Charter (CHTR) Q3 Earnings Beat, Internet User Base Rises Y/Y
Charter Communications CHTR delivered third-quarter 2023 earnings of $8.25 per share, beating the Zacks Consensus Estimate by 6.7%. The reported figure rose 11.8% year over year.
Revenues of $13.58 billion increased 0.2% on a year-over-year basis, owing to a rise in residential, Internet, mobile service and other revenues, and higher mobile device sales, partly offset by lower residential video and advertising sales revenues. The top line missed the consensus mark by 0.4%.
Segmental Details
Residential revenues totaled $10.7 billion in the third quarter, down 0.3% year over year. The decline was negatively impacted by $63 million of residential customer credits related to the temporary loss of Disney programming in September 2023.
Monthly residential revenue per residential customer totaled $119.28, down 0.6% year over year.
Under residential revenues, Internet revenues grew 3.7% year over year to $5.8 billion, driven by growth in Internet customers during the last year, promotional rate step-ups and rate adjustments. In the reported quarter, Charter added 57K Internet connections.
Video revenues of $4 billion in the third quarter were down 8.6% year over year, driven by a higher mix of lower-priced video packages within the company's video customer base. Voice revenues of $379 million decreased 3% year over year due to a decline in wireline voice customers over the last 12 months.
Mobile service revenues totaled $581 million, up 33.8% year over year, driven by mobile line growth and higher bundled revenue allocation.
Total Commercial revenues increased 0.8% year over year to $1.8 billion, driven by enterprise revenue growth of 3.7% year over year, partly offset by a small and medium business (SMB) revenue decrease of 0.9%.
Third-quarter advertising revenues decreased 20.3% year over year to $384 million, primarily driven by lower political revenues.
Other revenues increased 28.8% year over year to $677 million, driven by higher mobile device sales.
Charter Communications, Inc. Price, Consensus and EPS Surprise
Charter Communications, Inc. price-consensus-eps-surprise-chart | Charter Communications, Inc. Quote
Subscriber Statistics
Third-quarter total residential and SMB Internet customers increased by 63K. As of Sep 30, 2023, Charter served a total of 30.6 million residential and SMB Internet customers.
Third-quarter total residential and SMB mobile lines increased by 594K. As of Sep 30, 2023, Charter served a total of 7.2 million mobile lines.
As of Sep 30, 2023, Charter had a total of 32.2 million residential and SMB customer relationships, which excludes mobile-only relationships.
Third-quarter residential Internet customers increased by 57K. Residential video customers decreased by 320K.
Residential wireline voice customers declined by 288K. As of Sep 30, 2023, CHTR had seven million residential wireline voice customers.
During the third quarter, Charter added 577K residential mobile lines. SMB customer relationships grew by 5K while enterprise PSUs grew by 4K.
Operating Details
Total operating costs and expenses remained flat year over year at $8.13 billion.
Programming costs decreased 9.6% year over year to $2.59 billion. Other costs of revenues were $1.38 billion, up 15.2% year over year.
Costs to service customers increased 3.7% year over year to $2.14 billion. Sales & marketing costs were $912 million, down 1.2% year over year.
Adjusted EBITDA increased 0.7% year over year to $5.44 billion. Adjusted EBITDA margin expanded 20 basis points on a year-over-year basis to 40.1%.
Balance Sheet & Cash Flow
As of Sep 30, 2023, the total principal amount of debt was $97.6 billion and Charter's credit facilities provided approximately $3.3 billion of additional liquidity in excess of its $571 million cash position.
Cash flows from operating activities totaled $3.9 billion, up 2.6% year over year.
Free cash flow was $1.1 billion compared with the year-ago quarter’s $1.5 billion.
In the reported quarter, the company repurchased two million shares of Charter Class A common stock and Charter Communications Holdings, LLC common units for approximately $854 million.
Zacks Rank & Stocks to Consider
Charter currently carries a Zacks Rank #3 (Hold).
JAKKS Pacific JAKK, Cable One CABO and AMC Networks AMCX are some better-ranked stocks that investors can consider in the broader sector. JAKK, CABO and AMCX 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 JAKKS Pacific have declined 3.1% year to date. JAKK is set to report its third-quarter 2023 results on Nov 1.
Shares of Cable One have gained 17.8% year to date. CABO is slated to report its third-quarter 2023 results on Nov 2.
Shares of AMC Networks have declined 26.4% year to date. AMCX is set to report its fourth-quarter fiscal 2023 results on Nov 3.
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