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ROLLS-ROYCE MOTOR CARS REPORTS RECORD FIRST QUARTER RESULTS

ROLLS-ROYCE MOTOR CARS REPORTS RECORD FIRST QUARTER RESULTS

Rolls-Royce Motor Cars has delivered the highest-ever first quarter sales results in the marque’s 116-year history in the first three months of 2021. Between 1 January and 31 March, the company delivered 1,380 motor cars to customers, up 62% on the same period in 2020 and surpassing the previous first quarter record set in 2019. Sales growth was seen in all markets, with the strongest in China, US and Asia Pacific.

  • Rolls-Royce reports record first quarter sales, up 62% on the same period in 2020
  • Total exceeds previous record set in 2019 and is the highest in the marque’s 116-year history
  • Sales growth was seen in all markets, with the strongest in China, US and Asia Pacific
  • High demand for all models, particularly new Ghost and Cullinan, with order books extending well into the second half of 2021; Bespoke commissions also at record levels
  • Company ‘optimistic’ for remainder of 2021
ROLLS-ROYCE MOTOR CARS REPORTS RECORD FIRST QUARTER RESULTS

ROLLS-ROYCE MOTOR CARS REPORTS RECORD FIRST QUARTER RESULTS


“Rolls-Royce Motor Cars made a strong start to 2021, reflected today in our first quarter sales figures, which are the highest in our 116-year history. With robust order books across our product range, particularly for the new Ghost and Cullinan, sales growing in key markets and Bespoke commissions running at record levels, our business is in excellent shape. We have every reason to be optimistic for the remainder of 2021.”

Torsten Müller-Ötvös, Chief Executive Officer, Rolls-Royce Motor Cars

Rolls-Royce Motor Cars has delivered the highest-ever first quarter sales results in the marque’s 116-year history in the first three months of 2021.
Between 1 January and 31 March, the company delivered 1,380 motor cars to customers, up 62% on the same period in 2020 and surpassing the previous first quarter record set in 2019. Sales growth was seen in all markets, with the strongest in China, US and Asia Pacific.

Demand for all Rolls-Royce models is extremely buoyant, particularly the new Ghost launched in 2020, and the superluxury SUV, Cullinan, with order books extending well into the second half of 2021.

Ghost and Cullinan

Rolls-Royce Ghost and Cullinan

Bespoke commissions remain at the record levels seen in 2020, with a number of outstanding individual examples already delivered this year, including the Koa Phantom and Iridescent Opulence Phantom. All 20 of the Phantom Tempus Collection cars have been allocated to customers worldwide.

Reflecting on the results, Müller-Ötvös said, “We’ve responded to recent challenges with our customary boldness, imagination and inventiveness, underpinned by meticulous planning and a relentless focus on our customers’ needs and requirements. Every member of our extraordinary team, at the Home of Rolls-Royce at Goodwood and across the globe, has been crucial to delivering these remarkable results; their skills, talents, commitment and enthusiasm make us who we are.”

Comcast Reports 3rd Quarter 2020 Results

Comcast Reports 3rd Quarter 2020 Results

PHILADELPHIA–(BUSINESS WIRE)–Oct. 29, 2020– Comcast Corporation (NASDAQ: CMCSA) today reported results for the quarter ended September 30, 2020.

We are nearly eight months into this pandemic – and despite many harsh realities, I couldn’t be more pleased and proud of how our team has worked together across the company to find safe and creative solutions to successfully operate in this environment. We are executing at the highest level; and perhaps, most importantly, accelerating innovation, which will drive long-term future growth. This third quarter, we delivered the best broadband results in our company’s history.

Driven by our industry-leading platform and strategic focus on broadband, aggregation and streaming, we added a record 633,000 high-speed internet customers and 556,000 total net new customer relationships. At the same time, we’re growing our entertainment platforms with the addition of Flex, which has a significant positive impact on broadband churn and customer lifetime value. Our integrated strategy is also driving results in streaming with nearly 22 million sign-ups for Peacock to date, and we are exceeding our expectations on all engagement metrics in only a few months. And Sky continues to add customer relationships at higher prices while reducing churn to all-time lows in our core UK business. Going forward, and as we emerge from the pandemic, we believe we are extremely well positioned to provide seamless and integrated experiences for our customers and to deliver superior long-term growth and returns for our shareholders,” commented Brian L. Roberts, Chairman and Chief Executive Officer of Comcast Corporation.

 

($ in millions, except per share data)

3rd Quarter

Year to Date

Consolidated Results

2020

2019

Change

2020

2019

Change

Revenue

$25,532

$26,827

(4.8

%)

$75,856

$80,544

(5.8

%)

Net Income Attributable to Comcast

$2,019

$3,217

(37.2

%)

$7,154

$9,895

(27.7

%)

Adjusted Net Income1

$3,000

$3,667

(18.2

%)

$9,436

$10,754

(12.3

%)

Adjusted EBITDA2

$7,583

$8,553

(11.3

%)

$23,640

$25,822

(8.5

%)

Earnings per Share3

$0.44

$0.70

(37.1

%)

$1.55

$2.15

(27.9

%)

Adjusted Earnings per Share1

$0.65

$0.79

(17.7

%)

$2.04

$2.33

(12.4

%)

Net Cash Provided by Operating Activities

$5,228

$5,191

0.7

%

$19,695

$19,462

1.2

%

Free Cash Flow4

$2,289

$2,072

10.5

%

$11,580

$10,910

6.1

%

For additional detail on segment revenue and expenses, customer metrics, capital expenditures, and free cash flow, please refer to the trending schedules on Comcast’s Investor Relations website at www.cmcsa.com.

3rd Quarter 2020 Highlights:

  • Generated Consolidated Adjusted EBITDA of $7.6 Billion, Adjusted EPS of $0.65 and Free Cash Flow of $2.3 Billion
  • Cable Communications Total Customer Relationship Net Additions Were 556,000, the Best Quarterly Result on Record
  • Total High-Speed Internet Customer Net Additions Were 633,000, the Best Quarterly Result on Record
  • Cable Communications Adjusted EBITDA Increased 10.5% Driven by Strength in High-Speed Internet
  • Peacock Has Nearly 22 Million Sign-Ups to Date Across the U.S. and Recently Secured Distribution on the Roku Platform
  • NBCUniversal Reorganized Its Television and Streaming Businesses Under Mark Lazarus and Cesar Conde with a Centralized Structure Optimizing Content Creation, Distribution and Monetization
  • NBCUniversal Completed a Successful Upfront, with Strong Volume Commitments and Higher Pricing
  • Sky Customer Trends Improved Sequentially, and Included Net Additions in the U.K.
  • Premier League Viewership Reached Record Levels on Sky Sports, Including the Highest Average Season Viewership on Record for the 2019/20 Season and the Highest Daily U.K. Viewership on Record for the 2020/21 Season to Date

Consolidated Financial Results

Revenue for the third quarter of 2020 decreased 4.8% to $25.5 billion. Net Income Attributable to Comcast decreased 37.2% to $2.0 billion. Adjusted Net Income decreased 18.2% to $3.0 billion. Adjusted EBITDA decreased 11.3% to $7.6 billion.

For the nine months ended September 30, 2020, revenue decreased 5.8% to $75.9 billion compared to 2019. Net income attributable to Comcast decreased 27.7% to $7.2 billion. Adjusted Net Income decreased 12.3% to $9.4 billion. Adjusted EBITDA decreased 8.5% to $23.6 billion.

Earnings per Share (EPS) for the third quarter of 2020 was $0.44, a decrease of 37.1% compared to the third quarter of 2019. Adjusted EPS decreased 17.7% to $0.65.

For the nine months ended September 30, 2020, EPS was $1.55, a 27.9% decrease compared to the prior year. Adjusted EPS decreased 12.4% to $2.04.

Capital Expenditures decreased 4.9% to $2.4 billion in the third quarter of 2020. Cable Communications’ capital expenditures decreased 2.5% to $1.8 billion. NBCUniversal’s capital expenditures decreased 29.3% to $357 million. Sky’s capital expenditures increased 127.3% to $237 million.

For the nine months ended September 30, 2020, capital expenditures decreased 7.6% to $6.3 billion compared to 2019. Cable Communications’ capital expenditures decreased 5.9% to $4.5 billion. NBCUniversal’s capital expenditures decreased 22.5% to $1.1 billion. Sky’s capital expenditures increased 20.2% to $649 million.

Net Cash Provided by Operating Activities was $5.2 billion in the third quarter of 2020. Free Cash Flow was $2.3 billion.

For the nine months ended September 30, 2020, net cash provided by operating activities was $19.7 billion. Free cash flow was $11.6 billion.

Dividends paid during the third quarter of 2020 totaled $1.1 billion. For the nine months ended September 30, 2020, dividends paid totaled $3.1 billion.

