Cable giant Comcast (NASDAQ:CMCSA) reported third-quarter results early Thursday morning. The company continued to transform from an old-school cable-TV specialist into a provider of high-speed internet connectivity and related services, all without missing a beat in the never-ending quest for earnings and revenue growth.

Comcast's third-quarter results by the numbers

Metric

Q3 2019

Q3 2018

Change

Revenue

$26.8 billion

$22.1 billion

21%

Free cash flow

$2.07 billion

$3.14 billion

(34%)

Net income

$3.22 billion

$2.89 billion

11%

Adjusted earnings per share (diluted)

$0.79

$0.68

16%

Data source: Comcast.

What's new with Comcast?

  • For what it's worth, the analyst consensus had called for adjusted earnings near $0.74 per share on roughly $26.8 billion in top-line sales. Comcast delivered a positive earnings surprise while hitting the revenue forecast right on the nose.
  • Comcast Cable added 379,000 high-speed internet customers in the third quarter, stopping at 28.2 million names. At the same time, 238,000 video subscribers signed off, leaving that customer roll at 21.4 million customers.
  • Cash flows can be lumpy from quarter to quarter, even for a large company like Comcast. A large cash payment for the rights to broadcast Champions League soccer on the recently acquired Sky network fell in this quarter. On a smoother year-to-date basis, Comcast's free cash flows are running 4% above the rate seen at the same point in 2018.
  • Sky lost 99,000 customers in the third quarter, landing at 23.9 million. That's a seasonal effect, of course. The network added 482,000 subscribers over the last four quarters.
A wall of TV screens showing 120 different channels. In the foreground, a hand is holding a TV remote.

The growing plethora of streaming services can be daunting. Comcast's Flex wants to help you organize it all. Image source: Getty Images.

What management wanted to say

Comcast CEO Brian Roberts spent a generous portion of the earnings call discussing the Xfinity Flex entertainment portal. Flex gives Comcast subscribers a unified way to access content from a variety of different streaming services without switching apps on the cable box. According to Roberts:

With the three pillars speed, coverage and control, our X-Fi experience is resonating with customers. And with Flex, we just added a fourth pillar streaming designed to meet the growing needs of customers who only consume video over the top. Flex enables these streamers to quickly and easily search, access and enjoy content across their favorite apps on the TV, using our award-winning voice remote. It's a wonderful product and now we are providing it to our broadband-only customers for free.

Shipping out Flex boxes to customers will increase Comcast's capital expenses and thus lower its free cash flow in the short term, but management sees it as a unique selling point that sets Comcast apart from other broadband providers. Cash may be king, but user-friendly content consumption tools like Flex are perhaps more important than mere fiscal efficiency in the long run.

Now what?

It's good to see Comcast adjusting to the cord-cutting realities of the modern cable TV market. Focusing on broadband services and related ideas, such as the streaming media-organizer Flex, will help the company stay relevant.

I'm still not a buyer of Comcast shares at this point because there are better investment ideas in the entertainment industry. That being said, I find the company fascinating and well worth keeping an eye on -- just in case the stock ever goes on fire sale for some flimsy reason, like it did in the spring of 2018.