Did Charter Beat Q2 Expectations on Internet Subscriber Gains?



Charter beats expectations

Charter Communications (CHTR) impressed investors by beating Wall Street expectations for both earnings and revenues in the second quarter, for which it reported its results before the trading bell today.

The cable operator reported earnings of $1.15 per share, beating estimates of $0.99 per share by 16.2%. Earnings also posted year-over-year (or YoY) growth of 121.2% from Q2 2017’s earnings of $0.52 per share. The top line of $10.9 billion exceeded both analysts’ estimates of $10.83 billion by 0.2% and prior-year revenues of $10.36 billion by 4.8%. Moreover, the company’s revenue increased consecutively for the fifth quarter.

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Internet subscriber gains in Q2 2018

Charter not only beat expectations for both revenues and earnings but also delivered YoY growth for both earnings and revenues during the quarter. The company also beat Wall Street expectations for residential Internet customers, which helped Charter impress investors and beat profits. Charter reported that 218,000 more customers signed up for its Internet services in the second quarter—higher than the analyst estimate of 185,000 additions.

Plus, the company lost fewer video subscribers than expected, which also turned out to be positive for the company and added to the second-quarter earnings. Charter reported a loss of 73,000 residential video customers in the quarter, fewer than the 91,000 it had lost in Q2 2017. Analysts expected a loss of 108,000 video subscribers.

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Cord cutting

Cable-TV companies have been facing increasing pressure to retain customers due to cord-cutting, as traditional cable subscribers are shifting to cheaper online streaming alternatives provided by tech giants like Netflix (NFLX) and Amazon’s (AMZN) Prime Video. Netflix and Amazon are increasingly investing in original content to dominate the streaming services market and offer original shows and movies to consumers.

As a result, cable giants Charter and Comcast (CMCSA) are focusing on their broadband businesses. The second-largest wireless company, AT&T (T), has also been losing satellite TV customers over the past consecutive quarters. AT&T lost 286,000 satellite TV customers and added 24,000 U-verse TV customers in the second quarter.


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