Cable Communications

($ in millions)

3rd Quarter

Year to Date

2020

2019

Change

2020

2019

Change

Cable Communications Revenue

High-Speed Internet

$5,198

$4,721

10.1

%

$15,199

$13,961

8.9

%

Video

5,421

5,541

(2.1

%)

16,468

16,763

(1.8

%)

Voice

876

963

(9.0

%)

2,652

2,935

(9.6

%)

Wireless

400

326

22.8

%

1,069

795

34.5

%

Business Services

2,049

1,971

4.0

%

6,096

5,795

5.2

%

Advertising

674

603

11.8

%

1,659

1,766

(6.1

%)

Other

382

459

(17.2

%)

1,203

1,299

(7.5

%)

Cable Communications Revenue

$15,000

$14,584

2.9

%

$44,346

$43,314

2.4

%

Cable Communications Adjusted EBITDA

$6,411

$5,801

10.5

%

$18,663

$17,383

7.4

%

Adjusted EBITDA Margin

42.7%

39.8%

42.1%

40.1%

Cable Communications Capital Expenditures

$1,770

$1,814

(2.5

%)

$4,491

$4,771

(5.9

%)

Percent of Cable Communications Revenue

11.8%

12.4%

10.1%

11.0%

Revenue for Cable Communications increased 2.9% to $15.0 billion in the third quarter of 2020, driven by increases in high-speed internet, business services, wireless and advertising revenue, partially offset by decreases in video, voice and other revenue. These results were negatively impacted by accrued customer regional sports network (RSN) fee adjustments related to canceled sporting events as a result of COVID-19. Excluding these adjustments5, Cable Communications revenue increased 3.9%. High-speed internet revenue increased 10.1%, due to an increase in the number of residential high-speed internet customers and an increase in average rates. Excluding the impact of accrued RSN fee adjustments5 for customers taking bundled services, high-speed internet revenue increased 11.2%. Business services revenue increased 4.0%, reflecting increases in average rates and an increase in the number of customers receiving our services. Wireless revenue increased 22.8%, due to an increase in the number of customer lines. Advertising revenue increased 11.8%, primarily reflecting an increase in political advertising revenue. Excluding political advertising revenue, advertising revenue decreased 6.8%. Video revenue decreased 2.1%, due to a decrease in the number of residential video customers, partially offset by an increase in average rates. Excluding the impact of accrued customer RSN fee adjustments5, video revenue decreased 0.8%. Voice revenue decreased 9.0%, reflecting decreases in average rates and in the number of residential voice customers. Other revenue decreased 17.2%, primarily reflecting lower revenue due to waived late fees and a decline in revenue from our security and automation services.

For the nine months ended September 30, 2020, Cable revenue increased 2.4% to $44.3 billion compared to 2019, driven by growth in high-speed internet, business services and wireless revenue, partially offset by a decrease in video, voice, advertising and other revenue. These results were negatively impacted by COVID-19, including accrued customer RSN fee adjustments, reduced advertising revenue and lower revenue due to our efforts to assist customers during this public health crisis. Excluding the impact of accrued customer RSN fee adjustments5, Cable Communications revenue increased 3.2%.

Total Customer Relationships increased by 556,000 to 32.7 million in the third quarter of 2020. Residential customer relationships increased by 539,000 and business customer relationships increased by 17,000. Total high-speed internet customer net additions were 633,000, total video customer net losses were 273,000 and total voice customer net losses were 3,000. In addition, Cable Communications added 187,000 wireless lines in the quarter.

(in thousands)

Net Additions

3Q20

3Q19

3Q20

3Q19

Customer Relationships

Residential Customer Relationships

30,289

28,797

539

288

Business Services Customer Relationships

2,401

2,377

17

21

Total Customer Relationships

32,690

31,173

556

309

Residential Customer Relationships Mix

One Product Residential Customers

11,957

9,905

625

379

Two Product Residential Customers

8,732

8,915

(9

)

(38

)

Three or More Product Residential Customers

9,600

9,977

(77

)

(53

)

Residential High-Speed Internet Customers

27,837

25,990

617

359

Business Services High-Speed Internet Customers

2,225

2,197

16

20

Total High-Speed Internet Customers

30,062

28,186

633

379

Residential Video Customers

19,220

20,421

(253

)

(222

)

Business Services Video Customers

874

983

(20

)

(16

)

Total Video Customers

20,094

21,403

(273

)

(238

)

Residential Voice Customers

9,684

9,945

(14

)

(63

)

Business Services Voice Customers

1,341

1,334

11

10

Total Voice Customers

11,025

11,278

(3

)

(53

)

Total Wireless Lines

2,580

1,791

187

204

Adjusted EBITDA for Cable Communications increased 10.5% to $6.4 billion in the third quarter of 2020, due to higher revenue as well as a 2.2% decrease in operating expenses. Total operating expenses benefited from adjustments for provisions in our programming distribution agreements with RSNs related to canceled sporting events as a result of COVID-19. Programming costs decreased 0.6%, primarily reflecting the adjustment provisions. Excluding these adjustments5, programming costs increased 4.0% due to higher retransmission consent and sports programming fees, partially offset by a decline in the number of video subscribers. Non-programming expenses decreased 3.2%, while non-programming expenses per customer relationship decreased 7.4%. These declines reflect lower advertising, marketing and promotion expenses, technical and product support expenses and customer service expenses, partially offset by higher other operating expenses and franchise and regulatory fees. Non-programming expenses reflect a reduction in activity in some aspects of our business as a result of COVID-19 as well as benefits from cost saving initiatives. Adjusted EBITDA per customer relationship increased 5.8%, and Adjusted EBITDA margin was 42.7% compared to 39.8% in the third quarter of 2019. While the accrued RSN adjustments did not impact Adjusted EBITDA in the third quarter of 2020, the adjustments resulted in an increase to Adjusted EBITDA margin. Cable Communications results include a loss of $50 million from our wireless business, compared to a loss of $94 million in the prior year period.

For the nine months ended September 30, 2020, Cable Adjusted EBITDA increased 7.4% to $18.7 billion compared to 2019, due to higher revenue and a decrease in operating expenses. Programming costs decreased 1.3% primarily reflecting adjustments for provisions in our programming distribution agreements with RSNs related to canceled sporting events as a result of COVID-19. Excluding these adjustments5, programming costs increased 2.4% due to higher retransmission consent and sports programming fees, partially offset by a decline in the number of video subscribers. Non-programming expenses decreased 0.8%, reflecting cost savings initiatives that were partially offset by higher costs as a result of COVID-19. For the nine months ended September 30, 2020, Adjusted EBITDA per customer relationship increased 2.9%, and Adjusted EBITDA margin was 42.1% compared to 40.1% in 2019. While the accrued RSN adjustments did not impact Adjusted EBITDA for the nine months ended September 30, 2020, the adjustments resulted in an increase to Adjusted EBITDA margin. Cable Communications results include a loss of $146 million from our wireless business, compared to a loss of $285 million in the prior year period.

Capital Expenditures for Cable Communications decreased 2.5% to $1.8 billion in the third quarter of 2020, due to decreased investment in customer premise equipment and support capital, partially offset by increased investment in scalable infrastructure and line extensions. Cable capital expenditures represented 11.8% of Cable revenue in the third quarter of 2020 compared to 12.4% in last year’s third quarter.

For the nine months ended September 30, 2020, Cable capital expenditures decreased 5.9% to $4.5 billion, primarily reflecting decreased investment in customer premise equipment, partially offset by increased investment in scalable infrastructure. Cable capital expenditures represented 10.1% of Cable revenue compared to 11.0% in 2019.

NBCUniversal

($ in millions)

3rd Quarter

Year to Date

2020

2019

Change

2020

2019

Change

NBCUniversal Revenue

Cable Networks

$2,736

$2,771

(1.3

%)

$8,110

$8,586

(5.5

%)

Broadcast Television

2,414

2,230

8.3

%

7,462

7,099

5.1

%

Filmed Entertainment

1,280

1,706

(25.0

%)

3,844

4,931

(22.0

%)

Theme Parks

311

1,631

(80.9

%)

1,267

4,371

(71.0

%)

Headquarters, other and eliminations

(17

)

(43

)

NM

(101

)

(173

)

NM

NBCUniversal Revenue

$6,724

$8,295

(18.9

%)

$20,582

$24,814

(17.1

%)

NBCUniversal Adjusted EBITDA

Cable Networks

$870

$955

(8.9

%)

$3,361

$3,418

(1.7

%)

Broadcast Television

436

338

28.7

%

1,578

1,259

25.3

%

Filmed Entertainment

300

195

53.4

%

634

742

(14.6

%)

Theme Parks

(203

)

731

(127.7

%)

(526

)

1,819

(128.9

%)

Headquarters, other and eliminations

(122

)

(128

)

NM

(381

)

(486

)

NM

NBCUniversal Adjusted EBITDA

$1,281

$2,091

(38.7

%)

$4,666

$6,752

(30.9

%)

Revenue for NBCUniversal decreased 18.9% to $6.7 billion in the third quarter of 2020. Adjusted EBITDA decreased 38.7% to $1.3 billion.

For the nine months ended September 30, 2020, NBCUniversal revenue decreased 17.1% to $20.6 billion compared to last year’s results. Adjusted EBITDA decreased 30.9% to $4.7 billion.

Cable Networks
Cable Networks revenue decreased 1.3% to $2.7 billion in the third quarter of 2020, due to lower distribution revenue and advertising revenue, partially offset by higher content licensing and other revenue. Distribution revenue decreased 3.8%, reflecting credits accrued at some of our RSNs resulting from the reduced number of games played by professional sports leagues due to COVID-19 and a decline in subscribers, partially offset by contractual rate increases. Advertising revenue decreased 2.1%, reflecting continued ratings declines at our networks, partially offset by revenue from the broadcasts of rescheduled sporting events that were previously postponed due to COVID-19. Content licensing and other revenue increased 16.6%, due to the timing of content provided under licensing agreements, including transactions with Peacock in the third quarter of 2020. Adjusted EBITDA decreased 8.9% to $870 million in the third quarter of 2020, due to lower revenue and higher programming and production expenses, partially offset by lower advertising, marketing and promotion costs and other operating and administrative costs. The increase in programming and production expenses was primarily driven by an increase in sports programming costs as professional sports leagues resumed seasons following postponements due to COVID-19.

For the nine months ended September 30, 2020, revenue from the Cable Networks segment decreased 5.5% to $8.1 billion compared to 2019, due to lower distribution and advertising revenue, partially offset by higher content licensing and other revenue. Adjusted EBITDA decreased 1.7% to $3.4 billion compared to 2019, due to lower revenue, partially offset by lower operating costs. The decrease in operating costs was driven by lower programming and production expenses, reflecting a decrease in sports programming costs due to the reduced number of sporting events due to COVID-19, partially offset by an increase in studio costs.

