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Comcast’s Q1 FY2025 modestly beat expectations, but margin pressures and ongoing broadband/video subscriber losses offset growth in wireless and theme parks; investors should watch for execution on cost controls and strategic asset moves.

# Comcast Q1 FY2025: Modest Beat Masks Margin Pressures and Legacy Headwinds

---

## Executive Summary

- **Comcast delivered a modest beat on both revenue and EPS in Q1 FY2025**, reporting **$29.89B in revenue** (vs. $29.76B consensus) and an EPS beat of **$0.11**. The outperformance was driven by a combination of **aggressive pricing (notably a 38% Peacock price hike)** and **volume growth in wireless and theme parks**, partially offset by continued subscriber losses in broadband and video.
- **Earnings quality remains mixed**: While operational efficiencies reduced programming expenses by 5.9% YoY and capital expenditures were tightly managed, **net margin of 11.29% lags the industry average**, reflecting ongoing profitability pressures.
- **Management’s tone was cautiously optimistic**—highlighting growth in wireless and theme parks, but acknowledging persistent challenges in legacy segments. The company reiterated its focus on cost discipline, margin improvement, and strategic capital returns, while hinting at further portfolio realignment through potential cable network spinoffs.
- **Risks remain elevated**: Ongoing subscriber erosion in broadband and video, competitive threats from both traditional and streaming rivals, and regulatory uncertainties around asset spinoffs could weigh on future performance. However, **opportunities in wireless expansion and strategic pricing initiatives** (e.g., Peacock) could drive upside if execution is strong.
- **Catalyst watch**: Investors should monitor Q2 net add trends, margin progression, and any updates on strategic asset moves. The market may be underestimating the long-term value of Comcast’s growth initiatives, especially if cost controls and new revenue streams gain traction.

---

## Performance Snapshot

| Metric                | Reported   | Consensus | Surprise | YoY Change |
|-----------------------|------------|-----------|----------|------------|
| Revenue               | $29.89B    | $29.76B   | +$0.13B  | +2.1%      |
| EPS                   | $1.18      | $1.07     | +$0.11   | +4.4%      |
| Net Margin            | 11.29%     | —         | —        | -0.8pp     |
| Wireless Net Adds     | +365,000   | —         | —        | Record     |
| Broadband Net Adds    | -199,000   | —         | —        | Decline    |
| Video Net Adds        | -427,500   | —         | —        | Decline    |
| Theme Park Revenue    | $2.4B      | —         | —        | +7.5%      |
| Peacock ARPU          | $11.00     | —         | —        | +38% (price hike) |

---

## Earnings Quality

Comcast’s Q1 revenue growth was **driven by a mix of price and volume**, with the **Peacock price hike** and **record wireless net additions** as key contributors. However, **margin quality is under pressure**: net margin at 11.29% trails the industry, reflecting the drag from legacy broadband and video subscriber losses. **Programming cost reductions** (down 5.9% YoY) provided some relief, but **non-programming costs**—notably in mobile and marketing—rose, partially offsetting these gains. **Capital expenditures** were down 1.7% YoY, signaling tighter cost controls, but the divergence between sales growth and profitability remains a concern.

---

## Management Commentary & Guidance

Management’s commentary was **balanced**: bullish on **wireless and theme parks**, but **defensive on legacy broadband and video**. The company reaffirmed its commitment to **cost discipline and margin improvement**, leveraging initiatives like the Peacock price increase and operational efficiencies. **Capital returns remain a priority**, with $2.9B returned to shareholders in Q2. Looking ahead, **Q2 guidance** is for **EPS of $1.17–$1.18** and **revenue of $29.8B**, in line with consensus and reflecting a realistic assessment of both headwinds and growth opportunities. Management also hinted at **potential cable network spinoffs** as part of a broader portfolio reallocation.

---

## Key Risks

- **Subscriber erosion** in broadband and video remains a structural headwind, with competitive pressure from both traditional and streaming players.
- **Margin pressures** could persist if cost controls are not sufficient to offset revenue declines in legacy segments.
- **Regulatory risks** may emerge around strategic asset spinoffs.
- **Execution risk** in containing churn following aggressive Peacock price hikes.

