Jason S. Armstrong
Chief Financial Officer at Comcast
Thanks, Mike, and good morning, everybody.
I'll start with our consolidated results on slide three. Total revenue decreased 2.7% to $29.7 billion. Within these results, our six major growth drivers, including residential broadband, wireless, business services connectivity, theme parks, streaming, and premium content at our studios generated over $16 billion in revenue, well over half of our total company revenue and grew at a mid-single-digit rate over the past 12 months. Keep in mind that in the second quarter of last year, we had one of our most successful quarterly theatrical results in our history, which included two of 2023's top-five grossing films at the worldwide box office, the Super Mario Brothers movie and Fast X, and as such created a difficult comparison this quarter. If we exclude our studio results, total revenue would have been consistent with the prior year. Total EBITDA was consistent at $10.2 billion and free cash flow was $1.3 billion. Free cash flow was impacted this quarter by higher-than-usual cash taxes, which were up $2 billion over last year's level and were impacted by a tax payment associated with our Hulu stake and other tax-related matters. As you'll recall, we received a minimum floor payment for Hulu at the end of last year. During the second quarter, we returned $3.4 billion of capital to shareholders, including $2.2 billion in share repurchases, and over the last 12 months, we have reduced our share count by over 6%, contributing to our adjusted EPS growth of 7%.
Now let's go through our business results, starting on slide four, with Connectivity and Platforms. As usual, I will refer to our year-over-year growth on a constant-currency basis. Revenue for total connectivity and platforms was consistent at $20.2 billion as strong growth in our connectivity businesses was offset by declines in video and voice revenue. Residential connectivity revenue grew 6%, comprised of 3% growth in domestic broadband, 17% growth in domestic wireless, and 14% growth in international connectivity. Business services connectivity revenue also grew 6%. In domestic broadband, our revenue growth was again driven by strong ARPU growth, which increased 3.6% this quarter, well within our historical range as our team continues to effectively balance rate and volume through customer segmentation. The environment for broadband subscribers remains intensely competitive, which when combined with traditional negative seasonality in the second quarter, led to 120,000 subscriber losses.
Related to this, I would like to spend a minute on ACP. It has been well-documented that the government ended all funding for the ACP program in June. Consistent with our approach to normal promotional roll-offs, we were proactive and prepared for this action early in the quarter, communicating with our ACP customer base and migrating many of these customers to different products and price levels. While this had a bit of an impact on ARPU in the quarter, we still feel very comfortable that we will remain well within our historical 3% to 4% ARPU growth range for the remainder of the year. In terms of subscribers, we saw minimal impact from the end of ACP this quarter. Looking ahead, we expect the bulk of our ACP-related subscriber activity to happen in the third quarter, including losses associated with non-pay churn. While it's too early to assess the full impact, we are encouraged with the response we see from these customers to-date. Outside of ACP, we are seeing the same level of competitive intensity and expect an offset from seasonal tailwinds as the third quarter is typically a seasonally stronger quarter compared to the second.
Turning to domestic wireless, revenue growth was mainly driven by service revenue with some modest growth in equipment revenue this quarter as well. Customer lines increased 20% year-over-year, reaching 7.2 million in total, including 322,000 line additions this quarter. The acceleration in line additions compared to the prior several quarters was driven by some early success with new pricing plans launched in April, targeted at multi-line customers as well as continued traction with our Buy One Get One line offer. And you will see us continue to test new ways to capitalize on the significant opportunities we see ahead for us in wireless, in terms of both increasing the penetration of our domestic residential broadband customer base, which currently sits at 12% as well as selling additional lines per account. Wireless continues to be a key growth area for us and one in which we are striking the right balance in delivering exceptional value to our customers, bundling to enhance our opportunities in broadband, and continuing to drive profitability higher.
International connectivity revenue was mainly driven by broadband, which accounts for over two-thirds of our international revenue and grew at a mid-teens rate, reflecting strong ARPU growth. The remainder is wireless, which grew due to both additional lines and ARPU growth, but at a lower rate due to the variability in handset sales. Business services connectivity revenue growth of 6% reflects steady growth in small business with even faster growth in mid-market and enterprise. While the SMB market remains competitive, we are competing aggressively by delivering best-in-class products and services and growing revenue through ARPU growth, driven by higher adoption of additional products that expand our relationship with our SMB customers, like Mobile, Security Edge, Connection Pro, and WiFi Pro, as well as through targeted rate opportunities. At the mid-market and enterprise level, our revenue growth is primarily fueled by the increase in our customers, driven by the investments we have made in this space to build sales and fulfillment as well as expanding our capabilities in managed services, wide-area networking, and cyber cybersecurity. Finally, video and other revenue declined in the quarter. The high-single-digit decline in our video revenue is a function of continued customer losses, coupled with slower domestic ARPU growth versus last year and the lower other revenue mainly reflects the continued customer losses in wireline voice.
