COMCAST CORP Q1 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 2 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. We're off to a good start. We've taken a hard look at both where the market is and how we're performing, and made some real changes. With our new leadership structure, Mike as Co-CEO and taking the day-to-day lead on improvements, and Steve off to a fast start, fully running Connectivity & Platforms, I really like our team. Steve has brought in key new talent and is quickly restructuring a lot of the operations. Equally important, we have better aligned everyone across the entire company around a clear set of priorities with a sense of urgency to work in harmony toward the important company-wide initiatives. We've gone top to bottom in the businesses looking at how we operate, how we serve customers, and where we need to reset.

As you'll hear from Mike, Jason, and Steve, it's still early, but the initial results are encouraging. We're starting to see signs that our efforts are working, and we're shifting the businesses in the right direction. I'm also convinced that we have absolutely the best products in each of our markets. The opportunity in front of us now is making sure customers really see that and feel it in every experience and touch point. There is a real energy across the company now to work together in different ways to take advantage of the big moments we have. Whether it's the mobile launch we just announced, the Olympics, the Super Bowl, or Xfinity's new membership program, these are opportunities to show up for consumers in a way that only Comcast can, and connect that across all of our growth businesses.

Net net, I feel encouraged about where we are. We've got the right leaders. We're making meaningful but important improvements, and I feel good about these early results. Mike, over to you.

Thanks, Brian, and good morning, everyone. Our focus as we begin 2026 is on executing against the priorities Brian just highlighted. We are just one quarter into the year but are pleased with the progress, so let me highlight some of the first quarter achievements. First, despite what remains an incredibly intense competitive environment, broadband net losses improved by more than 100,000 year-over-year, the first year-over-year improvement since the fourth quarter of 2020. We also delivered the best wireless net additions of any quarter in our history. Together, these are early signs that the strategic pivot we've made in our connectivity business is underway. Second, in Parks, another area of consistent and disciplined investment, we generated healthy underlying EBITDA growth driven by robust consumer demand at Epic Universe. Third, we had a real company-wide moment with Legendary February. We outperformed across audience, engagement, and monetization.

Importantly, we leveraged this massive reach to market our connectivity products at scale, a proof point that when we really lean in, we can move the needle. Stepping back, this was our first quarter post-Versant, and we're already seeing the benefits of a more focused portfolio. Our six major growth drivers now represent well over 60% of total company revenue, up from 50% when we introduced this framework three years ago, supported by consistent organic investment and deliberate portfolio actions, including the spin of Versant Media. Now, going deeper on our Connectivity & Platforms business, the competitive environment remains intense. Fixed wireless continues to market aggressively across our footprint, and fiber overbuild is moving at a rapid pace, and promotional convergence offers remain elevated. We're not assuming this gets easier anytime soon.

Against that backdrop, we're investing to compete effectively, whether it's against fixed wireless, fiber, or any other alternative such as satellite. To do this, we're staying focused on what we can control and what matters most to consumers. Exceptional connectivity powered by the most reliable Wi-Fi, best-in-class products, and a simpler, more transparent experience that's easy to buy, activate, and support. Our confidence is building in the strategy and actions that are underway, including the execution of our go-to-market shift that we amplified through the reach of our sports portfolio. We aligned the full company across Xfinity and NBCUniversal around clear offers, focused messaging, and sharper targeting, and we saw that combination contribute to improved broadband and wireless performance this quarter.

We also used these tentpole moments to launch real-time 4K, a meaningful differentiator enabling us to deliver live sports with lower latency and at a higher quality than our competitors. We continue to see our customers consume more video online, which is driving network demand higher with monthly data usage on our network up 10% this quarter. Given the scope of the changes we've made across the business, the early signs of progress are connect volumes up for the first time in more than four years. Voluntary churn continues to improve, and NPS is moving in the right direction. Customers are responding to our go-to-market strategy with roughly 40% of our residential broadband base already on our simple, transparent packaging, and the majority still expected to migrate by year-end. Wireless is a central lever in our convergence strategy. It increases engagement, reduces churn, and strengthens customer lifetime value.

Wireless accelerated meaningfully this quarter, even as the competitive environment remains intense. We like what we're seeing, both in the momentum we're generating and in the quality of the customer relationships we're building. Our free line offer continues to perform well and is doing exactly what we intended, building awareness, increasing attachment, and expanding the top of the funnel across our broadband base. We're managing that base of customers with a clear lifecycle playbook focused on usage, engagement, and the overall product experience with the goal of converting a meaningful portion to paid relationships starting in the second half of the year. At the same time, we're gaining traction in premium wireless. We launched Premium Unlimited a year ago to broaden our offering for customers who want a more feature-rich mobile experience, including unlimited talk, text, and data in the U.S. and internationally. Since launch, adoption has increased meaningfully.

