Comcast Business Booms During COVID-19 Pandemic As Customers Demand More Broadband

The cable giant's business revenues, driven by its strong broadband internet and networking services, weren't hampered at all by the global COVID-19 pandemic during Q1 2020. Comcast's number of net-new business and residential internet customers climbed up 27 percent year-over-year.

The COVID-19 coronavirus pandemic couldn't stop Comcast Business Services, which saw its revenue climb 8 percent during during its most recent first quarter, according to Comcast executives.

In fact, Comcast Communications, the segment which houses the Comcast Business segment, had its best first quarter for customer net adds in 12 years thanks to the company's strong broadband internet services, said Comcast Chairman and CEO Brian Roberts.

"COVID-19 has created a tremendous amount of uncertainty and financial strain for people and businesses around the globe," Roberts told investors on Thursday morning. "Our engineers have done a wonderful job of creating and maintaining a network flexible enough to allow so many of us to learn and work at home ... It’s tough to fathom what would have happened if this virus struck just five years ago."

Even so, Comcast’s stock fell 5.01 percent to $37.04 on Thursday as the company warned it would be “negatively affected” by the pandemic in the next quarter because of the “significant deterioration in domestic economic conditions in recent weeks.” Comcast also said its financial outlook would be harmed by by the costs associated with customer connectivity related to the increase in remote work.

But Roberts said that Comcast's network is operating "incredibly well" during this time, despite an unprecedented shift in network usage, including a 33 percent increase in upstream traffic. The company is stress-testing the network with 700,000 diagnostic speed tests on most days, he added.

[Related: Here’s How Telecom Companies Are Helping Customers During Coronavirus]

Comcast's Cable Communications unit -- which includes high-speed internet, voice, video, wireless and business services -- continued to rise, despite massive outside pressures. The segment rose 4.5 percent and generated revenue of $14.92 billion, up from $14.28 billion in the first quarter of 2019. Comcast said those gains were driven by increases in high-speed internet net additions and increasing services per customer.

High-speed internet revenue rose 9.3 percent to $5 billion, up from $4.58 billion a year ago. For the first-quarter 2020, Comcast added a total of 477,000 net-new high-speed business and residential internet customers -- up 27 percent year-over-year -- the best quarterly result for net adds in 12 years and the lowest quarterly customer churn on record, said Michael Cavanagh, Comcast's senior executive vice president and CFO, during the call.

Comcast Business pulled in $2.04 billion during Q1, up 9 percent from $1.89 billion during 2019's first-quarter, which the cable giant attributed to an increase in average rates and an increase in the number of customers receiving its services. Revenue per business customer relationship also increased 4.1 percent during the quarter, Cavenagh said.

Philadelphia-based Comcast has been working to expand its relationships with business customers through value-added services, such as Comcast Business WiFi Pro and SecurityEdge. Comcast in 2018 launched its ActiveCore SDN platform, with SD-WAN as its inaugural offering. The provider has since added a managed router offering and plans to follow up with more on top of the platform, including a managed security and managed Wi-Fi offering.

Comcast has historically targeted small-to-midsized companies with its business connectivity services, many of which are being hit hard by the coronavirus pandemic. While a number of SMBs have had to close their doors and pause their accounts, Comcast is still seeing "a fair amount" of new business connections during this unprecedented time, said David Watson, president and CEO of Comcast's cable division. While SMBs are still the primary target for Comcast Business services, Watson added that enterprise business is an increasingly important segment for Comcast Business.

Watson also congratulated Bill Stemper, Comcast's president of Comcast Business, and his team for "moving on a dime" to help business customers on a local level during this time. Terry Connell, senior vice president of sales and sales operations for Comcast Business, reports to Stemper and Comcast Business’ longtime channel chief, Craig Schlagbaum, reports to Connell.

In addition to business services, Comcast also attributed some of the strength of its cable portfolio to Xfinity Mobile, its wireless service that was introduced in 2017, thanks to the addition of more customer lines. Xfinity Mobile posted revenues of $343 million, up a whopping 52.1 percent from last year's first-quarter result of $225 million.

Like competitors AT&T and Verizon, Comcast also signed the Federal Communications Commission's Keep America Connected pledge and is not charging for late fees and will not terminate connectivity services for Xfinity Internet, Xfinity Mobile, or Xfinity Voice services for residential and small business customers that can't pay their bill until June 30, a policy that was extended from May to June this week. Comcast also opened its Xfinity WiFi hotspots in business and outdoor locations across the country for free, regardless of whether or not users are Comcast subscribers.

For Comcast employees that have been unable to work from home, or can't work because operations are closed, the company has committed $500 million in direct support to help employees during this time, Roberts said. "Our employees have been among the most engaged in the country. We want to do what we can to support them during this crisis," he said.

Comcast's NBCUniversal segment, which includes theme parks, was the hardest-hit by COVID-19, with overall revenue declining year-over-year by 7 percent. Theme park revenue, which is generated from Universal Studios parks in the U.S. and in Asia, decreased 31.9 percent in Q1 2020 due to global closures of all parks due to the pandemic and current shelter-in-place regulations.

For the quarter ending March 31, Comcast reported revenues of $26.61 billion, which remained relatively flat compared to Q1 2019's result of $26.86 billion. Net income in the quarter was $2.15 billion, dropping 39.6 percent from last year's first quarter's ending balance of $3.55 billion. The cable giant posted adjusted earnings per share of 71 cents, down 6.6 percent, compared with 76 cents per share for the first quarter of 2019. Comcast expects to see Q2 2020 revenues continue to be impacted by COVID-19, the company said.