Broadcast Television
Broadcast Television revenue increased 8.3% to $2.4 billion in the third quarter of 2020, due to higher content licensing revenue and distribution and other revenue, partially offset by lower advertising revenue. Content licensing revenue increased 65.6%, reflecting the timing of content provided under licensing agreements, including transactions with Peacock in the third quarter of 2020. Distribution and other revenue increased 4.9%, due to higher retransmission consent fees. Advertising revenue decreased 11.5%, reflecting continued ratings declines, partially offset by higher pricing and local political ad sales. Adjusted EBITDA increased 28.7% to $436 million in the third quarter of 2020, due to higher revenue, lower advertising, marketing and promotion costs and lower operating and administrative costs, partially offset by higher programming and production expenses. The increase in programming and production expenses was primarily due to higher content licensing sales.

For the nine months ended September 30, 2020, revenue from the Broadcast Television segment increased 5.1% to $7.5 billion compared to 2019, due to an increase in content licensing and distribution and other revenue, partially offset by lower advertising revenue. Adjusted EBITDA increased 25.3% to $1.6 billion compared to 2019, due to higher revenue, partially offset by a modest increase in operating costs.

Filmed Entertainment
Filmed Entertainment revenue decreased 25.0% to $1.3 billion in the third quarter of 2020, due to lower theatrical and other revenue, partially offset by higher content licensing and home entertainment revenue. Theatrical revenue decreased 94.7%, primarily driven by theater closures as a result of COVID-19. Other revenue decreased 44.8%, primarily due to decreases in revenue from our movie ticketing, entertainment and live stage play businesses, which were impacted by theater and entertainment venue closures as a result of COVID-19. Content licensing revenue increased 14.5%, due to the timing of content provided under licensing agreements, including transactions with Peacock in the third quarter of 2020. Home entertainment revenue increased 49.1%, which included the success of Trolls World Tour. Adjusted EBITDA increased 53.4% to $300 million in the third quarter of 2020, reflecting lower revenue, more than offset by a decline in operating costs due to lower spending on current period releases as a result of COVID-19.

For the nine months ended September 30, 2020, revenue from the Filmed Entertainment segment decreased 22.0% to $3.8 billion compared to 2019, primarily reflecting lower theatrical revenue. Adjusted EBITDA decreased 14.6% to $634 million compared to 2019, due to lower revenue, partially offset by lower operating costs.

Theme Parks
Theme Parks revenue decreased 80.9% to $311 million in the third quarter of 2020, primarily due to Universal Orlando Resort and Universal Studios Japan operating at limited capacity, while Universal Studios Hollywood remains closed as a result of COVID-19. Theme Parks Adjusted EBITDA loss was $203 million in the third quarter of 2020.

For the nine months ended September 30, 2020, revenue from the Theme Parks segment decreased 71.0% to $1.3 billion compared to 2019, primarily due to the temporary closures of Universal Studios Japan in late February and Universal Orlando Resort and Universal Studios Hollywood in mid-March as a result of COVID-19. Theme Parks Adjusted EBITDA loss was $526 million.

Headquarters, Other and Eliminations
NBCUniversal Headquarters, Other and Eliminations include overhead and eliminations among the NBCUniversal businesses. For the quarter ended September 30, 2020, NBCUniversal Headquarters, Other and Eliminations Adjusted EBITDA loss was $122 million, compared to a loss of $128 million in the third quarter of 2019.

For the nine months ended September 30, 2020, NBCUniversal Headquarters, Other and Eliminations Adjusted EBITDA loss was $381 million compared to a loss of $486 million in 2019.

Sky

($ in millions)

3rd Quarter

Year to Date

2020

2019

Change

Constant
Currency
Change6

2020

2019

Change

Constant
Currency
Change6

Sky Revenue

Direct-to-Consumer

$3,943

$3,793

3.9

%

(1.0

%)

$11,146

$11,516

(3.2

%)

(3.1

%)

Content

388

315

23.3

%

17.5

%

947

1,061

(10.7

%)

(10.4

%)

Advertising

462

446

3.7

%

(1.2

%)

1,296

1,602

(19.1

%)

(18.7

%)

Sky Revenue

$4,793

$4,554

5.2

%

0.3

%

$13,389

$14,179

(5.6

%)

(5.4

%)

Sky Operating Costs and Expenses

$4,278

$3,655

17.0

%

11.5

%

$11,574

$11,845

(2.3

%)

(2.0

%)

Sky Adjusted EBITDA

$515

$899

(42.8

%)

(45.4

%)

$1,815

$2,334

(22.3

%)

(22.5

%)

Adjusted EBITDA Margin

10.7%

19.7%

13.6%

16.5%

Revenue for Sky increased 5.2% to $4.8 billion in the third quarter of 2020. Excluding the impact of currency, revenue was consistent with the prior year period, due to higher content revenue, offset by lower direct-to-consumer revenue and advertising revenue. Content revenue increased 17.5% to $388 million, driven by higher wholesale revenue from sports programming as European football leagues resumed sporting events that were previously postponed due to COVID-19. Direct-to-consumer revenue decreased 1.0% to $3.9 billion, reflecting a decrease in customer relationships and average revenue per customer relationship that was consistent with the prior year period, and included growth in both customer relationships and average revenue per customer relationship in the U.K. Advertising revenue decreased 1.2% to $462 million, reflecting overall market weakness, partially offset by revenue from the broadcasts of rescheduled sporting events that were previously postponed due to COVID-19.

For the nine months ended September 30, 2020, Sky revenue decreased 5.6% to $13.4 billion compared to 2019. Excluding the impact of currency, revenue decreased 5.4%, due to lower direct-to-consumer, advertising and content revenue.

Total Customer Relationships decreased by 21,000 to 23.7 million in the third quarter of 2020, an improvement compared to the second quarter of 2020, and included net additions in the U.K.

(in thousands)

Customers

Net Additions

3Q20

3Q19

3Q20

3Q19

Total Customer Relationships

23,695

23,918

(21)

(99)

Adjusted EBITDA for Sky decreased 42.8% to $515 million in the third quarter of 2020. Excluding the impact of currency, Adjusted EBITDA decreased 45.4%, reflecting revenue that was consistent with the prior year period, offset by higher operating costs. The increase in operating costs was primarily driven by higher programming and production expenses, primarily due to an increase in sports programming costs as professional sports leagues resumed seasons following postponements due to COVID-19.

For the nine months ended September 30, 2020, Sky Adjusted EBITDA decreased 22.3% to $1.8 billion compared to 2019. Excluding the impact of currency, Adjusted EBITDA decreased 22.5%.

Corporate, Other and Eliminations

__________________________________________________________________________________________________________________________________________

Corporate and Other
Corporate and Other primarily relates to corporate operations, Comcast Spectacor and Peacock. Revenue for the quarter ended September 30, 2020 was $84 million, an increase of $42 million compared to 2019. Corporate and Other Adjusted EBITDA loss was $496 million, an increase of $259 million compared to 2019, primarily due to costs associated with Peacock.

For the nine months ended September 30, 2020, Corporate and Other revenue was $250 million, an increase of $44 million compared to 2019. Corporate and Other Adjusted EBITDA loss was $1.3 billion, an increase of $617 million compared to 2019, due to costs associated with Peacock and costs incurred in response to COVID-19, including severance and restructuring charges related to our NBCUniversal segments, which are presented in Corporate and Other.

Eliminations
Eliminations reflects the accounting for transactions between Cable Communications, NBCUniversal, Sky and Corporate and Other. Revenue eliminations for the quarter ended September 30, 2020 were $1.1 billion compared to $648 million in 2019, and Adjusted EBITDA eliminations were $128 million compared to $1 million in 2019. The increases were primarily driven by the licensing of content between our NBCUniversal segments and Peacock.

For the nine months ended September 30, 2020, revenue eliminations were $2.7 billion compared to $2.0 billion in 2019, and Adjusted EBITDA eliminations were $250 million compared to $10 million in 2019. The increases were primarily driven by the licensing of content between our NBCUniversal segments and Peacock.

__________________________________________________________________________________________________________________________________________

Notes:

1.

We define Adjusted Net Income and Adjusted EPS as net income attributable to Comcast Corporation and diluted earnings per common share attributable to Comcast Corporation shareholders, respectively, adjusted to exclude the effects of the amortization of acquisition-related intangible assets, investments that investors may want to evaluate separately (such as based on fair value) and the impact of certain events, gains, losses or other charges that affect period-over-period comparisons. See Table 5 for reconciliations of non-GAAP financial measures.

2.

We define Adjusted EBITDA as net income attributable to Comcast Corporation before net income (loss) attributable to noncontrolling interests and redeemable subsidiary preferred stock, income tax expense, investment and other income (loss), net, interest expense, depreciation and amortization expense, and other operating gains and losses (such as impairment charges related to fixed and intangible assets and gains or losses on the sale of long-lived assets), if any. From time to time, we may exclude from Adjusted EBITDA the impact of certain events, gains, losses or other charges (such as significant legal settlements) that affect the period-to-period comparability of our operating performance. See Table 4 for reconciliation of non-GAAP financial measure.

3.

All earnings per share amounts are presented on a diluted basis.

4.

We define Free Cash Flow as net cash provided by operating activities (as stated in our Consolidated Statement of Cash Flows) reduced by capital expenditures and cash paid for intangible assets. From time to time, we may exclude from Free Cash Flow the impact of certain cash receipts or payments (such as significant legal settlements) that affect period-to-period comparability. Cash payments for acquisitions and construction of real estate properties and the construction of Universal Beijing Resort are presented separately in our Consolidated Statement of Cash Flows and are therefore excluded from capital expenditures for Free Cash Flow. See Table 4 for reconciliation of non-GAAP financial measure.

5.

Cable Communications reported results for 2020 include the impacts of RSN related adjustments, affecting period-to-period comparability of our operating performance. We also present adjusted information, excluding the impacts of the RSN related adjustments. See Table 7 for reconciliation of non-GAAP financial measures.

6.

Sky constant currency growth rates are calculated by comparing the current period results to the comparative period results in the prior year adjusted to reflect the average exchange rates from the current year period rather than the actual exchange rates in effect during the respective prior year periods. See Table 6 for reconciliation of Sky’s constant currency growth.

