Charter Communications, Inc (NASDAQ: CHTR) recently released its fourth-quarter FY23 results, showing a revenue growth of 0.3% year-on-year to $13.711 billion. This surpassed the consensus estimate of $13.699 billion. However, the company reported an earnings per share (EPS) of $7.07, missing the consensus estimate of $8.73. As a result, the stock price dropped after the results were announced.
The revenue growth was driven by strong performances in various sectors. Internet services saw a growth of 3.0%, mobile services grew by 35.7%, and commercial services increased by 0.9%. These positive results contributed to the company’s overall top-line growth.
Unfortunately, Charter experienced a decline in its residential customer base. The company lost 62,000 residential internet customers, compared to a gain of 92,000 in the previous year. Additionally, residential video customers decreased by 248,000, compared to a decrease of 145,000 in the prior year. This decline was partly due to video disconnects related to the temporary loss of programming from Walt Disney Company (NYSE: DIS).
Despite these challenges, Charter managed to expand its adjusted EBITDA margin by 50 basis points to 40.6%. This improvement indicates the company’s ability to control costs and increase profitability.
Charter’s quarterly free cash flow decreased from $1.14 billion in the prior year to $1.06 billion. This decline was primarily due to higher capital expenditures, driven by the company’s network evolution and expansion initiatives.
As of December 31, Charter served a total of 30.59 million residential and SMB (small and medium-sized business) internet customers. The company reported a net cash flow from operating activities of $3.86 billion and held $709 million in cash and equivalents.
Looking ahead, Charter Communications expects a capital expenditure (Capex) of $12.2 billion to $12.4 billion for 2024, compared to the actual expenditure of $11.1 billion in FY23. This indicates the company’s continued investment in its network infrastructure and expansion plans.
Following the release of the results, Charter’s stock price dropped by 9.24% to $347.00 premarket. Investors may be reacting to the missed EPS estimate and the decline in residential customer numbers.
Overall, Charter Communications’ fourth-quarter FY23 results showcase both positive and negative aspects. While the company experienced revenue growth and expanded its EBITDA margin, it also faced challenges with customer retention. Moving forward, it will be important for Charter to address these issues and continue its investments in network expansion to maintain its competitive position in the industry.
Disclaimer: The above article is for informational purposes only and should not be construed as financial advice.
