Comcast’s third quarter results were better than expected and the familiar storyline revolves around how customers are cutting the cord. That storyline is legit, but Comcast’s broadband business is booming and its move to embrace and integrate over-the-top services with its X1 platform appears to be paying off.
At a high level, Comcast reported third quarter earnings of $2.88 billion, or 62 cents a share, on revenue of $22.13 billion, up 5 percent from a year ago. Non-GAAP earnings for the third quarter were 65 cents a share. Wall Street was looking for earnings of 61 cents a share on revenue of $21.82 billion.
In addition, Comcast saw its business services unit continue to deliver strong growth with third quarter revenue of $1.8 billion, up 10.6 percent from a year ago. But the notable surge in the third quarter, came from Comcast’s high-speed Internet business as revenue jumped 9.6 percent.
Comcast’s digital transformation journey:
Comcast added 363,000 high-speed Internet customers in the quarter to more than offset 106,000 video customer net losses. A 35,000 net loss in voice customers was offset by 42,000 customer additions for security and automation.
If you break those customer relationships down, it’s clear that Comcast is losing the bundle, but retaining single product customers. Add it up and Comcast is navigating shifts in its customer base as well as any company.
On a conference call with analysts, Comcast CEO Brian Roberts said:
Customer relationship net adds of 288,000 were driven by 363,000 net new Broadband customers, the best third quarter in 10 years. Collectively, residential Broadband and business services revenue increased by nearly 10%.
Roberts added that the move to look at its broadband holistically as a product–rebranded xFi–adding new features like parental controls and hooks into the smart home have paid off. “By aggregating and integrating everything from linear TV, to applications like Netflix, YouTube and soon, Amazon Prime Video, X1 delivers an unmatched user experience and the broadest range of content that underscores the value of our broadband service,” said Roberts.
The other thread worth noting is that Comcast’s ability to keep single product customers enables it to cross-sell another bundle in the future. For instance, Comcast’s wireless business just past more than 1 million customer lines. Perhaps the broadband and mobile bundle is the new cable-ish package for customers.
Comcast certainly has its challenges ahead. For instance, 5G will create a new set of broadband competitors. In addition, Comcast still has to get its networking blocking and tackling down. A series of outages for business customers spurred a same old Comcast refrain. But it’s hard to count Comcast out given the way it has navigated things so far.