion. Adjusted EBITDA margin expanded 10 basis points on a year-over-year basis to 40.2%.
Balance Sheet & Cash Flow
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.
As of Dec 31, 2023, the total principal amount of debt was $97.6 billion and Charter's credit facilities provided approximately $5.2 billion of additional liquidity in excess of its $709 million cash position.
Cash flows from operating activities totaled $3.2 billion compared with $3.3 billion in the prior-year quarter. The year-over-year decrease in net cash flows from operating activities was primarily due to a one-time settlement payment in the first quarter of 2024, partly offset by higher Adjusted EBITDA.
Free cash flow in the first quarter of 2024 totaled $358 million, which decreased from $306 million reported in the first quarter of 2023. The year-over-year decrease in free cash flow was primarily due to an increase in capital expenditures and a decrease in net cash flows from operating activities, partly offset by a less unfavorable change in accrued expenses related to capital expenditures.
In the reported quarter, the company purchased 1.7 million shares of Charter Class A common stock and Charter Holdings common units for $567 Million.
Zacks Rank & Stocks to Consider
Charter currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the Consumer Discretionary sector are Disney DIS, Reynolds Consumer Products REYN and Roblox RBLX, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Shares of Disney have jumped 26.2% year to date. DIS is set to report second-quarter fiscal 2024 results on May 7.
Shares of Reynolds Consumer Products have gained 7% year to date. REYN is slated to report first-quarter 2024 results on May 8.
Shares of Roblox have plunged 23.5% year to date. RBLX is set to report first-quarter 2024 results on May 9.
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