Uptake is now around 30%, and the premium base is up roughly five-fold. We're building on that momentum with Mobile Plus, our new premium plan we launched just yesterday. Mobile Plus includes everything customers already value and adds lifetime device protection for all devices. We're the first in the industry to include this feature at no additional charge as part of the core offering, a disruptive shift away from the traditional pay-per-device model used by incumbent carriers. Mobile Plus strengthens our value proposition and reinforces our product and pricing advantage. Shifting to Content & Experiences, Legendary February was a remarkable 17-day stretch for our Media business. More than 225 million Americans watched across the Milan-Cortina Winter Olympics, Super Bowl LX, and the NBA All-Star Game. That scale drove record advertising sales, roughly $2 billion over the 17 days, and helped accelerate momentum at Peacock.

We added 2 million net new subscribers in the quarter, with revenue up more than 70%, putting Peacock on track to approach profitability for the first time next quarter. The Olympics continue to be a meaningful differentiator for us. Milan-Cortina was the most watched Winter Games since Sochi, averaging 23.5 million viewers. Peacock streamed a record 16.7 billion minutes, more than double all prior Winter Games combined. NBC closed out prime time number one on the closing ceremony night, marking our 143rd consecutive Olympics night at the top. The Super Bowl averaged 125.6 million viewers, the most-watched in our 100-year history and the second most-watched program ever. The NBA All-Star Game delivered its largest audience since 2011, with 8.8 million viewers across NBC, Peacock, and Telemundo, peaking at 10 million.

Turning to studios, we're off to an exceptional start with Nintendo and Illumination's "The Super Mario Galaxy Movie," which has crossed $750 million globally, the biggest title of the year worldwide, and the franchise has now grossed $2 billion at the global box office. We have a strong lineup for the rest of the year with Steven Spielberg's "Disclosure Day," Illumination's "Minions & Monsters," Christopher Nolan's "The Odyssey," and Universal's "Focker-In-Law," among others. Lastly, at Parks, Orlando continues to perform extremely well, with Epic driving strong resort attendance and higher per-cap spending. We're continuing to invest behind a pipeline of growth. This year, we open Fast & Furious: Hollywood Drift in Universal Studios Hollywood and our first-ever kids park in Frisco, Texas, this summer. Internationally, our U.K. park is progressing through final planning approvals as site stabilization begins, and we're building on our strength in Japan with immersive Pokémon experiences.

With that, let me turn it over to Jason.

Thanks, Mike, and 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 we recently issued updated pro forma trending schedules, which we filed in early March. The most significant change is the removal of Versant from our financials, along with a few smaller updates within Connectivity & Platforms and Content & Experiences. As a result, when I refer to our results today, all year-over-year comparisons will be presented on a pro forma basis. In the first quarter, revenue increased 11%, in part benefiting from NBCUniversal's highly successful airing of the Milano Cortina Winter Olympics and the Super Bowl. Excluding these events, revenue was up low single digits. As we've discussed, this is an investment period for us.

We continue to execute our broadband go-to-market pivot and customer experience improvements with the goal of stabilizing our customer base and returning the category to revenue growth over time. At the same time, we're absorbing the full cost of the first year of the new NBA contract in Content & Experiences, and this quarter included the peak dilution from that. As a result, Adjusted EBITDA declined 9%. Earnings per share were $0.79, and we generated $3.9 billion of free cash flow in the quarter, of which we returned $2.5 billion to shareholders, including $1.25 billion in share repurchases. Now turning to our businesses and starting with Connectivity & Platforms. Before diving deeper into the results, I wanted to begin with a high-level overview and share some perspective on the direction we're heading.

As we've consistently emphasized, we made a decisive and strategic pivot in this business to position ourselves more competitively within the evolving broadband market. This transformation hasn't just been about minor tweaks, it's been a comprehensive shift. We prioritize simple and transparent pricing. We've dialed up our investments in both current and future customer experience and doubled down to ensure our network and product offerings remain best in class. Another significant change has been how we're leveraging wireless to support enhanced broadband far more expansively than we have in the past. The encouraging news is that the early indications suggest this pivot is not only gaining traction, but is absolutely the right move. Our new go-to-market offerings are clearly resonating with customers.

For instance, this quarter, we saw a notable improvement in broadband performance, narrowing our losses by over 100,000 versus the prior year, while simultaneously achieving record wireless net additions, accompanied by a meaningful improvement in how our customers perceive and rate us as measured through Net Promoter Score. Of course, with any major strategic shift, there are inevitable costs. Simplified pricing and the inclusion of bundled free wireless lines have put pressure on broadband ARPU, and as a result, have also weighed on EBITDA growth, which is evident in our 4.7% decline this quarter. We were transparent about this last year, flagging that these pressures would intensify into the early part of this year, including the quarter we're reporting now and some incremental pressure in the second quarter. That expectation remains unchanged.

