Comcast provided aggressive growth guidance at its biennial Investor Day Tuesday, telling an audience of investors and analysts it expects double-digit revenue and cash-flow growth for at least the next three years.
The MSO’s optimism was fueled by strong growth in its triple-play offering of voice, video and high-speed data, as well as expected gains in online advertising through its Comcast.net Internet portal.
In the first quarter, Comcast reported record growth in digital-cable, high-speed-Internet and voice subscriber additions. On the financial-performance front, the company reported 14% operating-cash-flow growth in the quarter (its 27th consecutive quarter of double-digit cash-flow growth) and 12% revenue growth.
“We’re in an exciting new stage of growth which began 15 months ago when we made the decision to launch triple play,” Comcast CEO Brian Roberts said at the meeting. “We aren’t resting. We are aggressively moving on all fronts -- product development, marketing, customer service and technology.”
Leading the charge will be the operator’s digital-voice product. Comcast added about 571,000 voice customers during the first quarter, increasing overall penetration to about 7% of homes passed. That penetration is expected to rise to 20%-25% by the end of 2009.
The phone product has driven growth in other products, chief operating officer Steve Burke said, adding that Comcast regularly reported revenue-generating-unit growth of about 2.6 million per year until it began to roll out the phone product in 2006.
Burke said RGU additions doubled in 2006 to 5 million and they are expected to rise another 30% to 6.5 million in 2007. That growth has also had a big impact on the revenue and cash-flow line.
Burke said that for five quarters prior to the phone launch, average revenue growth was about 10%. After the phone launch, revenue grew 12%, or about $600 million. Operating-cash-flow growth was about 12% for the five quarters prior to the phone launch, rising to 15% after the launch of voice.
“The movement in this business is unlike anything we’ve ever seen,” he added.
Roberts was equally high on the potential of online advertising, pointing to the company’s recent deal with Yahoo for display advertising. He added that the MSO is working on a deal for search advertising.
Roberts called the Yahoo deal “the first step on the path to build a major new revenue stream for Comcast,” adding that he expects online advertising to be a $1 billion annual business in the next five to six years.