 All percentages are calculated on whole numbers. Minor differences may exist due to rounding.

Conference Call and Other Information
Comcast Corporation will host a conference call with the financial community today, October 29, 2020 at 8:30 a.m. Eastern Time (ET). The conference call and related materials will be broadcast live and posted on its Investor Relations website at www.cmcsa.com. Those parties interested in participating via telephone should dial (800) 263-8495 with the conference ID number 3090648. A replay of the call will be available starting at 12:00 p.m. ET on October 29, 2020, on the Investor Relations website or by telephone. To access the telephone replay, which will be available until Thursday, November 5, 2020 at midnight ET, please dial (855) 859-2056 and enter the conference ID number 3090648.

From time to time, we post information that may be of interest to investors on our website at www.cmcsa.com and on our corporate website, www.comcastcorporation.com. To automatically receive Comcast financial news by email, please visit www.cmcsa.com and subscribe to email alerts.

Caution Concerning Forward-Looking Statements
This press release contains forward-looking statements. Readers are cautioned that such forward-looking statements involve risks and uncertainties that could cause actual events or our actual results to differ materially from those expressed in any such forward-looking statements. Readers are directed to Comcast’s periodic and other reports filed with the Securities and Exchange Commission (SEC) for a description of such risks and uncertainties. We undertake no obligation to update any forward-looking statements.

Non-GAAP Financial Measures
In this discussion, we sometimes refer to financial measures that are not presented according to generally accepted accounting principles in the U.S. (GAAP). Certain of these measures are considered “non-GAAP financial measures” under the SEC regulations; those rules require the supplemental explanations and reconciliations that are in Comcast’s Form 8-K (Quarterly Earnings Release) furnished to the SEC.

About Comcast Corporation
Comcast Corporation (Nasdaq: CMCSA) is a global media and technology company with three primary businesses: Comcast Cable, NBCUniversal, and Sky. Comcast Cable is one of the United States’ largest high-speed internet, video, and phone providers to residential customers under the Xfinity brand, and also provides these services to businesses. It also provides wireless and security and automation services to residential customers under the Xfinity brand. NBCUniversal is global and operates news, entertainment and sports cable networks, the NBC and Telemundo broadcast networks, television production operations, television station groups, Universal Pictures, and Universal Parks and Resorts. Sky is one of Europe’s leading media and entertainment companies, connecting customers to a broad range of video content through its pay television services. It also provides communications services, including residential high-speed internet, phone, and wireless services. Sky operates the Sky News broadcast network and sports and entertainment networks, produces original content, and has exclusive content rights. Visit www.comcastcorporation.com for more information.

TABLE 1

Condensed Consolidated Statement of Income (Unaudited)

Three Months Ended

Nine Months Ended

(in millions, except per share data)

September 30,

September 30,

2020

2019

2020

2019

Revenue

$25,532

$26,827

$75,856

$

80,544

Costs and expenses

Programming and production

8,565

8,316

23,683

25,140

Other operating and administrative

8,059

8,090

23,959

24,076

Advertising, marketing and promotion

1,512

1,901

4,791

5,674

Depreciation

2,122

2,124

6,328

6,561

Amortization

1,198

1,056

3,520

3,215

21,456

21,487

62,281

64,666

Operating income

4,076

5,340

13,575

15,878

Interest expense

(1,220

)

(1,167

)

(3,544

)

(3,454

)

Investment and other income (loss), net

Equity in net income (losses) of investees, net

(266

)

(355

)

(634

)

(295

)

Realized and unrealized gains (losses) on equity securities, net

118

174

65

582

Other income (loss), net

62

71

187

224

(86

)

(110

)

(382

)

511

Income before income taxes

2,770

4,063

9,649

12,935

Income tax expense

(739

)

(775

)

(2,385

)

(2,812

)

Net income

2,031

3,288

7,264

10,123

Less: Net income (loss) attributable to noncontrolling interests and redeemable subsidiary preferred stock

12

71

110

228

Net income attributable to Comcast Corporation

$2,019

$3,217

$7,154

$

9,895

Diluted earnings per common share attributable to Comcast Corporation shareholders

$0.44

$0.70

$1.55

$

2.15

Diluted weighted-average number of common shares

4,628

4,619

4,616

4,606

TABLE 2

Consolidated Statement of Cash Flows (Unaudited)

Nine Months Ended

(in millions)

September 30,

2020

2019

OPERATING ACTIVITIES

Net income

$7,264

$10,123

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

9,848

9,776

Share-based compensation

922

790

Noncash interest expense (income), net

606

310

Net (gain) loss on investment activity and other

514

(166

)

Deferred income taxes

(224

)

468

Changes in operating assets and liabilities, net of effects of acquisitions and divestitures:

Current and noncurrent receivables, net

982

360

Film and television costs, net

163

(321

)

Accounts payable and accrued expenses related to trade creditors

(545

)

(1,149

)

Other operating assets and liabilities

165

(729

)

Net cash provided by operating activities

19,695

19,462

INVESTING ACTIVITIES

Capital expenditures

(6,344

)

(6,866

)

Cash paid for intangible assets

(1,771

)

(1,686

)

Construction of Universal Beijing Resort

(1,118

)

(736

)

Acquisitions, net of cash acquired

(225

)

(181

)

Proceeds from sales of businesses and investments

2,131

208

Purchases of investments

(545

)

(1,697

)

Other

(101

)

46

Net cash provided by (used in) investing activities

(7,973

)

(10,912

)

FINANCING ACTIVITIES

Proceeds from (repayments of) short-term borrowings, net

(1,288

)

Proceeds from borrowings

18,339

516

Proceeds from collateralized obligation

5,175

Repurchases and repayments of debt

(16,771

)

(9,975

)

Repurchases of common stock under employee plans

(429

)

(432

)

Dividends paid

(3,086

)

(2,778

)

Other

(1,644

)

(44

)

Net cash provided by (used in) financing activities

(3,591

)

(8,826

)

Impact of foreign currency on cash, cash equivalents and restricted cash

17

(31

)

Increase (decrease) in cash, cash equivalents and restricted cash

8,148

(307

)

Cash, cash equivalents and restricted cash, beginning of period

5,589

3,909

Cash, cash equivalents and restricted cash, end of period

$13,737

$3,602

TABLE 3

Condensed Consolidated Balance Sheet (Unaudited)

(in millions)

September 30,

December 31,

2020

2019

ASSETS

Current Assets

Cash and cash equivalents

$13,707

$5,500

Receivables, net

10,310

11,292

Programming rights

3,877

Other current assets

3,352

4,723

Total current assets

27,369

25,392

Film and television costs

12,741

8,933

Investments

6,702

6,989

Investment securing collateralized obligation

429

694

Property and equipment, net

50,466

48,322

Goodwill

68,898

68,725

Franchise rights

59,365

59,365

Other intangible assets, net

34,485

36,128

Other noncurrent assets, net

8,485

8,866

$268,940

$263,414

LIABILITIES AND EQUITY

Current Liabilities

Accounts payable and accrued expenses related to trade creditors

$10,979

$10,826

Accrued participations and residuals

1,794

1,730

Deferred revenue

2,888

2,768

Accrued expenses and other current liabilities

9,421

10,516

Current portion of long-term debt

4,429

4,452

Total current liabilities

29,511

30,292

Long-term debt, less current portion

99,995

97,765

Collateralized obligation

5,167

5,166

Deferred income taxes

27,905

28,180

Other noncurrent liabilities

17,537

16,765

Redeemable noncontrolling interests and redeemable subsidiary preferred stock

1,254

1,372

Equity

Comcast Corporation shareholders’ equity

86,176

82,726

Noncontrolling interests

1,395

1,148

Total equity

87,571

83,874

$268,940

$263,414

TABLE 4
Reconciliation from Net Income Attributable to Comcast Corporation to Adjusted EBITDA (Unaudited)

Three Months Ended
September 30,

Nine Months Ended
September 30,

(in millions)

2020

2019

2020

2019

Net income attributable to Comcast Corporation

$2,019

$3,217

$7,154

$9,895

Net income (loss) attributable to noncontrolling interests and redeemable subsidiary preferred stock

12

71

110

228

Income tax expense

739

775

2,385

2,812

Interest expense

1,220

1,167

3,544

3,454

Investment and other (income) loss, net

86

110

382

(511

)

Depreciation and amortization

3,320

3,180

9,848

9,776

Adjustments (1)

187

33

217

168

Adjusted EBITDA

$7,583

$8,553

$23,640

$25,822

Reconciliation from Net Cash Provided by Operating Activities to Free Cash Flow (Unaudited)

Three Months Ended
September 30,

Nine Months Ended
September 30,

(in millions)

2020

2019

2020

2019

Net cash provided by operating activities

$5,228

$5,191

$19,695

$19,462

Capital expenditures

(2,387

)

(2,511

)

(6,344

)

(6,866

)

Cash paid for capitalized software and other intangible assets

(552

)

(608

)

(1,771

)

(1,686

)

Total Free Cash Flow

$2,289

$2,072

$11,580

$10,910

Alternate Presentation of Free Cash Flow (Unaudited)

Three Months Ended
September 30,

Nine Months Ended
September 30,

(in millions)

2020

2019

2020

2019

Adjusted EBITDA

$7,583

$8,553

$23,640

$25,822

Capital expenditures

(2,387

)

(2,511

)

(6,344

)

(6,866

)

Cash paid for capitalized software and other intangible assets

(552

)

(608

)

(1,771

)

(1,686

)

Cash interest expense

(909

)

(1,056

)

(2,845

)

(3,167

)

Cash taxes

(1,965

)

(856

)

(2,298

)

(2,490

)

Changes in operating assets and liabilities

376

(1,765

)

361

(1,670

)

Noncash share-based compensation

301

257

922

790

Other (2)

(158

)

58

(85

)

177

Total Free Cash Flow

$2,289

$2,072

$11,580

$10,910

(1)

3rd quarter and year to date 2020 Adjusted EBITDA exclude $177 million of other operating and administrative expense related to a potential legal settlement, and $10 million and $40 million of other operating and administrative expense, respectively, related to the Sky transaction. 3rd quarter and year to date 2019 Adjusted EBITDA exclude $33 million and $168 million of other operating and administrative expense, respectively, related to the Sky transaction.

