COMCAST CORP Q2 2026 earnings call

Thank you, operator, and welcome everyone. Joining us on today's call are Brian Roberts, Mike Cavanagh, Jason Armstrong, and Steve Croney. I will now refer you to slide two of the presentation accompanying this call, which can also be found on our investor relations website and which contains our safe harbor disclaimer. This conference call may include forward-looking statements subject to certain risks and uncertainties. In addition, during this call, we will refer to certain non-GAAP financial measures. Please see our 8-K and trending schedule issued earlier this morning for the reconciliations of these non-GAAP financial measures to GAAP. With that, I'll turn the call over to Brian.

Good morning and thanks, Marci. Before Mike and Jason take you through the quarter, I'd like to spend a few minutes on the separation we announced three weeks ago. Since then, we've talked with our key constituencies, employees at every level, and most of our key partners, and the reaction has been overwhelmingly positive. I feel more positive and energized today than I was on the day we announced it. What's come through most clearly is renewed conviction in both businesses. There's real excitement about taking two exceptional companies and giving each the focus and agility to win in markets that are changing fast. We've also spent time with leaders across media and tech, and we've come away more optimistic than ever about the next wave of innovation.

One thing is clear: AI and the coming generation of technology will demand more data, more bandwidth, lower latency, and smarter networks and platforms. They'll bring together connectivity, entertainment, and new experiences in ways we are only beginning to see. And that is exactly where Comcast is built to lead. The market is moving to our strengths, and winning now is about focus, speed, and relentless execution. That's also why this is the right time for Michael Angelakis to return. He's been welcomed back with tremendous enthusiasm and confidence. He has deep relationships across the industry. He knows this company, and his return will help accelerate the work Steve and the team already have underway. Wireless is a great proof point of what this team can do.

In the second quarter, we crossed 10 million lines for the first time, a meaningful milestone that's just 7% penetration of the total addressable lines in our footprint and perhaps a new way to look at the wireless opportunity and the significant runway we have ahead. We're building this business on top of a deep customer base, leadership in Wi-Fi, strong wireless partnerships, and products that are already in tens of millions of homes and businesses. On the media and entertainment side with NBCUniversal and Sky, we're equally excited about the next chapter. The strength of these businesses isn't just the world-class assets we own, it's the role we play as a trusted partner to talent, creators, sports leagues, and platforms throughout the industry. In just six years, we've built Peacock into a streaming business with real scale in the U.S.

We've added 2 million paid subscribers in each of the last two quarters, had our biggest viewership month ever in June, and reached profitability, all anchored by what NBCUniversal does best: premium entertainment, live sports, news, and extraordinary storytelling. With the combined reach of NBC, Peacock, Telemundo, Bravo, Sky, and possibly ITV, and the many relationships we've built with partners across tech and streaming, we will be well-positioned as an independent media company to drive engagement and growth. When you look at things like the amazing and recent success of "The Odyssey" and Christopher Nolan and the strength of our film slate, it underscores that creativity and collaboration with the world's best talent. That all remains at the heart of what makes this company so special. That is why I feel so energized.

We've spent years investing to build these two great companies, each with distinct world-class assets and leaders I trust deeply. This structure gives both companies the freedom to pursue the priorities that matter most to their futures. There's a lot of work ahead and we're moving with real urgency. With that, I'll turn it over to Mike.

Thanks, Brian. I'll just add a few additional comments on the separation before turning to some highlights of the quarter. When we made the announcement, we were clear about the core assets that would sit within each company. With that foundation in place, we are off and running on the work to finalize the remaining details and move towards execution with the goal of completing the separation in approximately one year. Over the next several months, our teams will continue working through the items that naturally come with a transaction of this scale. A key part of our work is on the balance sheet and capital structure, as our intention is to set both companies up with strong investment-grade profiles and the financial strength and flexibility to pursue their respective growth strategies.

With that, I'll turn to highlights of the second quarter, starting with Connectivity & Platforms, where results were broadly in line with our prior commentary. We are well into the deliberate broadband pivot that began almost a year ago. That pivot has included significant changes in pricing and packaging to make our value proposition clearer and more predictable, continued investment in a simpler, more seamless customer experience, and a more aggressive push into wireless, both through free lines to build awareness in the market and through the launch of our premium unlimited plans. These actions are intended to address the areas we need to improve while leaning on the structural advantages we already have: a scaled network, industry-leading Wi-Fi, and a capital-efficient mobile platform.