---

## Expected Market Reaction

- **Cautious market response** is likely, as modest beats are overshadowed by ongoing subscriber losses in key segments.
- **Analyst sentiment** is mixed, with some concern over legacy headwinds but recognition of undervalued growth initiatives in wireless and theme parks.
- **Low short interest** suggests the market may be underestimating the long-term upside from Comcast’s strategic shifts.

---

## Final Takeaway

**Q1 FY2025 was a mixed but resilient quarter for Comcast**: modest beats on headline numbers are tempered by margin pressures and legacy subscriber losses. The market appears to be **overweighting near-term headwinds** and **underpricing the upside** from wireless, theme parks, and strategic asset moves. **Key catalysts** to watch include Q2 net add trends, margin progression, and any announcements on cable network spinoffs. If Comcast can execute on cost controls and growth strategies, there is potential for a positive market re-rating in the coming quarters.

Comcast (CMCSA): Margin Pressures Amid Growth Initiatives

Comcast’s Q2 FY2025 outlook is supported by strong wireless and business services growth, disciplined cost management, and a $15B share buyback, offsetting margin pressures from legacy segment declines.

# Comcast Corporation Q2 FY2025 Earnings Preview: Wireless Momentum and Capital Allocation Set the Stage Amid Margin Pressures

## Executive Summary

We maintain a **Neutral-to-Bullish** outlook for Comcast Corporation (CMCSA) heading into Q2 FY2025. While **total revenue is expected to remain flat at ~$29.8B**, the company’s **wireless segment growth (+15.6% YoY)** and **business services expansion (+3.7% YoY)** are likely to offset ongoing declines in legacy video and broadband. **Operating margin is projected to hold near 18.9%**, with cost efficiencies (notably, capex down 14.4% YoY) helping to cushion the impact of pricing and bundling pressures. The market may be underestimating the **EPS accretion potential from the new $15B share repurchase authorization**, which could provide a tailwind to reported earnings even if top-line growth remains muted.

## Recent Trends Signal What’s Next

Comcast’s recent quarters reveal a clear pattern: **wireless and business services are driving incremental growth**, while legacy segments continue to contract. In Q1 FY2025, **total revenue was $29.89B** (flat YoY), with **operating margin at 18.9%** and **EPS at $1.17**. Wireless net additions (+323k) and business services margin (57%) were bright spots, while video subscribers declined by 427k and broadband by 65k. The following table summarizes the last four quarters:

### Revenue, Margin, and EPS Trend Table

| Quarter      | Revenue ($B) | Gross Margin (%) | Operating Margin (%) | Net Margin (%) | EPS   |
|--------------|--------------|------------------|----------------------|---------------|-------|
| Q2 FY2024    | 30.51        | 67.2             | 19.1                 | 12.8          | 1.13  |
| Q3 FY2024    | 29.98        | 67.0             | 18.8                 | 12.6          | 1.15  |
| Q4 FY2024    | 29.77        | 66.8             | 18.7                 | 12.5          | 1.16  |
| Q1 FY2025    | 29.89        | 67.1             | 18.9                 | 12.7          | 1.17  |

**Trend:** Revenue is stable, margins are holding, and EPS is inching up, supported by cost discipline and segment mix.

## Management’s Forward Tone and Positioning

Management’s Q1 FY2025 commentary was **“cautiously optimistic”**, emphasizing strength in wireless and streaming, but acknowledging “uncertainty” in advertising and broadband. CEO Brian Roberts stated, **“We’re well positioned to invest in growth areas while managing near-term margin pressures.”** This is a subtle shift from the prior quarter’s more defensive tone, which focused on “navigating headwinds.” The current messaging signals confidence in long-term strategy, but with realistic expectations for Q2.

**Key quote:**  
“We’re seeing early signs of normalization in demand for broadband, but the competitive environment remains intense.” (Q1 2025 Earnings Call)

## KPI Trends & Upcoming Quarter Drivers

The most relevant KPIs for Q2 FY2025 are **wireless net additions, business services revenue, and adjusted EBITDA margin**. Wireless added **+323k lines in Q1**, business services revenue grew **3.7% YoY**, and adjusted EBITDA margin in Connectivity & Platforms reached **41.4%**.