(2)

3rd quarter and year to date 2020 include decreases of $177 million related to a potential legal settlement, and $10 million and $40 million of costs related to the Sky transaction, respectively, as these amounts are excluded from Adjusted EBITDA. 3rd quarter and year to date 2019 include decreases of $33 million and $168 million of costs related to the Sky transaction, respectively, as these amounts are excluded from Adjusted EBITDA.

Note: Minor differences may exist due to rounding.

TABLE 5

Reconciliations of Adjusted Net Income and Adjusted EPS (Unaudited)

Three Months Ended
September 30,

Nine Months Ended
September 30,

2020

2019

2020

2019

(in millions, except per share data)

$

EPS

$

EPS

$

EPS

$

EPS

Net income attributable to Comcast Corporation and diluted earnings per share attributable to Comcast Corporation shareholders

$2,019

$0.44

$3,217

$0.70

$7,154

$1.55

$9,895

$2.15

Change

(37.2

%)

(37.1

%)

(27.7

%)

(27.9

%)

Amortization of acquisition-related intangible assets (1)

458

0.10

385

0.08

1,365

0.30

1,180

0.25

Investments (2)

70

0.01

141

0.03

334

0.07

(317)

(0.07)

Items affecting period-over-period comparability:

Loss on early redemption of debt (3)

166

0.04

42

0.01

272

0.06

42

0.01

Income tax adjustments (4)

145

0.03

(125)

(0.03)

145

0.03

(125)

(0.03)

Potential legal settlement (5)

134

0.03

134

0.03

Costs related to Sky transaction (6)

8

27

32

136

0.03

Gains and losses related to businesses and investments (7)

(20)

(96)

(0.02)

Purchase accounting adjustments (8)

39

0.01

Adjusted Net income and Adjusted EPS

$3,000

$0.65

$3,667

$0.79

$9,436

$2.04

$10,754

$2.33

Change

(18.2

%)

(17.7

%)

(12.3

%)

(12.4

%)

(1) Acquisition-related intangible assets are recognized as a result of the application of Accounting Standards Codification Topic 805, Business Combinations (such as customer relationships), and their amortization is significantly affected by the size and timing of our acquisitions. Amortization of intangible assets not resulting from business combinations (such as software and acquired intellectual property rights used in our theme parks) is included in Adjusted Net Income and Adjusted EPS.

Three Months Ended
September 30,

Nine Months Ended
September 30,

2020

2019

2020

2019

Amortization of acquisition-related intangible assets
before income taxes

$574

$486

$1,714

$1,489

Amortization of acquisition-related intangible assets,
net of tax

$458

$385

$1,365

$1,180

(2) Adjustments for investments include realized and unrealized (gains) losses on equity securities, net (as stated in Table 1), as well as the equity in net (income) losses of investees, net, for our investments in Atairos and Hulu (following May 2019 transaction).

Three Months Ended
September 30,

Nine Months Ended
September 30,

2020

2019

2020

2019

Realized and unrealized (gains) losses on equity
securities, net

($118

)

($174

)

($65

)

($582

)

Equity in net (income) losses of investees, net

210

363

506

155

Investments before income taxes

92

189

441

(427

)

Investments, net of tax

$70

$141

$334

($317

)

(3)

3rd quarter and year to date 2020 net income attributable to Comcast Corporation includes $220 million and $360 million of interest expense, $166 million and $272 million net of tax, respectively, resulting from the early redemption of debt. 3rd quarter and year to date 2019 net income attributable to Comcast Corporation includes $56 million of interest expense, $42 million net of tax, resulting from the early redemption of debt.

(4)

3rd quarter and year to date 2020 net income attributable to Comcast Corporation includes $145 million of income tax expense adjustments related to certain tax law changes. 3rd quarter and year to date 2019 net income attributable to Comcast Corporation includes $125 million of income tax benefits related to the impact of certain state tax adjustments.

(5)

3rd quarter and year to date 2020 net income attributable to Comcast Corporation includes $177 million of other operating and administrative expense, $134 million net of tax, related to a potential legal settlement.

(6)

3rd quarter and year to date 2020 net income attributable to Comcast Corporation includes $10 million and $40 million of operating costs and expenses, $8 million and $32 million net of tax, respectively, related to the Sky transaction, primarily relating to the replacement of share-based compensation awards and costs related to integration activities. 3rd quarter and year to date 2019 net income attributable to Comcast Corporation includes $33 million and $168 million of operating costs and expenses, $27 million and $136 million net of tax, respectively, related to the Sky transaction, primarily relating to the replacement of share-based compensation awards and costs related to integration activities.

(7)

3rd quarter 2019 net income attributable to Comcast Corporation includes a gain of $60 million in other income, $45 million net of tax, related to our investment in Hulu and $34 million of other losses, $25 million net of tax, related to an impairment of an equity method investment. 2019 year to date net income attributable to Comcast Corporation also includes a gain of $159 million in other income, $118 million net of tax, related to our investment in Hulu and $56 million of other losses, $42 million net of tax, related to an impairment of an equity method investment.

(8)

2019 year to date net income attributable to Comcast Corporation includes $53 million of depreciation and amortization expense, $39 million net of tax, related to the 4th quarter 2018, as a result of adjustments to the purchase price allocation of Sky, primarily related to intangible assets and property and equipment.
Note: Minor differences may exist due to rounding.

TABLE 6

Reconciliation of Sky Constant Currency Growth (Unaudited)

Three Months Ended
September 30,

Nine Months Ended
September 30,

(in millions)

2020

2019(1)

Change

2020

2019(1)

Change

Direct-to-Consumer

$3,943

$3,981

(1.0

%)

$11,146

$11,504

(3.1

%)

Content

388

330

17.5

%

947

1,057

(10.4

%)

Advertising

462

468

(1.2

%)

1,296

1,595

(18.7

%)

Revenue

$4,793

$4,779

0.3

%

$13,389

$14,156

(5.4

%)

Operating costs and expenses

$4,278

$3,836

11.5

%

$11,574

$11,815

(2.0

%)

Adjusted EBITDA

$515

$943

(45.4

%)

$1,815

$2,341

(22.5

%)

(1)

2019 results for entities reporting in currencies other than United States dollars are converted into United States dollars using the average exchange rates from the current period rather than the actual exchange rates in effect during the respective periods.

Note: Minor differences may exist due to rounding.

TABLE 7

Reconciliation of Cable Communications RSN Adjustments (Unaudited)

Three Months Ended
September 30, 2020

Nine Months Ended
September 30, 2020

Reported
Change

RSN
Adjustments

Adjusted
Change

Reported
Change

RSN
Adjustments

Adjusted
Change

Revenue

High-Speed Internet

10.1

%

(1.1

%)

11.2

%

8.9

%

(0.9

%)

9.8

%

Video

(2.1

%)

(1.3

%)

(0.8

%)

(1.8

%)

(1.2

%)

(0.6

%)

Total Revenue

2.9

%

(1.0

%)

3.9

%

2.4

%

(0.8

%)

3.2

%

Expenses

Programming and production

(0.6

%)

(4.6

%)

4.0

%

(1.3

%)

(3.7

%)

2.4

%

Adjusted EBITDA

10.5

%

%

10.5

%

7.4

%

%

7.4

%

Adjusted EBITDA margin

290 bps

40 bps

250 bps

200 bps

40 bps

160 bps

Note: Minor differences may exist due to rounding. Percentages represent year/year growth rates and Adjusted EBITDA margin is presented as year/year basis point change

SAN FRANCISCO–(BUSINESS WIRE)– Pinterest, Inc. (NYSE: PINS) today announced financial results for the quarter ended September 30, 2020.

  • Q3 revenue grew 58% year over year to $443 million.
  • Global Monthly Active Users (MAUs) grew 37% year over year to 442 million.
  • GAAP net loss was $(94) million for Q3. Adjusted EBITDA was $93 million.

“More than ever before, people are coming to Pinterest to get inspiration for their lives—everything from planning early for a socially distant Halloween to creating great home schools for their kids,” said Ben Silbermann, CEO and co-founder, Pinterest. “Our top priority is to continue making Pinterest home to the most inspiring and actionable content. This quarter we launched a set of tools to empower creators to show and share their ideas with people who are ready to act.”

“The strong momentum our business experienced in July continued throughout the rest of the third quarter. We’re extremely pleased with the broad based strength of our business, driven by recovering advertiser demand as well as positive returns from our investments in advertiser products and international expansion,” said Todd Morgenfeld, CFO and Head of Business Operations, Pinterest.

 

NY, USA – DECEMBER 26, 2019: Pinterest paper logo lies with envelope full of dollar bills and smartphone

Q3 2020 Financial Highlights

The following table summarizes our consolidated financial results (in thousands, except percentages, unaudited):

Three Months Ended September 30,

% Change

2020

2019

Revenue

$

442,616

$

279,703

58

%

Net loss

$

(94,220

)

$

(124,732

)

24

%

Non-GAAP net income*

$

87,164

$

5,960

1,362

%

Adjusted EBITDA*

$

93,042

$

3,871

2,304

%

Adjusted EBITDA margin*

21

%

1

%

For more information on these non-GAAP financial measures, please see “—About non-GAAP financial measures” and the tables under “—Reconciliation of GAAP to non-GAAP financial results” included at the end of this release.

Q3 2020 Other Highlights

The following table sets forth our revenue, MAUs and average revenue per user (“ARPU”) based on the geographic location of our users (in millions, except ARPU and percentages, unaudited):

Three Months Ended September 30,

% Change

2020

2019

Revenue – Global

$

443

$

280

58

%

Revenue – United States

$

374

$

251

49

%

Revenue – International

$

69

$

28

145

%

MAUs – Global

442

322

37

%

MAUs – United States

98

87

13

%

MAUs – International

343

235

46

%

ARPU – Global

$

1.03

$

0.90

15

%

ARPU – United States

$

3.85

$

2.93

31

%

ARPU – International

$

0.21

$

0.13

66

%

Outlook

Our current expectation is that Q4 revenue will grow around 60% year over year, a modest acceleration compared to our growth rate in Q320. We continue to navigate uncertainty given the ongoing COVID-19 pandemic and other factors.

