DISH Network (DISH) Q1 Earnings Miss, Subscriber Count Down

DISH Network (NASDAQ:DISH) delivered first-quarter 2018 earnings of 70 cents per share that missed the Zacks Consensus Estimate by couple of cents and declined 7.9% year over year.

Revenues slumped 6% year over year to $3.46 billion, lagging the Zacks Consensus Estimate of almost $3.50 billion.

Shares declined 2.5% in pre-market trading. DISH has lost 29% on a year-to-date basis, compared with the industry’s decline of 17.4%.

Segment Details

Subscriber-related revenues (99% of revenues) declined 6.1% from the year-ago quarter to $3.42 billion. Pay-TV video and related revenues fell 5.3% to $3.35 billion. Broadband revenues plunged 30.2% year over year to $75.1 million.

Equipment sales and other revenues dipped 1% to $35.8 million.

United States contributed 99.7% of revenues which declined 6% year over year to $3.45 billion. Canada and Mexico contributed the rest of the revenues which fell 1% from the year-ago quarter to $9.5 million.

Subscriber Loss Continues

DISH exited the quarter with 10.845 million DISH TV subscribers and 2.303 million Sling TV subscribers. Total Pay-TV subscribers were 13.148 million, down from 13.528 million reported in the year-ago quarter.

Net Pay-TV subscribers declined approximately 94K as compared with a decline of roughly 143K in the year-ago quarter. Pay-TV average revenue per user (ARPU) declined from year-ago quarter’s figure of $86.55-$84.50.

Net DISH TV subscribers declined approximately 185K and Sling TV subscribers increased almost 91K.

DISH TV's average monthly subscriber churn rate was 1.47% against year-ago quarter’s 1.92%.

Operating Details

In the first quarter, subscriber-related expenses declined 2.6% year over year to $2.18 billion. However, as percentage of revenues, subscriber-related expenses expanded 220 basis points (bps) on a year-over-year basis to 63.2%.

Total subscriber acquisition costs (SACs) plunged 32.4% from the year-ago quarter to $196 million. As percentage of revenues, SACs declined 220 bps to 5.7%.

Operating income declined 12.8% year over year to $529.5 million. Operating margin fell 120 bps to 15.3% in the reported quarter.

Balance Sheet & Cash Flow

As of Mar 31, 2018, cash & cash equivalents (including marketable investment securities) were $2.35 billion as compared with $2.05 billion as of Dec 31, 2017.

Cash flow from operating activities was $751.6 million, while free cash flow was $387 million.

Zacks Rank & Stocks to Consider

Currently, DISH carries a Zacks Rank #3 (Hold).

Glu Mobile (NASDAQ:GLUU) , GoPro (NASDAQ:GPRO) and NutriSystem (NASDAQ:NTRI) are stocks worth considering in the broad consumer discretionary sector. All the three stocks carry Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term earnings growth rate for Glu, GoPro and NutriSystem is currently pegged at 15%, 10% and 16.7%, respectively.

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