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DISH Network (DISH) Q2 Earnings Miss, Revenues Down Y/Y

Zacks Equity Research

DISH Network DISH reported second-quarter 2019 earnings of 60 cents per share that missed the Zacks Consensus Estimate by 6 cents and declined 27.7% year over year.

Revenues declined 7.2% year over year to $3.21 billion but surpassed the consensus mark of $3.14 billion.

The United States revenues declined 7.3% year over year to $3.20 billion. Canada and Mexico revenues increased 7.3% from the year-ago quarter to $10.8 million.

DISH exited the reported quarter with 9.560 million DISH TV and 2.472 million Sling TV subscribers. Total Pay-TV subscribers were 12.032 million.

DISH Network Corporation Price, Consensus and EPS Surprise

 

DISH Network Corporation Price, Consensus and EPS Surprise

DISH Network Corporation price-consensus-eps-surprise-chart | DISH Network Corporation Quote

Wireless Details

On Jul 26, 2019, DISH announced that it will enter the U.S. wireless market as the fourth, nationwide, facilities-based network competitor.

The company has inked agreements with the Antitrust Division of the U.S. Department of Justice (DOJ), T-Mobile U.S., Inc. and Sprint Corporation to complete this transaction.

Moreover, per the latest agreement, Jun 14, 2023, is now DISH’s deadline to provide 70% of the nation's population access to its 5G broadband network.

Additionally, following completion of the merger between Sprint and T-Mobile, DISH will buy Sprint's prepaid businesses and customers, including Boost Mobile, Virgin Mobile and the Sprint-branded prepaid service.

The company will also acquire 14 MHz of Sprint's nationwide 800 MHz spectrum.

Segment Details

Subscriber-related revenues (98.5% of revenues) declined 7.5% from the year-ago quarter to $3.16 billion. Equipment sales and other revenues increased 10% to $39.4 million.

Pay-TV video and related revenues fell 7% to $3.12 billion. Broadband revenues plunged 32.5% year over year to $45.5 million.

Pay-TV ARPU increased 0.9% year over year to $86.34, driven by DISH TV programming package price increases in 2018 and the first quarter of 2019, and higher revenues from advertising services.

Pay-TV subscribers declined approximately 31K compared with 151K subscribers lost in the year-ago quarter. Moreover, the churn rate was 1.48% compared with 1.46% in the year-ago quarter.

DISH added approximately 48,000 net Sling TV subscribers compared with roughly 41,000 added in the year-ago quarter. This increase was primarily driven by higher Sling TV subscriber activations.

Operating Details

In the second quarter, subscriber-related expenses declined 7.3% year over year to $2 billion. As percentage of revenues, subscriber-related expenses decreased 10 basis points (bps) on a year-over-year basis to 62.3%.

Total subscriber acquisition costs (SACs) increased 29.9% from the year-ago quarter to $238.1 million. As percentage of revenues, SACs expanded 210 bps to 7.4%.

DISH TV SAC was $786, up 3% year over year primarily due to increase in advertising and hardware costs.

EBITDA decreased 24.9% year over year to $559.7 million. EBITDA margin contracted 410 bps on a year-over-year basis to 17.4%.

Operating income fell 24.8% year over year to $430.7 million. Operating margin contracted 310 bps to 13.4%.

Balance Sheet

As of Jun 30, 2019, cash, cash equivalents and current marketable investment securities were $2.73 billion compared with $2.39 billion as of Mar 31, 2019.

Zacks Rank and Stocks to Consider

DISH currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader consumer discretionary sector are Electronic Arts EA, Liberty Global LBTYA and Lionsgate LGF.A, each carrying a Zacks #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

While EA is set to report on Jul 30, Liberty Global and Lionsgate are scheduled to report on Aug 7 and 8, respectively.

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