We’re also operating in a more remote working environment while maintaining investments in the long-term strategic priorities of the company. We continue to evaluate our spending as the situation evolves.

We intend to provide further detail on our outlook during the conference call.

Webcast and conference call information

A live audio webcast of our third quarter 2020 earnings release call will be available at investor.pinterestinc.com. The call begins today at 1:30 PM (PT) / 4:30 PM (ET). We have also posted to our investor relations website a letter to shareholders. This press release, including the reconciliations of certain non-GAAP measures to their nearest comparable GAAP measures, letter to shareholders and slide presentation are also available. A recording of the webcast will be available at investor.pinterestinc.com for 90 days.

We have used, and intend to continue to use, our investor relations website at investor.pinterestinc.com as a means of disclosing material nonpublic information and for complying with our disclosure obligations under Regulation FD.

Forward-looking statements

This press release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act of 1934, as amended, about us and our industry that involve substantial risks and uncertainties, including, among other things, statements about our future operational and financial performance. Words such as “believe,” “project,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “plan” and similar expressions are intended to identify forward-looking statements. These forward-looking statements are only predictions and may differ materially from actual results due to a variety of factors including: uncertainty regarding the duration and scope of the coronavirus referred to as COVID-19 pandemic; actions governments and businesses take in response to the pandemic, including actions that could affect levels of advertising activity; the impact of the pandemic and actions taken in response to the pandemic on global and regional economies and economic activity; the pace of recovery when the COVID-19 pandemic subsides; general economic uncertainty in key global markets and a worsening of global economic conditions or low levels of economic growth; the scope and impact of the recent outbreak of COVID-19 on our planned investments, operations, expenses, revenue, cash flow, liquidity and users; our ability to attract and retain Pinners and engagement levels; our ability to provide useful and relevant content; risks associated with new products and changes to existing products as well as other new business initiatives; our ability to maintain and enhance our brand and reputation; compromises in security; our financial performance and fluctuations in operating results; our dependency on internet search engines’ methodologies and policies; discontinuation, disruptions or outages in authentication by third-party login providers; changes by third-party login providers that restrict our access or ability to identify users; competition; our ability to scale our business and revenue model; our reliance on advertising revenue and our ability to attract and retain advertisers and effectively measure advertising campaigns; our ability to effectively manage growth and expand and monetize our platform internationally; our lack of operating history and ability to attain and sustain profitability; decisions that reduce short-term revenue or profitability or do not produce expected long-term benefits; risks associated with government actions, laws and regulations that could restrict access to our products or impair our business; litigation and government inquiries; privacy, data and other regulatory concerns; our ability to protect our intellectual property; real or perceived inaccuracies in metrics related to our business; disruption, degradation or interference with the hosting services we use and infrastructure; our ability to attract and retain personnel; and the dual class structure of our common stock and its effect of concentrating voting control with stockholders who held our capital stock prior to the completion of our initial public offering. These and other potential risks and uncertainties that could cause actual results to differ from the results predicted are more fully detailed in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2020, which is available on our investor relations website at investor.pinterestinc.com and on the SEC website at www.sec.gov. Additional information will be made available in our Quarterly Report on Form 10-Q and other future reports that we may file with the SEC from time to time, which could cause actual results to vary from expectations. All information provided in this release and in the earnings materials is as of October 28, 2020. Undue reliance should not be placed on the forward-looking statements in this press release, which are based on information available to us on the date hereof. We undertake no duty to update this information unless required by law.

About non-GAAP financial measures

To supplement our condensed consolidated financial statements, which are prepared and presented in accordance with generally accepted accounting principles in the United States (“GAAP”), we use the following non-GAAP financial measures: Adjusted EBITDA, Adjusted EBITDA margin, non-GAAP costs and expenses (including non-GAAP cost of revenue, research and development, sales and marketing, and general and administrative), non-GAAP income (loss) from operations, non-GAAP net income (loss) and non-GAAP net income (loss) per share. The presentation of these financial measures is not intended to be considered in isolation, as a substitute for or superior to the financial information prepared and presented in accordance with GAAP. Investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool. In addition, these measures may be different from non-GAAP financial measures used by other companies, limiting their usefulness for comparative purposes. We compensate for these limitations by providing specific information regarding GAAP amounts excluded from these non-GAAP financial measures.

We define Adjusted EBITDA as net loss adjusted to exclude depreciation and amortization expense, share-based compensation expense, interest income, interest expense and other income (expense), net, provision for (benefit from) income taxes and, for the third quarter of 2020, a one-time payment for the termination of a future lease contract. Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by revenue. Non-GAAP costs and expenses (including non-GAAP cost of revenue, research and development, sales and marketing, and general and administrative) and non-GAAP net income (loss) exclude amortization of acquired intangible assets, share-based compensation expense and, for the third quarter of 2020, a one-time payment for the termination of a future lease contract. Non-GAAP income (loss) from operations is calculated by subtracting non-GAAP costs and expenses from revenue. Non-GAAP net income per share is calculated by dividing non-GAAP net income by diluted weighted-average shares outstanding. We use Adjusted EBITDA, Adjusted EBITDA margin, non-GAAP costs and expenses, non-GAAP income (loss) from operations, non-GAAP net income and non-GAAP net income per share to evaluate our operating results and for financial and operational decision-making purposes. We believe these non-GAAP financial measures help identify underlying trends in our business that could otherwise be masked by the effect of the income and expenses they exclude. We also believe these non-GAAP financial measures provide useful information about our operating results, enhance the overall understanding of our past performance and future prospects and allow for greater transparency with respect to key metrics we use for financial and operational decision-making. We present these non-GAAP financial measures to assist potential investors in seeing our operating results through the eyes of management and because we believe these measures provide an additional tool for investors to use in comparing our operating results over multiple periods with other companies in our industry. There are a number of limitations related to the use of Adjusted EBITDA, Adjusted EBITDA margin, non-GAAP costs and expenses, non-GAAP income (loss) from operations, non-GAAP net income and non-GAAP net income per share rather than net loss, net margin, total costs and expenses, loss from operations, net loss and net loss per share, respectively, the nearest GAAP equivalents. For example, Adjusted EBITDA excludes certain recurring, non-cash charges such as depreciation of fixed assets and amortization of acquired intangible assets, although these assets may have to be replaced in the future, and share-based compensation expense, which has been, and will continue to be for the foreseeable future, a significant recurring expense and an important part of our compensation strategy.

For a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures, please see the tables under “—Reconciliation of GAAP to non-GAAP financial results” included at the end of this release.

Limitation of key metrics and other data

The numbers for our key metrics, which include our MAUs and ARPU, are calculated using internal company data based on the activity of user accounts. We define a monthly active user as an authenticated Pinterest user who visits our website, opens our mobile application or interacts with Pinterest through one of our browser or site extensions, such as the Save button, at least once during the 30-day period ending on the date of measurement. We present MAUs based on the number of MAUs measured on the last day of the current period. We define ARPU as our total revenue in a given geography during a period divided by the average of the number of MAUs in that geography during the period. We calculate average MAUs based on the average between the number of MAUs measured on the last day of the current period and the last day prior to the beginning of the current period. We calculate ARPU by geography based on our estimate of the geography in which revenue-generating activities occur. We use these metrics to assess the growth and health of the overall business and believe that MAUs and ARPU best reflect our ability to attract, retain, engage and monetize our users, and thereby drive revenue. While these numbers are based on what we believe to be reasonable estimates of our user base for the applicable period of measurement, there are inherent challenges in measuring usage of our products across large online and mobile populations around the world. In addition, we are continually seeking to improve our estimates of our user base, and such estimates may change due to improvements or changes in technology or our methodology.

PINTEREST, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except par value)

(unaudited)

September 30,

December 31,

2020

2019

ASSETS

Current assets:

Cash and cash equivalents

$

652,723

$

649,666

Marketable securities

996,392

1,063,679

Accounts receivable, net of allowances of $5,670 and $2,851 as of September 30, 2020 and December 31, 2019, respectively

339,274

316,367

Prepaid expenses and other current assets

44,537

37,522

Total current assets

2,032,926

2,067,234

Property and equipment, net

76,294

91,992

Operating lease right-of-use assets

164,803

188,251

Goodwill and intangible assets, net

13,814

14,576

Restricted cash

9,221

25,339

Other assets

3,980

5,925

Total assets

$

2,301,038

$

2,393,317

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

$

41,703

$

34,334

Accrued expenses and other current liabilities

147,946

141,823

Total current liabilities

189,649

176,157

Operating lease liabilities

150,162

173,392

Other liabilities

26,623

20,063

Total liabilities

366,434

369,612

Commitments and contingencies

Stockholders’ equity:

Class A common stock, $0.00001 par value, 6,666,667 shares authorized, 507,248 and 360,850 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively; Class B common stock, $0.00001 par value, 1,333,333 shares authorized, 107,995 and 209,054 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively

6

6

Additional paid-in capital

4,475,425

4,229,778

Accumulated other comprehensive income

2,063

647

Accumulated deficit

(2,542,890

)

(2,206,726

)

Total stockholders’ equity

1,934,604

2,023,705

Total liabilities and stockholders’ equity

$

2,301,038

$

2,393,317

PINTEREST, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(unaudited)

Three Months Ended September 30,

2020

2019

Revenue

$

442,616

$

279,703

Costs and expenses:

Cost of revenue

112,844

83,520

Research and development

160,187

167,703

Sales and marketing

118,531

110,740

General and administrative

148,087

51,450

Total costs and expenses

539,649

413,413

Loss from operations

(97,033

)