While this pivot comes with investment that is weighing on financial results in the near term, we are making real progress against the objectives we set out, which are to build a durable, converged customer base, deepen our relationships, and transform the experience so as to position this business for long-term growth, and we are pleased with the progress we are making. Broadband subscriber losses in the second quarter improved year-over-year. We also continue to see year-over-year gains in our Net Promoter Scores, which is an important signal that our moves in pricing, packaging, and experience are resonating with customers. Wireless is becoming a more meaningful growth engine for us.

We just had our best quarter ever with 448,000 net line additions, our second consecutive record quarter, supported by stronger gross additions and improved churn, even as the initial cohort of free lines began rolling into the paid base. Year to date, net line additions are up 25%, and importantly, we are seeing positive early traction converting those free lines into paid wireless relationships, which reinforces the value customers are seeing in our products and which will support better monetization as we move through the year. We are also extending that same convergence opportunity into business services. This quarter, we went live with our T-Mobile MVNO partnership for business customers, and the early signs are encouraging. We expect activity to ramp as we move into the latter part of the year.

Separately, we continue to win significant new contracts in enterprise, which reinforces the strength of our position as the fastest-growing enterprise provider in the market. While the environment remains highly competitive, we like the progress we are making on the things we can control. Wireless is scaling quickly, enterprise continues to gain momentum, and the work underway across pricing and the overall experience is strengthening the foundation for a converged, valuable customer base over time. Turning to Content & Experiences, the media segment had a strong quarter, generating mid-single-digit EBITDA growth, with Peacock delivering meaningful profitability for the first time, even as we absorb the final quarter of the first full year of our NBA contract. That performance reinforces the value of NBC, Telemundo, Bravo, and Peacock together as one integrated media business with continued opportunity to drive stronger engagement, advertising, and profitability into the future.

Peacock added another 2 million paid subscribers in this quarter, bringing us to 48 million paid subscribers and had its biggest viewership month ever in June, fueled by the World Cup and "Love Island." That builds on the 2 million subscribers added in the first quarter around Legendary February and is important evidence that we are managing event-driven churn effectively by bringing users in around major moments and keeping them engaged with the broader content slate. The NBA, "Love Island," and the World Cup are all contributing to strong engagement and robust ad sales across both linear and streaming. The World Cup has been terrific for us, delivering the biggest Spanish-language sporting event in U.S. media history and record engagement for Telemundo and Peacock. "Love Island" has been the number one overall streaming title in the U.S. this summer.

Our studios business is having a great year with momentum across franchises, animation, originals, and specialty titles. In the second quarter, "Super Mario Galaxy" and "Minions & Monsters" extended the strength of our animation slate, with "Minions & Monsters" taking the Minions franchise to $6 billion globally and further extending its position as the highest-grossing animated franchise of all time. Focus had a standout performance with "Obsession," which crossed $400 million worldwide and became its top-performing film ever, while "Disclosure Day" delivered Steven Spielberg's biggest original opening to date. Just last week, "The Odyssey" became one of the defining theatrical events of the year, reinforcing the power of our creative partnerships and ambitious storytelling, with "The Odyssey" becoming Nolan's biggest global opening of all time. Turning to parks, the operating environment has softened more than we anticipated.

Unpacking this by geography, in Orlando, Epic Universe continues to perform well and is delivering the strong guest response we expected. At the same time, attendance across the broader Orlando market began to soften in June, and that trend has continued into the third quarter. We believe there are some temporary factors at work, including higher fuel prices and weaker consumer sentiment, but we are watching these trends closely. Internationally, Osaka continues to be affected by China-related travel restrictions, while Beijing is operating against a challenging macroeconomic backdrop. Despite these near-term pressures, our outlook for the long-term opportunity in parks is unchanged. We have great brands, great locations, and a proven playbook for investing behind attractions and experiences that create real consumer demand and strong returns. With Universal Kids Resort now open in Frisco and our U.K. park moving toward construction, we continue to see a long runway for growth.

Before I hand it over to Jason, I want to touch on Sky's proposed acquisition of ITV's media and entertainment business, which will strengthen Sky's long-term position in the U.K. The transaction brings together two of the U.K.'s most trusted media businesses, pairing Sky's premium content, connectivity, and sports leadership with ITV, which reaches 40 million people in the U.K. every week and serves more than 16.5 million digital users. The transaction will enhance Sky's streaming and advertising capabilities, create meaningful operating efficiencies, and broaden the opportunities to grow customer relationships. With that, let me turn it over to Jason to go through the financial results in more detail.

