Comcast's Solid Q3 Results Boosted By Double-Digit Growth In Business Services
Cable giant Comcast posted positive financial results for its 2016 third quarter, bolstered by its businesses services segment that grew its revenue more than 15 percent year-over-year.
Philadelphia-based Comcast reported business services revenues of $1.40 billion for the third quarter ended Sept. 30, an increase of 15.5 percent from $1.21 billion in the third quarter of 2015. The company, announcing its quarterly results Wednesday, attributed the upward trend to an increasing number of small business customers, but noted that growth in its medium-sized and enterprise business revenues added to the quarter's revenue growth.
In Comcast's second quarter, small business sales accounted for about 75 percent of business services revenues and 60 percent of business services' growth. In the third quarter small business sales continued to grow, but accounted for about 70 percent of business services revenue with mid-market and enterprise sales accounting for a larger share of business services revenue.
"We are seeing healthy growth in mid-sized business customers now," said Neil Smit, president and CEO of Comcast Cable Communications, on an earnings call Wednesday.
Comcast is also starting to land more enterprise deals for its business services.
"We have a large financial institution with about 2,000 locations, a large healthcare provider with 1,000 locations, and a retailer with about 2,000 locations. We are starting to see the enterprise business grow," Smit said.
Michael Cavanagh, Comcast's senior executive vice president and CFO, also speaking on the earnings call, added that mid-market sales are being fueled by the addition of more Ethernet sites as Comcast continues to invest in expanding that portion of the business.
For the third quarter Comcast reported a 14.2 percent increase in consolidated revenue to $21.31 billion, up from $18.67 billion in the year ago quarter in Q3 2015. Earnings per share also saw a 15 percent bump to 92 cents, up from 80 cents in Q3 2015.
Operating income increased by 11 percent to $4.44 billion. Operating Cash Flow Increased 10.5 percent to $6.84 billion in the quarter.
Voice services revenues, however, continued to decline. Revenue from that segment dropped 2.4 percent in the third quarter to $878 million.
Brian Roberts, CEO of Comcast, said on the earnings call that the "terrific Q3 results" were driven by strength across the company, including its video segment, which saw its best Q3 in 10 years, and in broadband, which posted its best Q3 results in seven years.
Roberts also attributed Comcast's strong Q3 to the broadcast and distribution of the 2016 Olympic Games in Rio in August.
During the question-and-answer portion of the earnings call, Comcast executives declined to comment on AT&T's acquisition plans for Time Warner, a deal that is similar to Comcast's NBCUniversal buyout in 2011 that helped the company establish a media presence.
Cavanough added that Comcast's own media assets, including NBCUniversal and the integration between popular video streaming service Netflix and the company's Xfinity X1 set top boxes, are helping to add more customers.
"[Our] assets are great, and they are working well together … we couldn't be happier with the momentum of this year," he said.
Comcast announced plans for its new Mobile Business unit in the second quarter. Roberts reported "no new news" on its wireless strategy this quarter, but said the company is "getting closer to trialing the product,' which it plans to launch in 2017.