However, we anticipate some relief as we exit this year, particularly as we begin to lap the initial investment pressures and monetize the free lines at the one-year anniversary mark of the start of our free line rollout. Looking ahead, like others in the industry, a key metric for success is increasingly shifting toward consumer purchase intentions around bundled broadband and wireless offerings. To support this, you'll notice in the trending schedules we published in March, we started to break out wireless revenue into service and equipment revenue, and we're now grouping broadband revenue and wireless service revenue together into a new convergence revenue view. Our convergence ARPA, or average revenue per account, currently stands at roughly $85. For context, our telecom competitors are roughly double this amount on the same metric.

This really underscores the significant growth opportunity in front of us, especially as we stabilize broadband and look to accelerate growth through wireless. Now let's get into more details on the quarter, starting with broadband. Broadband subscriber losses improved by 117,000 year-over-year to 65,000. This improvement reflects traction for our new go-to-market strategy, including improved connects year-over-year, lower voluntary churn, a step-up in take rates on gig plus speeds, and the continued uptake of our free wireless line offer. In addition, we leaned into the unique moment that Legendary February created across our company by amplifying Xfinity brand awareness on a national platform, with particular emphasis on gig speeds and our five-year price guarantee. We estimate these specific offers accounted for over half of our year-over-year improvement in subscriber losses. Broadband ARPU declined 3.1%.

This is consistent with the pressure we signaled on our fourth quarter call and reflects the absence of a rate increase at the beginning of the year, our new go-to-market pricing, including the Legendary February offers, and the impact from strong adoption of free wireless lines, which initially has a diluted impact on broadband ARPU. We expect incremental pressure on broadband ARPU for another quarter until we start to anniversary early go-to-market transition efforts, as well as the impact of free lines starting to roll into paying relationships, which will happen in greater volumes as we exit this year. Convergence revenue declined 2.8%, with convergence ARPA down 0.8%, reflecting the pressure on broadband revenue and partially offset by 15% growth in wireless service revenue.

We added 435,000 net wireless lines, our strongest quarter on record, with nearly half of our residential postpaid phone connects coming from customers taking a free line. We're deliberately leaning in as our free line offer expands awareness and ultimately widens the base of customers we can drive into paying relationships. We also continue to see a strong uptake in our new Premium Unlimited wireless plans, accounting for about 30% of our postpaid phone connects, reinforcing that we're competing effectively in the higher value segment of the wireless market. We ended the quarter with 9.7 million total lines at 16% penetration of our domestic residential broadband customer base. Looking ahead, in the second half of the year, many of the free lines will come up for monetization.

Early engagement and usage trends are encouraging in that respect, and we expect to convert the significant majority of free lines into paying relationships, which should provide a tailwind to convergence revenue and ARPA growth over time. Turning to business services, revenue grew 6% and EBITDA increased 4%. Growth continues to be driven by strong momentum at our enterprise solutions business as we add customers and deepen our relationships through a strong mix of advanced solutions. Looking ahead, we're excited to expand our business mobile relationships through the launch of our T-Mobile MVNO, which adds another differentiated capability to the portfolio as we compete for business customers at every level. In Content & Experiences, there are a few items I'd like to highlight. At theme parks, we delivered another quarter of strong growth, with revenue up 24% and EBITDA increasing 33%.

Adjusting for the roughly $100 million of pre-opening costs at Epic in last year's first quarter, Parks EBITDA grew over 7%. Under the hood, we had very strong growth in Orlando, where Epic continues to drive higher per cap spending and attendance across the entirety of the resort. We are really pleased with Epic's performance since its launch. It's expanding the overall guest experience and helping to position Universal Orlando as a true week-long destination.

Partially offsetting strong growth in Orlando is some pressure at our other parks. Specifically, in Osaka, we're seeing some impact from China-related inbound travel trends, which is putting pressure on attendance. In Beijing, we're navigating a more challenging macroeconomic environment. Turning to Media, revenue increased over 60%, including strong contributions from the Milan-Cortina Winter Olympics and the Super Bowl, which together drove $2.2 billion of incremental revenue. Excluding those events, Media revenue growth remained strong, up 13%, driven by 21% growth in distribution and 5% growth in advertising. The strong growth in distribution was driven by Peacock, with paid subscribers up 5 million year-over-year and 2 million sequentially, reaching 46 million.

In advertising, underlying demand remained solid, supported by a record upfront and a strong sports lineup, including the NBA. In the second quarter, we'll continue to benefit from sports, including the NBA playoffs and the FIFA World Cup on Telemundo and Peacock. Media EBITDA was a loss of $426 million, consistent with the dilution we've been expecting in the first season of the NBA as we straight line the amortization of these rights with quarterly seasonality driven by game counts. The first quarter was the peak volume, with about 50% of the games played and the corresponding costs flowing through. As a result, this quarter represents our peak EBITDA dilution from NBA costs. This dynamic flowed through to Peacock as well, where EBITDA losses were $432 million.

Thanks, Jason. Operator, let's open the call for Q&A, please.