Charter Communications Tops Quarterly Views Amid Residential Mobile Service Revenue Boost

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Charter Communications

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Charter Communications on Friday logged stronger-than-forecast fourth-quarter results amid double-digit percentage gains in advertising and residential mobile service revenue.

The broadband connectivity company and cable operator reported earnings of $10.10 a share for the quarter through Dec. 31, up from $7.07 a year earlier. Revenue rose 1.6% to $13.93 billion, with advertising and residential mobile service sales jumping 26% and 37%, respectively. Analysts polled by FactSet were looking for non-GAAP EPS of $9.21 and total sales of $13.88 billion.

The company's Spectrum Mobile business continued to grow at a "rapid" pace, with additions of more than 2 million lines last year, Chief Executive Chris Winfrey said on an earnings conference call, according to a FactSet transcript. "Our multiyear investment initiatives, including network evolution, network expansion and execution, including the investment in frontline employees and tenure to benefit our service, are all delivering tangible results."

Charter Communications' shares were up 3.5% in Friday trade.

Fourth-quarter mobile lines rose by 529,000, compared with a 546,000 gain a year earlier. Video customers fell by 123,000 versus a 257,000 decline in the year-ago period, with the company attributing the improvement to new and simplified pricing and packaging launched in September.

Internet customers decreased by 177,000, hit by the end in the second quarter of the government's Affordable Connectivity Program, or ACP, which subsidized broadband affordability for internet and mobile customers.

Full-year EPS rose to $34.97 from $29.99 a year earlier, while revenue grew 0.9% to $55.09 billion. Wall Street was looking for $33.75 and $55.03 billion, respectively.

Charter Communications expects its first-quarter results to include "some lost customers and passings" tied to the recent Southern California wildfires, Chief Financial Officer Jessica Fischer said on the call. "We're still assessing impacted area."

In November, the company agreed to acquire Liberty Broadband in an all-stock deal. Charter Communications aims to resume its open market buyback program following a shareholder vote on the Liberty deal scheduled for Feb. 26, Fischer told analysts.

Charter Communications said it projects 2025 capital expenditures at roughly $12 billion, compared with $11.3 billion in the just-concluded year.

"As we look to 2025 and beyond, the environment for broadband, mobile and video remains competitive, but we had better visibility than this time last year," Winfrey said on the call. "The impact of the elimination of the ACP is now behind us. Cell phone internet net additions appear to have peaked or be stabilized, and we continue to do well against new fiber overlap."

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Charter Q4 Earnings Beat, Residential Revenues Drive Top Line

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Charter Communications CHTR reported fourth-quarter 2024 earnings of $10.10 per share, which beat the Zacks Consensus Estimate by 5.9%. The reported figure jumped 43% year over year.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Revenues of $13.93 billion increased 1.6% on a year-over-year basis, driven by growth in residential mobile service and residential Internet revenues. The top line beat the consensus mark by 0.3%.

Charter Communications, Inc. Price, Consensus and EPS Surprise

Charter Communications, Inc. price-consensus-eps-surprise-chart | Charter Communications, Inc. Quote

CHTR’s Segmental Details

Residential revenues totaled $10.69 billion in the fourth quarter, which decreased 0.4% year over year.

Fourth-quarter 2024 monthly residential revenues per residential customer totaled $121.40 and increased 1.7% year over year.

Internet revenues grew 0.9% year over year to $5.86 billion.

Video revenues totaled $3.62 billion in the fourth quarter, reflecting a decrease of 7.4% year over year.

Voice revenues decreased 10.4% year over year to $353 million.

Fourth-quarter mobile service revenues totaled $860 million, up 37.4% year over year.

Commercial revenues increased 1.9% year over year to $1.82 billion.

Enterprise revenues, excluding wholesale, rose 5.2% year over year, mostly reflecting PSU growth. Fourth-quarter advertising sales were $540 million, which increased 26.4% year over year, primarily driven by higher political revenues.

Excluding political revenues in both periods, advertising sales revenues decreased 8.2% year over year due to a more challenging advertising market.

Other revenues totaled $884 million in the fourth quarter, reflecting a rise of 14.6% compared to the third quarter of 2023, primarily driven by higher mobile device sales.

CHTR’s Subscriber Statistics

Fourth-quarter total residential and SMB Internet customers decreased 2% year over year to 31.473 million.

Fourth-quarter total Internet customers decreased 177,000. As of Dec. 31, 2024, Charter had 30.1 million total Internet customers.

Total video customers decreased by 123,000 in the fourth quarter of 2024 compared to a decline of 257,000 in the year-ago quarter. As of Dec. 31, 2024, Charter had 12.892 million total video customers.

During the fourth quarter of 2024, total voice customers decreased 274,000 compared to a decline of 251,000 in the year-ago quarter. As of Dec. 31, 2024, Charter had 7.2 million total voice customers.

Charter added 529,000 total mobile lines compared to 546,000 in the year-ago quarter. As of Dec. 31, 2024, Charter served 9.9 million mobile lines, with 2.1 million mobile lines added in 2024.

Operating Details

Total operating costs and expenses increased 0.3% year over year to $8.17 billion.

Fourth-quarter programming costs decreased 9.1% year over year due to fewer video customers, a higher mix of lower-cost packages within Charter’s video customer base and $37 million of costs, which accounting principles require to be allocated to programmer streaming applications and netted within video revenues.

Other costs of revenues increased 16.2% year over year, primarily driven by higher mobile device sales and mobile service direct costs, and higher advertising sales expense related to political revenue.

While field and technology operations increased 0.9% year over year, customer operations decreased 2.6% year over year, primarily due to lower labor costs.

Sales and marketing expenses increased 3.2% year over year, given Spectrum's continued focus on driving growth and the launch of its new brand platform, Life Unlimited.

Other expenses decreased 0.7% year over year.

Adjusted EBITDA increased 3.4% year over year to $5.8 billion.

Balance Sheet & Cash Flow

As of Dec. 31, 2024, total principal amount of debt was $93.8 billion and Charter's credit facilities provided approximately $6.3 billion of additional liquidity in excess of its $459 million cash position.

During the fourth quarter of 2024, net cash flows from operating activities totaled $3.5 billion. Capital expenditures totaled $3.1 billion in the fourth quarter of 2024, an increase of $206 million from the figure reported in the year-ago quarter.

Free cash flow in the fourth quarter of 2024 totaled $984 million, representing a decrease of $77 million compared with the fourth quarter of 2023. The year-over-year decline in free cash flow was primarily driven by lower net cash flows from operating activities and higher capital expenditures.

In the reported quarter, Charter purchased 292 thousand shares of Charter Class A common stock and Charter Holdings common units for $113 million.

Zacks Rank & Stocks to Consider

Charter currently carries a Zacks Rank #3 (Hold).

Fox Corporation FOXA, News Corporation NWSA and Roku ROKU are some better-ranked stocks that investors can consider in the Zacks Consumer Discretionary sector. While NWSA sports a Zacks Rank #1 (Strong Buy) at present, FOXA and ROKU carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.

Fox Corporation is scheduled to report its second-quarter fiscal 2025 results on Feb. 4. News Corporation is set to report second-quarter fiscal 2025 results on Feb. 5, while Roku is scheduled to report its fourth-quarter 2024 results on Feb. 13.

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