Thanks, Mike, good morning, everyone. Let me start with a high-level overview of our consolidated results and then get into more detail on our businesses. Before I begin, I want to note this morning we issued updated pro forma trending schedules to reflect the removal of Sky Germany from our consolidated results following the sale of that business on May 31st. For context, Sky Germany generated over $2 billion in annual revenue but had an immaterial EBITDA contribution and had previously been reflected within corporate and other. As a result, all year-over-year comparisons in my remarks today will be presented on a pro forma basis. In the second quarter, revenue increased 5%, in part benefiting from Telemundo and Peacock's successful airing of the FIFA World Cup. Adjusted EBITDA declined 5%, reflecting pressure from two areas.

In Connectivity & Platforms, as we have discussed, we are investing behind the go-to-market pivot we began last year with a focus on simpler pricing and packaging and an improved customer experience. In Content & Experiences, we are still in the first year of the NBA rights cycle and absorbing the full cost of that contract while the revenue opportunity builds over time. Adjusted earnings per share were $1.04, and we generated $4.6 billion of free cash flow in the quarter, of which we returned $2.1 billion to shareholders, including $900 million in share repurchases. Turning to our businesses, starting with Connectivity & Platforms. We are almost a year into this go-to-market transition, let me start with where we stand before moving to this quarter's specific results. The broadband market remains highly competitive.

Fiber continues to expand, fixed wireless remains aggressive, satellite is emerging as another alternative, and convergence-based promotional activity remains elevated across the industry. We are operating under the assumption that the market will remain intensely competitive. Against that backdrop, at the end of the second quarter of last year, we made a deliberate shift in how we go to market to compete more effectively in a competitive environment increasingly defined by convergence. Since then, we have focused on simplifying pricing, improving transparency, streamlining the customer experience, investing in our best-in-class network and products, and leaning further into wireless, including through our free wireless offer. We continue to see encouraging signs from these actions. Broadband losses improved versus last year. Customers continue to migrate to higher-tier plans with about 45% of our base now on gig plus tiers.

Wireless net additions reached a new record, and NPS improved again year over year, reflecting better customer perception of our service experience. At the same time, we have been transparent that this pivot comes with investment. We made several deliberate choices this year to reposition the business for stronger long-term performance. We did not take a broadband rate increase, and we've been migrating customers into simplified pricing with lower everyday price points. At the same time, we continue to see strong adoption of free wireless lines, which is initially dilutive to broadband ARPU. As a result, broadband ARPU declined 3.8% in the quarter. Additionally, we continue to invest in the customer experience and go-to-market capabilities needed to support this broader shift, which contributed to a 5.8% decline in Connectivity & Platforms EBITDA.

These results are consistent with our remarks on last quarter's earnings call, where we previewed incremental pressure on both ARPU and EBITDA growth. At the same time, we indicated that trends should improve beyond the second quarter as we lap the initial go-to-market investments as free wireless lines convert into paying relationships in greater volumes. That remains our expectation, and we expect modest improvements starting in the third quarter. Looking ahead, as we have highlighted before, consumers are increasingly choosing converged broadband and wireless offerings. We believe we have a strong position to compete in convergence. We have the largest converged footprint, offering gig plus broadband and wireless ubiquitously, our product experience continues to receive external validation.

Opensignal has consistently ranked our Wi-Fi number one in our footprint, in its first U.S. converged experience report, Xfinity ranked number one nationally in two of three categories measured: converged consistent quality, which assesses reliability across the combined network, converged download speed. This reinforces why convergence ARPA is an important metric for how we think about running the business. Broadband remains the anchor product, the value of the relationship expands meaningfully when we add wireless. At roughly $85, our convergence ARPA remains well below levels reported by telecom competitors, which highlights the long runway and opportunity we have ahead of us, particularly as we stabilize broadband and continue to scale wireless. With that outline of strategic priorities, let's get into more detail of the quarter, starting with broadband. Broadband subscriber losses improved by 34,000 year-over-year to a loss of 167,000.

That improvement reflects continued traction from our new go-to-market strategy, even as we continue to operate in a highly competitive environment across our footprint. Broadband ARPU declined 3.8%. As I said earlier, we expect to see modest improvement as we anniversary the launch of the go-to-market strategy as free wireless lines begin converting into paid relationships in greater volume as we exit this year. Turning to convergence revenue declined 3.2%, convergence ARPA declined 1.5%, reflecting the pressure on broadband revenue, partially offset by 14% growth in wireless service revenue. Wireless had another very strong quarter. We added 448,000 net lines. That's our best quarter on record, with roughly half of our residential postpaid phone connects coming from customers taking a free line. We are actively leaning into this opportunity. The free line offer is doing what we intended.