Connectivity and Platform's total EBITDA increased 1.6% with margin up 90 basis points, reflecting a decline in overall expenses driven by the continued mix-shift to our higher-margin Connectivity businesses, coupled with ongoing expense management. As I have previously mentioned in prior quarters and think is worth noting here, is that the only expense line item that had a meaningful increase over last year was direct product costs, which are success-based and tied to growth in our Connectivity businesses. Breaking out our Connectivity and Platforms EBITDA results further, residential EBITDA increased 1.1% with margins improving 100 basis points to 39.9% and Business Services EBITDA growth rebounded nicely this quarter, returning to a mid-single-digit rate, while margin declined 70 basis points to 57%, reflecting the investments in sales and fulfillment we are making to scale in the mid-market and enterprise space.
Now let's turn to Content and Experiences on slide five. Revenue decreased 7.5% to $10.1 billion and EBITDA decreased 11% to $1.9 billion. I'll detail these results further, starting with Theme Parks. Revenue decreased 11% and EBITDA declined 24% in the quarter compared to last year's record level for second quarter. As Mike highlighted, two-thirds of the decline was driven by our domestic parks, due to lower attendance compared to last year, largely reflecting two factors; normalization in demand post-COVID, combined with the timing of our domestic attractions. This is the first full quarter comparison to the highly successful opening of Super Nintendo World in Hollywood early last year, which drove that park's record results in the second quarter of last year, and we haven't launched a major new attraction in Orlando since VelociCoaster in 2021 in anticipation of Epic Universe, which we originally planned to open this year. On the international side, underlying growth at our park in Osaka continues, partially offset by foreign currency as well as some softness at Universal Beijing due to the local macroeconomic environment.
To reiterate, we couldn't be more bullish about the long-term trajectory of Parks. In addition to Epic Universe, we have a fantastic slate of new attractions and experiences on the horizon, Donkey Kong Country and Osaka and a Fast and Furious Roller Coaster in Hollywood, as well as the Universal Horror Unleashed in Las Vegas and our Universal Kids Resort coming to Texas.
Now let's turn to media, where revenue increased 2% and EBITDA was up 9%, driven by Peacock. Peacock revenue grew 28% with 9% growth in advertising and 61% growth in distribution, driven by the 38% year-over-year increase in our paid subscriber base to 33 million. On a sequential basis, we held subscribers fairly steady. As we noted, during our last earnings call, our focus in the second quarter was on subscriber retention due to the lack of new tentpole content in the quarter. This timing and content also contributed to some relief in our expenses, which helped drive year-over-year Peacock EBITDA improvement of $300 million. We are pleased with the progress we are making with media EBITDA for the first half of the year up nearly 3% as the improvement at Peacock outweighed the pressure at our TV networks. As we look to the second half of the year, we expect continued modest growth in overall media EBITDA, but with some variation in the degree of year-over-year improvement between the quarters, driven by the timing of sports, entertainment launches, and marketing.
Beginning in the third quarter, we are loaded with incremental content, including the Olympics, Sunday Night Football, which will have an additional game fall into the third quarter, as well as Peacock's exclusive NFL game from Brazil and the return of Big 10. Given the timing of this content, EBITDA growth will be skewed to the fourth quarter. At Studios, revenue decreased 27% and EBITDA decreased 51%, reflecting both the timing of our film slate and a tough comparison relative to last year's second quarter, which included the tremendously successful Super Mario Brothers movie as well as Fast X. We have said our film slate is weighted to the back-half of the year, which we believe will drive better year-over-year performance, and we're off to a strong start. Despicable Me 4 had a terrific opening weekend earlier this month, making the Despicable Me series of movies the first animated franchise in history to cross the $5 billion mark. And Twisters is off to a strong start, landing at number one at the box office this past weekend. And we're excited about our upcoming titles, including Wild Robot in September and Wicked in November.
I'll wrap-up with free cash flow and capital allocation on slide six. As I mentioned earlier, we generated $1.3 billion in free cash flow this quarter, which includes a $2 billion increase in cash taxes over last year's level. Total capital spending declined 10% compared to last year with the $3.4 billion in spending reflecting the significant investments we continue to make to support our growth drivers, such as expanding our footprint and further strengthening our domestic broadband network, scaling our streaming business and supporting the continued build of our Epic Universe Theme Park ahead of its opening in 2025.
Turning to return of capital. For the quarter, we returned a total of $3.4 billion to shareholders. This includes share repurchases of $2.2 billion and dividend payments of $1.2 billion. Notably, since we restarted our buyback program just three years ago, we have reduced our share count by 16% and returned just under $50 billion to shareholders through a combination of buybacks and dividends, prudently balancing investments we've made in the business around our six core growth drivers, protecting a strong balance sheet and providing strong capital returns to shareholders.
Now let me turn it over to Brian for some closing remarks. Brian?
