Comcast Q2 – Headlines Broadly In Line; FCF Soft On One-Off Hulu Tax Payment

Rating: A3/A-/A- EUR Short-End -2bp, Long-End Flat

• Results look credit neutral; headline results mostly in line with consensus though equity may be happy with the EPS beat and the better-than-expected subscriber numbers. FCF was very soft though was down to a one-off tax payment on the Hulu deal so is unlikely to repeat.
  
  
• Q2 revenue -2.7% YoY (-1.2% vs. BBG consensus), EBITDA -0.7% YoY (+1.4% vs. consensus), EPS +7% YoY (USD 1.21 VS. USD 1.12 consensus).
• Cable segment (two-thirds) performed well with EBITDA +1.6% supported by Businesses at +4.4% vs. Residential +1.1%. Broadband ARPU at +3.6% looks strong and while total domestic broadband customers fell by 120k this actually looks ahead of consensus of around ~145k losses. Wireless additions of 322k are 8.2% ahead of consensus while Video losses of 419k looks broadly in line.
• EBITDA weighed upon by Content & Experiences (one third) at -10.9% with poor performance on lower theme park attendance and a strong Q223 for Studios.
• CFO -34.4% YoY at USD 4.7bn vs. USD 7.2bn in Q223 with FCF -60.9% YoY at USD 1.3bn vs. USD 3.4bn in Q223 and BBG consensus of USD 3.2bn. Mainly driven by a USD 2bn tax payment related to the Hulu deal. If we exclude this then FCF came in USD 3.3bn which is far more in line with last year and consensus. Net leverage of 2.4x up from 2.3x at Q1 but flat to Q223.