It's building awareness, it's driving attachment, it's expanding the base of customers we can convert into paying wireless relationships over time. Most importantly, this is a product that provides real value across a range of customer segments. We compete effectively in value-oriented segments with substantial savings offered relative to competitor offerings, we are also gaining traction in the higher value segment of the wireless market. In fact, premium unlimited plans accounted for roughly 30% of postpaid phone connects, demonstrating that we are now competing very effectively in a segment of the market that carries higher expectations around network quality and data allotments, as well as handset availability and refreshment. We ended the quarter with 10.2 million total lines, representing 17% penetration of our domestic residential broadband customer base, only 7% penetration of the total wireless line opportunity in our footprint.

Looking ahead, as free wireless lines come up for monetization, we are managing those customers with a clear life cycle approach focused on usage, engagement, retention, and the overall product experience. Early free line conversion cohorts are tracking in line with our expectations, and we continue to expect a significant majority of these customers to convert to paid relationships as roll-offs accelerate in the second half of the year. Over time, that should provide a real tailwind to convergence revenue and ARPA growth. Turning to business services, revenue grew 3.7%, and EBITDA increased 5%. Both benefited from a non-recurring item related to a long-term fiber lease renewal. Excluding that benefit, underlying growth in both revenue and EBITDA was just under 3%. That's consistent with the trend we have seen over the past year after adjusting for the Nitel acquisition, which we have now lapped.

Growth continues to be driven by strong momentum in enterprise solutions, where we are seeing demand from larger customers with more complex connectivity, security, and managed services needs. Importantly, the mix shift towards advanced solutions continues to scale. Three years ago, for every dollar of connectivity we sold, we sold about $0.20 of advanced solutions. Today, that figure is closer to $0.70, underscoring the increasing value we are delivering to customers. At SMB, competition remains elevated, but we continue to drive ARPU growth by deepening relationships through a strong mix of advanced solutions. We also recently launched our T-Mobile MVNO, adding expanded business mobile capabilities and another differentiated product to the portfolio as we compete for business customers across every segment of the market. Moving to Content & Experiences, there are a few items I'd like to highlight. At theme parks, revenue increased 3%, while EBITDA declined 5%.

The EBITDA decline was primarily driven by continued pressure at our Osaka park, where China-related travel restrictions are still impacting attendance. That pressure was partially offset by growth at our U.S. parks. In Orlando, revenue and EBITDA grew as we compared to the partial opening period of Epic in last year's second quarter. That said, growth in Orlando came in below our expectations as attendance began to soften in June and has remained pressured into the third quarter. At Hollywood, results improved as we began to lap the initial pressure we experienced last year, though we do not expect a more meaningful improvement until the new Fast & Furious rollercoaster opens later this year. Turning to media, we achieved an important milestone as Peacock reached profitability for the first time, generating $189 million of EBITDA in the quarter.

This reflects the strategy we have been executing for several years, building Peacock around a dual revenue model supported by a broad content mix across sports, next-day NBC and Bravo, film, originals, news, library, and major events. Peacock was also a primary driver of overall media results, with media revenue increasing 25% and EBITDA increasing 4%, even as we absorbed first-year NBA rights costs. Digging into Peacock specifically, revenue increased 54%, driven by strong growth in both distribution and advertising revenue. Distribution revenue grew over 50%, with paid subscribers up 7 million year-over-year and 2 million sequentially, reaching 48 million. Advertising revenue increased nearly 70%, fueled by multiple drivers with notable call-outs, including the simulcast of Telemundo's FIFA World Cup, the NBA playoffs, and the latest season of "Love Island." At Studios, we had another strong quarter, with revenue increasing 25% and EBITDA increasing $141 million year-over-year.

Results were driven by recent theatrical releases, including the "Super Mario Galaxy" Movie, "Obsession," and the international distribution of "Michael." As always, Studios will have some quarter-to-quarter volatility based on theatrical release timing and licensing activity. This quarter was another good example of the breadth of the portfolio with strength across franchise animation, specialty titles, filmmaker-driven projects, and international distribution. Now let me wrap up with free cash flow and capital allocation. In the second quarter, we generated $4.6 billion of free cash flow, underscoring the strength of our businesses, even as we make meaningful investments that I've highlighted. This quarter, we returned $2.1 billion to shareholders, including $900 million in share repurchases. As we recently announced on our separation call, we did pause share repurchases as of July 1st and expect to remain paused through our separation.

Our priority is to ensure both businesses are well-capitalized with favorable investment-grade ratings to provide both the financial foundation to pursue their respective growth strategies. Now I'll turn it over to Marci, who will moderate the questions we collected from the analyst community in advance of today's call. Marci?