Charter (CHTR) Q4 Earnings Miss, Internet User Base Rises Y/Y
Charter Communications CHTR delivered fourth-quarter 2023 earnings of $7.07 per share, which missed the Zacks Consensus Estimate by 6.7%. The reported figure increased 20.8% year over year.
Revenues of $13.71 billion increased 0.3% on a year-over-year basis, owing to a rise in residential Internet, residential mobile service and other revenues, and higher mobile device sales, partly offset by lower residential video as well as advertising sales 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 $10.7 billion in the fourth quarter, which remained unchanged year over year.
Monthly residential revenue per residential customer totaled $119.41, up 0.1% year over year, given promotional rate step-ups, rate adjustments and the accelerated growth of Spectrum Mobile.
Under residential revenues, Internet revenues grew 3% year over year to $5.8 billion, driven by growth in Internet customers during the last year, promotional rate step-ups and rate adjustments, partly offset by lower bundled revenue allocation.
Video revenues of $3.9 billion in the fourth quarter were down 8.1% year over year, mainly due to a higher mix of lower-priced video packages within the company's video customer base. Voice revenues of $393 million increased 3.8% year over year, driven by voice rate adjustments, partly offset by a decline in wireline voice customers over the last 12 months.
Mobile service revenues totaled $626 million, up 35.7% year over year, driven by mobile line growth and higher bundled revenue allocation.
Total Commercial revenues increased 0.9% year over year to $1.8 billion, driven by enterprise revenue growth of 3.8% year over year. Small and medium business (SMB) revenues decreased 0.9% due to lower monthly SMB revenue per customer.
Fourth-quarter advertising revenues decreased 23.4% year over year to $428 million, primarily due to lower political revenues.
Other revenues increased 24.4% year over year to $771 million, driven by higher mobile device sales.
Subscriber Statistics
Fourth-quarter total residential and SMB Internet customers increased 61K. As of Dec 31, 2023, Charter served a total of 30.6 million residential and SMB Internet customers, with 155K total Internet customers added in 2023.
Fourth-quarter total residential and SMB mobile lines increased 564K. As of Dec 31, 2023, Charter served a total of 7.8 million mobile lines, with 2.5 million mobile lines added in 2023.
As of Dec 31, 2023, Charter had a total of 29.9 million residential and SMB customer relationships, which excludes mobile-only relationships.
Fourth-quarter residential Internet customers increased 62K. Residential video customers decreased 248K, partly due to video disconnects related to the temporary loss of Disney programming in early September. As of Dec 31, 2023, Charter had 13.5 million residential video customers.
In October, Charter began deploying Xumo Stream Boxes to video customers. The Xumo Stream Box combines a live TV experience with access to hundreds of the most popular direct-to-consumer TV applications and features unified search and discovery along with a curated content offering based on the customer's interests and subscriptions.
Residential wireline voice customers declined 248K. As of Dec 31, 2023, CHTR had 6.7 million residential wireline voice customers.
During the fourth quarter, CHTR added 532K residential mobile lines. SMB customer relationships declined 2K while enterprise PSUs grew 5K.
During the fourth quarter, Charter activated 105K subsidized rural passings. Within Charter's subsidized rural footprint, total residential and SMB customer relationships increased 34K in the fourth quarter of 2023.
Operating Details
Total operating costs and expenses declined 0.7% year over year at $8.13 billion.
Programming costs decreased 10.6% year over year to $2.5 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 and renewals.
Other costs of revenues were $1.5 billion, up 15% year over year, primarily driven by higher mobile device sales and other mobile direct costs, partly offset by lower advertising sales expenses.
Costs to service customers increased 2.1% year over year to $2.1 billion, primarily driven by additional activity to support the growth of Spectrum Mobile, partly offset by productivity improvements.
Sales & marketing costs were $900 million, down 1.6% year over year, primarily due to lower labor costs.
Other expenses declined 1.5% year over year at $1.1 billion.
Adjusted EBITDA rose 1.6% year over year to $5.57 billion. Adjusted EBITDA margin expanded 60 basis points on a year-over-year basis to 40.6%.
Balance Sheet & Cash Flow
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.
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, representing a decrease of $75 million compared with the fourth quarter of 2022.
In the reported quarter, the company purchased 3.2 million shares of Charter Class A common stock and Charter Holdings common units for $1.3 billion.
Zacks Rank & Stocks to Consider
Charter currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the Consumer Discretionary sector are Universal Technical Institute UTI, Sphere Entertainment Co. SPHR and Flexsteel Industries FLXS, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Universal Technical Institute is set to report its quarterly reports on Feb 7. Flexsteel Industries and Sphere Entertainment Co. are slated to report each of their quarterly results on Feb 5.
The Zacks Consensus Estimate for UTI’s fourth-quarter 2023 earnings per share is pegged at 6 cents, which remained unchanged over the past 30 days.
The Zacks Consensus Estimate for SPHR’s fourth-quarter 2023 loss per share is pegged at 73 cents per share, which remained unchanged over the past 30 days.
The Zacks Consensus Estimate for FLXS’ fourth-quarter 2023 earnings is pegged at 57 cents per share, up 111.1% over the past 30 days.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Charter Communications, Inc. (CHTR) : Free Stock Analysis Report
Universal Technical Institute Inc (UTI) : Free Stock Analysis Report
Flexsteel Industries, Inc. (FLXS) : Free Stock Analysis Report
Sphere Entertainment Co. (SPHR) : Free Stock Analysis Report
