Canadian telecom and media giant Rogers Communications reported second-quarter results before the market opened on Thursday. The company reported stronger than expected results thanks to improving subscriber metrics among wireless and Internet subscribers, as well as a standout performance from its media segment. The quarter was an improvement over last quarter's results where the company dialed up weak earnings that disappointed investors.
A look at the numbers(Note: all dollar figures in Canadian dollars)Rogers Communications reported revenue of $3.4 billion, which was up nearly 6% year over year and beat analysts' estimates by roughly $30 million. Driving this revenue growth was the company's wireless segment as revenue increased 6% to $1.9 billion thanks to greater smartphone sales and higher network revenue from the continued growth of data usage among its subscriber base. The company's media segment was even stronger as revenue jumped 23% to $582 million as a result its NHL licensing agreement along with solid growth at Sportsnet, the Toronto Blue Jays, and Next Issue Canada. Revenue from the company's Cable segment was stable at $869 million as it was just off by roughly $3 million year over year as the company was able to overcome cord cutting in both its television and phone offerings by generating stronger revenue from its Internet offerings. Meanwhile, revenue in its business solutions segment was off by $1 million to $94 million.
This strong revenue growth boosted Rogers Communications' profitability as its adjusted operating profit increased by 2% to $1.3 billion. But adjusted net income did slip 5% to $412 million, which equated to earnings per share of $0.80. While that was down 5% year over year, the company did manage to beat the consensus estimate by a penny. The sole driver of the better-than-expected earnings was the company's media segment as its adjusted operating profit soared 67% to $90 million due in large part to increased advertising revenue from the NHL agreement. This enabled the company to overcome flat profitability in the wireless segment and year-over-year declines in cable and business solutions, which were down 2% and 4%, respectively.
A look aheadRogers closed two notable strategic acquisitions in the quarter that are expected to strengthen its wireless segment. The company acquired wireless provider Mobilicity and acquired additional spectrum licenses. These transactions, combined with the investments the company has been making in its subscriber base to subsidize smartphone purchases, are expected to yield stronger revenue growth and improved profitability in the segment in the years ahead.
Further, the company also continues to invest in content, which is a move that's also delivering results as evidenced by the strong results in its media segment on the back of the NHL agreement. That agreement, combined with a solid year from the company's MLB team, made Sportsnet the No. 1 most watched televised sports brand in Canada. The company expects to continue to invest in content to keep its lead and drive profitable growth in that segment.
Investor takeawayRogers Communications delivered a solid quarter as revenue and earnings both beat estimates. The company continues to invest in both its wireless and media segments to not just offset weakness from cord cutting in the cable segment, but to drive meaningful growth.
The article Rogers Communications Inc. Delivers Strong Results on Improving Wireless and Internet Subscribers originally appeared on Fool.com.
Matt DiLallo owns shares of Rogers Communications. The Motley Fool recommends Rogers Communications. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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