Charter Earnings Beat Estimates in Q2, Revenues Decline Y/Y

CHTR has shown weak performance, missing the Zacks Consensus Estimate in all the trailing four quarters, with an average negative surprise of 6.95%.

CHTR’s Segmental Details

Residential revenues totaled $10.4 billion, down 3.5% year over year due to a decline in residential customers of 1.8% and a decrease in monthly residential revenue per residential customer of 1.8%. Excluding costs allocated to programmer streaming applications and netted within video revenues, residential revenues declined 1.8% year over year.

Internet revenues declined 3.2% year over year to $5.8 billion, driven by a decline in Internet customers year over year and pricing and packaging mix within the customer base, partly offset by more favorable bundled revenue allocation.

Mobile service revenues increased 18.9% year over year to $1.1 billion, driven by mobile line growth and rate adjustments.

Video revenues totaled $3.1 billion in the second quarter, a decrease of 9.7% year over year, driven by a higher mix of lower priced video packages, $251 million of costs allocated to programmer streaming applications and netted within video revenue versus $67 million in the year ago period, more unfavorable bundled revenue allocation and a decline in video customers, partly offset by promotional rate step ups and video rate adjustments.

Voice revenues decreased 4.5% year over year to $331 million, driven by a decline in wireline voice customers, partly offset by voice rate adjustments.

Commercial revenues increased 1.5% year over year to $1.9 billion, driven by mid market and large business revenue growth of 2.8% and an increase in small business revenue of 0.7%.

Mid market and large business revenues excluding wholesale increased 3.5% year over year, mostly reflecting primary service unit growth.

Second-quarter advertising sales revenues of $416 million increased 12.3% year over year, primarily driven by higher political revenues. Excluding political revenues in both periods, advertising sales revenues decreased 4.6% year over year, reflecting lower linear advertising revenues, partly offset by higher streaming advertising revenues.

Other revenues totaled $894 million in the second quarter, an increase of 7.1% year over year, primarily driven by higher mobile device sales, partly offset by a $45 million one-time benefit in the year-ago period.

CHTR’s Subscriber Statistics

Second quarter total customer relationships declined 1.7% year over year to 31.5 million. Total connectivity customers decreased 1.3% year over year to 30.4 million.

Total Internet customers decreased by 172,000 in the second quarter of 2026, compared with a decline of 116,000 in the year-ago period. As of June 30, 2026, Charter served 29.4 million total Internet customers, down 1.7% year over year.

The company added 406,000 total mobile lines in the second quarter compared with 491,000 in the year-ago quarter. As of June 30, 2026, it served 12.5 million mobile lines, up 15.5% year over year.

Total video customers decreased 21,000 in the second quarter of 2026 compared with a decline of 80,000 in the year-ago quarter. As of June 30, 2026, Charter served 12.5 million total video customers, down 0.8% year over year. The year-over-year improvement in video net losses was driven by simplified pricing and packaging and benefits from the inclusion of programmer streaming applications in Spectrum's expanded basic video packages.

Total wireline voice customers declined by 178,000 in the second quarter of 2026 compared with a decline of 220,000 in the year-ago quarter. As of June 30, 2026, Charter served 5.7 million total wireline voice customers.

Charter activated 127,000 subsidized rural passings in the second quarter of 2026. Within the subsidized rural footprint, total customer relationships increased by 47,000.

CHTR’s Operating Details

Total operating costs and expenses were flat year over year at $8.1 billion, driven by lower programming costs offset by higher other costs of revenue and higher transition expenses.

Second quarter programming costs decreased 9.7% year over year, reflecting $251 million of costs allocated to programmer streaming applications and netted within video revenues versus $67 million in the year ago period, a higher mix of lower cost packages and fewer video customers, partly offset by contractual programming rate increases and renewals.

Other costs of revenues increased 11.3% year over year, primarily driven by higher mobile device sales, higher mobile service direct costs and higher advertising sales costs, given higher political revenues.

Field and technology operations expenses increased 1.6% year over year, primarily driven by higher vehicle fuel costs and medical expenses.

Customer operations expenses increased 1.1% year over year, driven by medical expenses.

Marketing and residential sales expenses decreased 3.1% year over year, due to lower marketing expenses from cost savings despite higher marketing activity.

Transition expenses of $65 million represent incremental costs incurred to prepare for the integration of the previously announced Cox Communications transaction. There were no comparable transition expenses in the year ago quarter.

Capital expenditures totaled $2.9 billion in the second quarter, down 0.1% year over year, with lower line extension spend offset by higher upgrade and rebuild spend related primarily to network evolution. Charter continues to expect full year 2026 capital expenditures, excluding impacts from the previously announced Cox transaction, to total approximately $11.4 billion.

Balance Sheet & Cash Flow

As of June 30, 2026, the total principal amount of debt was $93.8 billion, and Charter's credit facilities provided approximately $3.7 billion in additional liquidity in excess of Charter's $509 million cash position.

During the second quarter of 2026, Charter repurchased $1.2 billion in aggregate principal amount of Charter Communications Operating, LLC and CCO Holdings, LLC notes under an open market repurchase program for $1 billion in cash.

Free cash flow in the second quarter of 2026 totaled $969 million, a decrease from $1.4 billion in the first quarter of 2026. 

In the second quarter of 2026, Charter purchased 4 million shares of Charter Class A common stock for $838 million compared with 4.3 million shares for $963 million in the first quarter of 2026.

Zacks Rank & Stocks to Consider

CHTR currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the broader Zacks Consumer Discretionary sector are Cimpress CMPR, The Marcus MCS and News Corporation NWSA, each currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of Cimpress have returned 46.2% in the year-to-date period. Cimpress is slated to report fourth-quarter of fiscal 2026 results on July 29.

Shares of The Marcus have returned 53.4% in the year-to-date period. The Marcus is slated to report second-quarter 2026 results on July 30.

Shares of News Corporation have returned 0.8% in the year-to-date period. News Corporation is slated to report fourth-quarter of fiscal 2026 results on Aug. 05.

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