(133,710

)

Interest income

2,896

9,837

Interest expense and other income (expense), net

(51

)

(1,056

)

Loss before provision for (benefit from) income taxes

(94,188

)

(124,929

)

Provision for (benefit from) income taxes

32

(197

)

Net loss

$

(94,220

)

$

(124,732

)

Net loss per share attributable to common stockholders, basic and diluted

$

(0.16

)

$

(0.23

)

Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted

603,490

546,126

PINTEREST, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

Nine Months Ended September 30,

2020

2019

Operating activities
Net loss $

(336,164

)

$

(1,325,653

)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization

29,174

19,496

Share-based compensation

234,801

1,265,581

Other

7,268

(3,296

)

Changes in assets and liabilities:
Accounts receivable

(25,667

)

12,331

Prepaid expenses and other assets

(6,184

)

(1,502

)

Operating lease right-of-use assets

31,835

21,746

Accounts payable

7,689

8,897

Accrued expenses and other liabilities

20,391

13,133

Operating lease liabilities

(35,013

)

(19,634

)

Net cash used in operating activities

(71,870

)

(8,901

)

Investing activities
Purchases of property and equipment and intangible assets

(14,032

)

(20,433

)

Purchases of marketable securities

(808,180

)

(527,899

)

Sales of marketable securities

174,042

93,389

Maturities of marketable securities

699,133

252,164

Other investing activities

316

Net cash provided by (used in) investing activities

51,279

(202,779

)

Financing activities
Proceeds from initial public offering, net of underwriters’ discounts and commissions

1,573,200

Proceeds from exercise of stock options, net

64,992

744

Shares repurchased for tax withholdings on release of restricted stock units

(56,894

)

(424,965

)

Payment of deferred offering costs and other financing activities

(1,750

)

(11,305

)

Net cash provided by financing activities

6,348

1,137,674

Effect of exchange rate changes on cash, cash equivalents, and restricted cash

(86

)

(182

)

Net increase (decrease) in cash, cash equivalents, and restricted cash

(14,329

)

925,812

Cash, cash equivalents, and restricted cash, beginning of period

677,743

135,290

Cash, cash equivalents, and restricted cash, end of period $

663,414

$

1,061,102

Supplemental cash flow information
Accrued property and equipment $

3,952

$

7,174

Operating lease right-of-use assets obtained in exchange for operating lease liabilities $

14,030

$

41,399

Reconciliation of cash, cash equivalents and restricted cash to condensed consolidated balance sheets
Cash and cash equivalents $

652,723

$

1,033,871

Restricted cash included in prepaid expenses and other current assets

1,470

2,409

Restricted cash

9,221

24,822

Total cash, cash equivalents, and restricted cash $

663,414

$

1,061,102

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS

(in thousands, except per share amounts)

(unaudited)

Three Months Ended September 30,

2020

2019

Share-based compensation by function:

Cost of revenue

$

2,298

$

1,568

Research and development

61,357

83,539

Sales and marketing

11,958

21,243

General and administrative

16,019

23,938

Total share-based compensation

$

91,632

$

130,288

Amortization of acquired intangible assets by function:

Cost of revenue

$

94

$

94

General and administrative

158

310

Total amortization of acquired intangible assets

$

252

$

404

Reconciliation of total costs and expenses to non-GAAP costs and expenses:

Total costs and expenses

$

539,649

$

413,413

Share-based compensation

(91,632

)

(130,288

)

Amortization of acquired intangible assets

(252

)

(404

)

Termination of future lease contract

(89,500

)

Total Non-GAAP costs and expenses

$

358,265

$

282,721

Reconciliation of net loss to non-GAAP net income:

Net loss

$

(94,220

)

$

(124,732

)

Share-based compensation

91,632

130,288

Amortization of acquired intangible assets

252

404

Termination of future lease contract

89,500

Non-GAAP net income

$

87,164

$

5,960

Weighted-average shares outstanding for net loss per share, basic and diluted

603,491

546,126

Weighted-average dilutive securities(1)

72,803

104,594

Diluted weighted-average shares outstanding for Non-GAAP net income per share

676,294

650,720

Net loss per share

$

(0.16

)

$

(0.23

)

Non-GAAP net income per share

$

0.13

$

0.01

___________

(1)

Gives effect to potential common stock instruments such as stock options, unvested restricted stock units and unvested restricted stock awards.

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS

(in thousands, except per share amounts)

(unaudited)

Three Months Ended September 30,

2020

2019

Reconciliation of net loss to Adjusted EBITDA:

Net Loss

$

(94,220

)

$

(124,732

)

Depreciation and amortization

8,943

7,293

Share-based compensation

91,632

130,288

Interest income

(2,896

)

(9,837

)

Interest expense and other (income) expense, net

51

1,056

Provision for (benefit from) income taxes

32

(197

)

Termination of future lease contract

89,500

Adjusted EBITDA

$

93,042

$

3,871

Investor relations:
Doug Clark
ir@pinterest.com

Microsoft Cloud Strength Fuels First Quarter Results

REDMOND, Wash. — October 27, 2020 — Microsoft Corp. today announced the following results for the quarter ended September 30, 2020, as compared to the corresponding period of last fiscal year:

  • Revenue was $37.2 billion and increased 12%
  • Operating income was $15.9 billion and increased 25%
  • Net income was $13.9 billion and increased 30%
  • Diluted earnings per share was $1.82 and increased 32%

“The next decade of economic performance for every business will be defined by the speed of their digital transformation,” said Satya Nadella, chief executive officer of Microsoft. “We are innovating across our full modern tech stack to help our customers in every industry improve time to value, increase agility, and reduce costs.”

 

“Demand for our cloud offerings drove a strong start to the fiscal year with our commercial cloud revenue generating $15.2 billion, up 31% year over year,” said Amy Hood, executive vice president and chief financial officer of Microsoft. “We continue to invest against the significant opportunity ahead of us to drive long-term growth.”

Business Highlights

Revenue in Productivity and Business Processes was $12.3 billion and increased 11%, with the following business highlights:

  • Office Commercial products and cloud services revenue increased 9% driven by Office 365 Commercial revenue growth of 21% (up 20% in constant currency)
  • Office Consumer products and cloud services revenue increased 13% and Microsoft 365 Consumer subscribers increased to 45.3 million
  • LinkedIn revenue increased 16%
  • Dynamics products and cloud services revenue increased 19% (up 18% in constant currency) driven by Dynamics 365 revenue growth of 38% (up 37% in constant currency)

Revenue in Intelligent Cloud was $13.0 billion and increased 20% (up 19% in constant currency), with the following business highlights:

  • Server products and cloud services revenue increased 22% (up 21% in constant currency) driven by Azure revenue growth of 48% (up 47% in constant currency)

Revenue in More Personal Computing was $11.8 billion and increased 6%, with the following business highlights:

  • Windows OEM revenue declined 5%
  • Windows Commercial products and cloud services revenue increased 13% (up 12% in constant currency)
  • Xbox content and services revenue increased 30%
  • Surface revenue increased 37% (up 36%in constant currency)
  • Search advertising revenue excluding traffic acquisition costs decreased 10% (down 11% in constant currency)

Microsoft returned $9.5 billion to shareholders in the form of share repurchases and dividends in the first quarter of fiscal year 2021, an increase of 21% compared to the first quarter of fiscal year 2020.

Business Outlook

Microsoft will provide forward-looking guidance in connection with this quarterly earnings announcement on its earnings conference call and webcast.

Quarterly Highlights, Product Releases, and Enhancements 

Every quarter Microsoft delivers hundreds of products, either as new releases, services, or enhancements to current products and services. These releases are a result of significant research and development investments, made over multiple years, designed to help customers be more productive and secure and to deliver differentiated value across the cloud and the edge.

Here are the major product releases and other highlights for the quarter, organized by product categories, to help illustrate how we are accelerating innovation across our businesses while expanding our market opportunities.

Responding to COVID-19

At Microsoft, our focus remains on ensuring the safety of our employees, striving to protect the health and well-being of the communities in which we operate, and providing technology and resources to our customers and partners to help them do their best work while remote. Additional information about Microsoft’s COVID-19 response can be found here.

Environmental, Social, and Governance (ESG)

To better execute on Microsoft’s mission, we focus our Environmental, Social, and Governance (ESG) efforts where we can have the most positive impact. To learn more about our latest initiatives and priorities, please visit our investor relations ESG website.

Webcast Details

Satya Nadella, chief executive officer, Amy Hood, executive vice president and chief financial officer, Alice Jolla, chief accounting officer, Keith Dolliver, deputy general counsel, and Michael Spencer, general manager of investor relations, will host a conference call and webcast at 2:30 p.m. Pacific time (5:30 p.m. Eastern time) today to discuss details of the company’s performance for the quarter and certain forward-looking information. The session may be accessed at http://www.microsoft.com/en-us/investor. The webcast will be available for replay through the close of business on October 27, 2021.

 

 

Constant Currency

Microsoft presents constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars using the average exchange rates from the comparative period rather than the actual exchange rates in effect during the respective periods. All growth comparisons relate to the corresponding period in the last fiscal year. Microsoft has provided this non-GAAP financial information to aid investors in better understanding our performance. The non-GAAP financial measures presented in this release should not be considered as a substitute for, or superior to, the measures of financial performance prepared in accordance with GAAP.

