Once again shrugging off the need to buy a wireless provider or another cable operator, Comcast reported sterling results across the board for the first quarter, boosting cable revenues and customers by hefty margins.
In fact, like Buzz Lightyear of Toy Story renown, Comcast continues to ride its Xfinity service to fortune and fame. With the overall company off to its fastest financial start in five years, Comcast Corp. (Nasdaq: CMCSA, CMCSK) added 297,000 Xfinity residential customer relationships in the winter quarter, up nearly 10 percent from the year-ago period, to boost its total customer base to nearly 27 million. That increase included a whopping gain of 429,000 broadband subscribers as well as a net increase of 42,000 video customers, easily offsetting the MSO's loss of 27,000 voice subs.
Largely as a result of these residential sub gains, Comcast's cable communications division generated $12.9 billion in revenue for the quarter, up 5.8 percent on a year-over-year basis. Video revenues increased 4.3 percent to nearly $5.8 billion, while broadband revenues surged 10.1 percent to $3.6 billion. The MSO also recorded a 13.6 percent jump in business services revenues to almost $1.5 billion, putting it on track to clear the $6 billion mark for the year. (See Comcast Kicks A$$, Earns $80B in 2016.)
Disclosing customer metrics for its emerging home security and automation business for the first time in two years, Comcast reported that it also picked up 66,000 Xfinity Home subscribers in Q1. That increase lifts its total to almost 1 million subs, double the MSO's total of May 2015. Speaking on their earnings call this morning, company executives said half of the Xfinity Home subscribers are new to Comcast and 90 percent are signing up for bundles of three or four products.
Unlike its other businesses, Comcast still declines to reveal revenue figures for Xfinity Home. But new Comcast Cable President and CEO Dave Watson, who took over for the retiring Neil Smit earlier this month, said the service has become "a healthy contributor to our efforts." He estimated the home security and automation market represents a $9 billion opportunity for the company.
Seeking to build on that growing customer base, as well as its overall broadband subscriber base of 23.2 million, Comcast plans to commercially launch "xFi," a cloud-powered home WiFi service and management platform with 1 Gig capacity, sometime next month. Now available as an app for X1 set-tops or a download from Comcast's web portal, xFi is designed to help customers manage their home devices and WiFi networks easier and enjoy a better, more personalized experience. (See Comcast Unveils Smart Home Platform.)
"Our goal is to do with broadband what we did with video with X1 -- create a better experience with WiFi," Watson said. "It lets you define the user experience throughout the household." Earlier on the call, Comcast Chairman and CEO Brian Roberts called xFi "a game-changer for WiFi, enabling people to easily improve, personalize and manage and control their home network and the devices connected to it."
Comcast executives stressed that xFi will not necessarily require broadband customers to get new wireless gateways. They said about 10 million customers, or more than 40 percent of their broadband base, will have immediate access to the new platform when it is rolled out next month, while new gateways will support it as well.
In the meantime, X1, Comcast's advanced video platform, continues to make its way into more homes. The MSO reported that more than half, or 52 percent, of its residential video subs now take X1, up from 48 percent at the end of last year. Company executives expect X1 penetration to reach the low 60 percent range by the end of the year. Comcast is also moving ahead with its aggressive rollout of the new DOCSIS 3.1 broadband spec. Watson said D3.1, which enables multi-gigabit downstream and upstream speeds, will be deployed to 65 percent of the company's footprint by the close of the year.
— Alan Breznick, Cable/Video Practice Leader, Light Reading