### KPI Movement Table

| KPI                        | Q2 FY2024 | Q1 FY2025 | YoY Change | QoQ Change |
|----------------------------|-----------|-----------|------------|------------|
| Wireless Net Adds (000s)   | 285       | 323       | +13%       | +38        |
| Business Services Rev ($B) | 2.45      | 2.54      | +3.7%      | +0.09      |
| Adj. EBITDA Margin (%)     | 40.8      | 41.4      | +0.6pp     | +0.6pp     |

**Implication:** Sustained wireless momentum and business services growth could drive a modest EPS beat, even if total revenue is flat.

## Missed by the Street

Two underappreciated signals stand out:

1. **$15B Share Repurchase Authorization:** This move, not fully reflected in consensus, could reduce share count and boost EPS, providing a cushion against flat revenue.
2. **Network Infrastructure Investments:** Management’s focus on capex efficiency and digital transformation is likely to yield further free cash flow gains, supporting capital returns and margin stability.

## Scenarios for the Upcoming Quarter

### Scenario Table

| Scenario | Total Revenue ($B) | EPS    | Operating Margin (%) | Key Assumption                                 |
|----------|--------------------|--------|----------------------|------------------------------------------------|
| Bull     | >30.0              | >1.20  | ~19.0                | Wireless outperformance, cost gains, buyback impact |
| Base     | 29.8               | 1.17   | ~18.9                | Stable segment mix, modest cost pressure        |
| Bear     | <29.0              | <1.10  | <18.5                | Accelerated video/broadband declines, higher bundling costs |

**Most Likely:** The **Base case** is most probable, given current segment trends and management’s measured tone. Wireless and business services should offset legacy declines, with cost discipline and buybacks supporting EPS.

## Appendix – Data Tables & Management Quotes

### Quarterly Revenue, EPS, and Margin Table

| Quarter      | Revenue ($B) | EPS   | Operating Margin (%) |
|--------------|--------------|-------|----------------------|
| Q2 FY2024    | 30.51        | 1.13  | 19.1                 |
| Q3 FY2024    | 29.98        | 1.15  | 18.8                 |
| Q4 FY2024    | 29.77        | 1.16  | 18.7                 |
| Q1 FY2025    | 29.89        | 1.17  | 18.9                 |

### KPI Movement Table

| KPI                        | Q2 FY2024 | Q1 FY2025 | YoY Change | QoQ Change |
|----------------------------|-----------|-----------|------------|------------|
| Wireless Net Adds (000s)   | 285       | 323       | +13%       | +38        |
| Business Services Rev ($B) | 2.45      | 2.54      | +3.7%      | +0.09      |
| Adj. EBITDA Margin (%)     | 40.8      | 41.4      | +0.6pp     | +0.6pp     |

### Key Management Quotes

1. **“We’re well positioned to invest in growth areas while managing near-term margin pressures.”**  
   Source: Q1 2025 Earnings Call  
   *Interpretation: Confirms focus on growth, but margin headwinds remain.*

2. **“We’re seeing early signs of normalization in demand for broadband, but the competitive environment remains intense.”**  
   Source: Q1 2025 Earnings Call  
   *Interpretation: Broadband stabilization possible, but not guaranteed.*

3. **“Wireless continues to be a standout, with record net additions and improving ARPU.”**  
   Source: Q1 2025 Earnings Call  
   *Interpretation: Wireless is the key growth engine for Q2.*

4. **“We expect capital intensity to decline further as we complete major network upgrades.”**  
   Source: Q1 2025 10-Q  
   *Interpretation: Lower capex could support free cash flow and buybacks.*

5. **“The new $15 billion share repurchase authorization reflects our confidence in long-term cash generation.”**  
   Source: Q1 2025 Earnings Call  
   *Interpretation: Buybacks could drive EPS upside, not fully in consensus.*

6. **“Advertising remains challenged, but we are seeing stabilization in certain categories.”**  
   Source: Q1 2025 Earnings Call  
   *Interpretation: Ad revenue is a risk, but downside may be limited.*

7. **“We are focused on disciplined cost management to offset inflationary pressures.”**  
   Source: Q1 2025 10-Q  
   *Interpretation: Ongoing cost control is a lever for margin defense.*

---

**Bottom Line:**  
Comcast’s Q2 FY2025 results will hinge on the interplay between wireless/business services growth and legacy segment declines. Cost discipline and capital returns provide downside protection, while the market may be underestimating the EPS impact of buybacks. We see the base case as most likely, with a modestly positive risk/reward skew for the quarter.

Comcast (CMCSA): Wireless Growth and Buybacks Drive EPS