Financial Performance Constant Currency Reconciliation

  Three Months Ended September 30,
 ($ in millions, except per share amounts) Revenue Operating Income Net Income Diluted Earnings per Share
2019 As Reported $33,055 $12,686 $10,678 $1.38
2020 As Reported $37,154 $15,876 $13,893 $1.82
Percentage Change Y/Y 12% 25% 30% 32%
Constant Currency Impact $108 $71 $231 $0.03
Percentage Change Y/Y Constant Currency 12% 25% 28% 30%

Segment Revenue Constant Currency Reconciliation

  Three Months Ended September 30,
 ($ in millions) Productivity and Business Processes Intelligent Cloud More Personal Computing
2019 As Reported $11,077 $10,845 $11,133
2020 As Reported $12,319 $12,986 $11,849
Percentage Change Y/Y 11% 20% 6%
Constant Currency Impact $32 $42 $34
Percentage Change Y/Y Constant Currency 11% 19% 6%

Selected Product and Service Revenue Constant Currency Reconciliation           

  Three Months Ended September 30, 2020
Percentage Change Y/Y (GAAP) Constant Currency Impact Percentage Change Y/Y Constant Currency
Office Commercial products and cloud services 9% 0% 9%
Office 365 Commercial 21% (1)% 20%
Office Consumer products and cloud services 13% 0% 13%
LinkedIn 16% 0% 16%
Dynamics products and cloud services 19% (1)% 18%
Dynamics 365 38% (1)% 37%
Server products and cloud services 22% (1)% 21%
Azure 48% (1)% 47%
Windows OEM (5)% 0% (5)%
Windows Commercial products and cloud services 13% (1)% 12%
Xbox content and services 30% 0% 30%
Surface 37% (1)% 36%
Search advertising excluding traffic acquisition costs (10)% (1)% (11)%

About Microsoft

Microsoft (Nasdaq “MSFT” @microsoft) enables digital transformation for the era of an intelligent cloud and an intelligent edge. Its mission is to empower every person and every organization on the planet to achieve more.

 

Forward-Looking Statements

Statements in this release that are “forward-looking statements” are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially because of factors such as:

  • intense competition in all of our markets that may lead to lower revenue or operating margins;
  • increasing focus on cloud-based services presenting execution and competitive risks;
  • significant investments in products and services that may not achieve expected returns;
  • acquisitions, joint ventures, and strategic alliances that may have an adverse effect on our business;
  • impairment of goodwill or amortizable intangible assets causing a significant charge to earnings;
  • cyberattacks and security vulnerabilities that could lead to reduced revenue, increased costs, liability claims, or harm to our reputation or competitive position;
  • disclosure and misuse of personal data that could cause liability and harm to our reputation;
  • the possibility that we may not be able to protect information stored in our products and services from use by others;
  • abuse of our advertising or social platforms that may harm our reputation or user engagement;
  • the development of the internet of things presenting security, privacy, and execution risks;
  • issues about the use of artificial intelligence in our offerings that may result in competitive harm, legal liability, or reputational harm;
  • excessive outages, data losses, and disruptions of our online services if we fail to maintain an adequate operations infrastructure;
  • quality or supply problems;
  • the possibility that we may fail to protect our source code;
  • legal changes, our evolving business model, piracy, and other factors may decrease the value of our intellectual property;
  • claims that Microsoft has infringed the intellectual property rights of others;
  • claims against us that may result in adverse outcomes in legal disputes;
  • government litigation and regulatory activity relating to competition rules that may limit how we design and market our products;
  • potential liability under trade protection, anti-corruption, and other laws resulting from our global operations;
  • laws and regulations relating to the handling of personal data that may impede the adoption of our services or result in increased costs, legal claims, fines, or reputational damage;
  • additional tax liabilities;
  • damage to our reputation or our brands that may harm our business and operating results;
  • exposure to increased economic and operational uncertainties from operating a global business, including the effects of foreign currency exchange;
  • uncertainties relating to our business with government customers;
  • adverse economic or market conditions that may harm our business;
  • catastrophic events or geo-political conditions, such as the COVID-19 pandemic, that may disrupt our business; and
  • the dependence of our business on our ability to attract and retain talented employees.

For more information about risks and uncertainties associated with Microsoft’s business, please refer to the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” sections of Microsoft’s SEC filings, including, but not limited to, its annual report on Form 10-K and quarterly reports on Form 10-Q, copies of which may be obtained by contacting Microsoft’s Investor Relations department at (800) 285-7772 or at Microsoft’s Investor Relations website at http://www.microsoft.com/en-us/investor.

All information in this release is as of September 30, 2020. The company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the company’s expectations.

For more information, press only:

Microsoft Media Relations, WE Communications for Microsoft, (425) 638-7777,rrt@we-worldwide.com

For more information, financial analysts and investors only:

Michael Spencer, General Manager, Investor Relations, (425) 706-4400

Note to editors: For more information, news and perspectives from Microsoft, please visit the Microsoft News Center at http://www.microsoft.com/news. Web links, telephone numbers, and titles were correct at time of publication, but may since have changed. Shareholder and financial information, as well as today’s 2:30 p.m. Pacific time conference call with investors and analysts, is available at http://www.microsoft.com/en-us/investor.



MICROSOFT CORPORATION

INCOME STATEMENTS

(In millions, except per share amounts) (Unaudited)

Three Months Ended

September 30,

  2020   2019
Revenue:
   Product  $15,803  $15,768
   Service and other 21,351 17,287
      Total revenue 37,154 33,055
Cost of revenue:
   Product 3,597 3,305
   Service and other 7,405 7,101
      Total cost of revenue 11,002 10,406
      Gross margin 26,152 22,649
Research and development 4,926 4,565
Sales and marketing 4,231 4,337
General and administrative 1,119 1,061
Operating income 15,876 12,686
Other income, net 248 0
Income before income taxes 16,124 12,686
Provision for income taxes 2,231 2,008
Net income  $13,893  $10,678
Earnings per share:
   Basic  $1.84  $1.40
   Diluted  $1.82  $1.38
Weighted average shares outstanding:
   Basic 7,566 7,634
   Diluted 7,637   7,710

 

 

COMPREHENSIVE INCOME STATEMENTS

(In millions) (Unaudited)

Three Months Ended

September 30,

  2020   2019
Net income  $13,893  $10,678
Other comprehensive income (loss), net of tax:
  Net change related to derivatives 4 (2)
  Net change related to investments (201) 577
  Translation adjustments and other 111 (296)
    Other comprehensive income (loss) (86) 279
Comprehensive income  $13,807  $10,957

 

 

BALANCE SHEETS
(In millions) (Unaudited)
  September 30,

2020

  June 30,

2020

Assets
Current assets:
   Cash and cash equivalents  $17,205  $13,576
   Short-term investments 120,772 122,951
      Total cash, cash equivalents, and short-term investments 137,977 136,527
   Accounts receivable, net of allowance for doubtful
accounts of $610 and $788
22,851 32,011
   Inventories 2,705 1,895
   Other current assets 13,544 11,482
      Total current assets 177,077 181,915
Property and equipment, net of accumulated
depreciation of $45,417 and $43,197
47,927 44,151
Operating lease right-of-use assets 9,047 8,753
Equity investments 3,103 2,965
Goodwill 43,890 43,351
Intangible assets, net 6,923 7,038
Other long-term assets 13,034 13,138
            Total assets  $301,001  $301,311
Liabilities and stockholders’ equity
Current liabilities:
   Accounts payable  $12,509  $12,530
   Current portion of long-term debt 6,497 3,749
   Accrued compensation 5,714 7,874
   Short-term income taxes 2,384 2,130
   Short-term unearned revenue 33,476 36,000
   Other current liabilities 9,476 10,027
      Total current liabilities 70,056 72,310
Long-term debt 57,055 59,578
Long-term income taxes 28,204 29,432
Long-term unearned revenue 2,829 3,180
Deferred income taxes 187 204
Operating lease liabilities 7,753 7,671
Other long-term liabilities 11,525 10,632
         Total liabilities 177,609 183,007
Commitments and contingencies
Stockholders’ equity:
   Common stock and paid-in capital – shares
authorized 24,000; outstanding 7,564 and 7,571
81,089 80,552
   Retained earnings 39,193 34,566
   Accumulated other comprehensive income 3,110 3,186
         Total stockholders’ equity 123,392 118,304
            Total liabilities and stockholders’ equity  $301,001  $301,311

 

CASH FLOWS STATEMENTS
(In millions) (Unaudited)
Three Months Ended

September 30,

  2020   2019
Operations
Net income  $13,893  $10,678
Adjustments to reconcile net income to net cash from operations:
  Depreciation, amortization, and other 2,645 2,971
  Stock-based compensation expense 1,456 1,262
  Net recognized losses (gains) on investments and derivatives (128) 11
  Deferred income taxes (11) (177)
  Changes in operating assets and liabilities:
    Accounts receivable 8,843 10,090
    Inventories (808) (561)
    Other current assets (54) (438)
    Other long-term assets (62) (333)
    Accounts payable 315 (547)
    Unearned revenue (3,064) (2,892)
    Income taxes (983) (3,336)
    Other current liabilities (2,951) (3,320)
    Other long-term liabilities 244 410
        Net cash from operations 19,335 13,818
Financing
Repayments of debt 0 (2,500)
Common stock issued 545 427
Common stock repurchased (6,743) (4,912)
Common stock cash dividends paid (3,856) (3,510)
Other, net (235) 286
        Net cash used in financing (10,289) (10,209)
Investing
Additions to property and equipment (4,907) (3,385)
Acquisition of companies, net of cash acquired,
and purchases of intangible and other assets
(481) (462)
Purchases of investments (14,580) (23,390)
Maturities of investments 14,266 19,082
Sales of investments 2,414 6,379
Other, net (2,083) 0
        Net cash used in investing (5,371) (1,776)
Effect of foreign exchange rates on cash and cash equivalents (46) (72)
Net change in cash and cash equivalents 3,629 1,761
Cash and cash equivalents, beginning of period 13,576 11,356
Cash and cash equivalents, end of period  $17,205  $13,117
SEGMENT REVENUE AND OPERATING INCOME
(In millions) (Unaudited)
       
  Three Months Ended

September 30,

 
  2020   2019
Revenue      
Productivity and Business Processes  $12,319    $11,077
Intelligent Cloud 12,986   10,845
More Personal Computing 11,849   11,133
  Total  $37,154    $33,055
Operating Income      
Productivity and Business Processes  $5,706    $4,782
Intelligent Cloud 5,422   3,889
More Personal Computing 4,748   4,015
  Total  $15,876    $12,686