Comcast Corp - Class A (CMCSA) — Q2 2025 Earnings Call Transcript

Thank you, operator, and welcome, everyone. Joining us on today's call are Brian Roberts, Mike Cavanagh, Jason Armstrong, and Dave Watson. I will now refer you to Slide 2 of the presentation accompanying this call, which can also be found on our Investor Relations website and which contains our safe harbor disclaimer. This conference call may include forward-looking statements subject to certain risks and uncertainties. In addition, during this call, we will refer to certain non-GAAP financial measures. Please see our 8-K and trending schedule issued earlier this morning for the reconciliations of these non-GAAP financial measures to GAAP. With that, I'll turn the call over to Mike.

Good morning, everyone, and thanks for joining us. Before I hand it to Jason, I want to talk about three things that are particularly significant this quarter related to several of the strategic priorities of the company. First is our broadband business, where we continue to roll out our new go-to-market strategy in a highly competitive environment. Second is our theme parks, where we successfully opened Epic Universe in Orlando, one of the largest and most ambitious projects in our history. And third is our Media segment, where our extraordinary mix of live events, sports and entertainment across NBC and Peacock led to a record-breaking upfront as we continue to execute on our strategy of running NBCUniversal's linear and streaming assets as one holistic media business. So let me start with broadband. We've taken a hard look at what it takes to compete and win, and we start with great confidence that our products and network are marketplace leaders. That includes our AI-powered entertainment OS, the most intelligent WiFi network in the country and a mobile service delivering the fastest speeds in our footprint. We're proud that we've reenergized a culture that drives innovation, one that continues to set our products and services apart. Building on that foundation, we took several important steps this quarter to strengthen our position. Our goal for all the actions we've taken is to build a loyal customer base that churns less and values our services more by: one, delivering simple, predictable and transparent pricing; and two, making it easier than ever to do business with us. Specifically, we've realigned our pricing strategy around seven main elements. First, we've moved from local offers to a consistent national pricing structure. Second, we simplified our broadband offering with four flagship speed tiers. Third, everything is included. All packages come with unlimited data and our advanced gateways, which deliver the fastest, most reliable WiFi experience, enable the connection of hundreds of devices, provide low lag Internet for gaming and streaming and feature advanced WiFi controls and cybersecurity protection. Fourth, we've lowered everyday pricing. Fifth, we introduced both 1-year and 5-year price guarantees without contracts to give customers more choice and certainty. Sixth, we're including a free Xfinity mobile line for one year for all new and existing customers. And finally, we introduced our premium unlimited mobile plan, which includes 4K Ultra HD streaming, expanded mobile hotspot usage and device upgrades. But in addition to pricing changes, we focused on making it easier to do business with us. We are incredibly focused on reducing friction across all of our channels, dot-com, phone, chat and our app, and making every customer interaction an excellent and personalized experience. For instance, we recently improved our digital buy flow by removing five steps, making the purchase process faster and easier, which has already driven more than a 20% improvement in purchase conversion rates. We also recently upgraded the operating system that manages our customer interactions to Google's AI platform, which will significantly improve our digital experience and route customers quickly to the support they need, providing our teams with full visibility into each customer interaction. Together, these changes we are making in pricing transparency and ease of doing business are starting to drive the results and customer behavior we are aiming for. Customers are responding to the simplicity and power of these changes with roughly half of our eligible new customer connects choosing our 5-year price guarantee this quarter. We also posted a 20% increase in the percentage of new customers taking gig plus speeds, which lifted our overall speed tier mix and helped drive higher connect ARPU. And we're also seeing stabilization in voluntary churn and overall connect activity in broadband. Momentum is building in wireless as well. Our free line offer and solid uptake in our new premium unlimited plans helped drive our best quarter ever with 378,000 new lines added, bringing Xfinity Mobile to 14% penetration of our residential broadband base and still leaving us with plenty of room to run. Before we leave broadband, I want to highlight a recent deal on the Comcast business side that strengthens our go-to-market approach for that customer base. Just last week, we announced a new MVNO agreement with T-Mobile in partnership with Charter. This new agreement pairs our industry-leading broadband and WiFi with T-Mobile's 5G network to expand our mobile product offer to business customers as a fully integrated solution. We are pleased to work with T-Mobile in this initiative and continue to value our strong partnership with Verizon. So the net of this is, while it's still early days, we like what we are seeing in our broadband business, giving us confidence in the changes we've made and what's still ahead. We're executing on a connectivity strategy that fully plays to our strengths in broadband, WiFi and convergence, leveraging the largest gig speed broadband and mobile converged footprint in the country that serves both residential and business customer segments and a best-in-class in-home experience through our advanced Xfinity WiFi gateway. With our go-to-market strategy in place and execution improving, we're well positioned to lead in convergence. Turning to Parks. We are extremely proud of the successful opening of Epic Universe in May. We're pleased with the early results as Epic is already driving higher per cap spending and attendance across the entirety of Universal Orlando Resort with strong food and merchandise sales and minimal impact on attendance at Universal Studios Florida and Islands of Adventure. Epic is the most technologically advanced park we've ever built, and we are getting high praise for the innovative attractions, immersive environments, three new on-site hotels and our strong food and merchandise offering. As expected, our near-term focus is on expanding ride throughput to reduce early attendance constraints. Epic is trending in line with our expectations and well on its way to transforming Universal Orlando into a true week-long destination. Beyond Orlando, we're executing against a strong pipeline of new opportunities to serve more guests. Universal Horror Unleashed opens in Las Vegas next month, and we're developing a second year-round horror experience in Chicago, tapping into one of the country's top tourist markets. In addition, in Texas, our Universal Kids Resort is moving towards a 2026 opening, and we're continuing the planning process for our new park outside of London slated to open in 2031. These projects reflect our long-term strategy to expand reach, enter new markets and broaden the appeal of our Parks portfolio. Turning to Media. Our world-class combination of entertainment content and live sports and events continues to drive results across NBC and Peacock. We just closed our most successful upfront ever with record total sales and our largest sports commitments to date. Peacock was a standout, up more than 20% year-over-year and representing over one-third of NBCUniversal's total volume. Our upfront results reflect our unparalleled 2026 lineup of tentpole events, starting with the Milan-Cortina Olympics, Super Bowl LX, and the NBA All-Star Game in February, the FIFA World Cup on Telemundo in June, and the elections and BravoCon in November, along with a robust slate of entertainment and sports content throughout the year. We also expect to build on the momentum we are seeing in our entertainment content. Love Island USA, which appeared exclusively on Peacock, was the top streaming reality series for the entirety of its Season 7 run. It attracted a significant number of first-time subscribers. And importantly, two-thirds of those new paying customers went on to engage with additional content, driving a lift in overall consumption across the platform. Peacock continues to differentiate itself with one of the most robust live sports offerings of any streamer, and that position will only strengthen with the addition of NBA coverage this fall. In fact, in 2026, Peacock will stream more live sports hours than any other streaming entertainment service. Add to that Pay-One films from our top-performing studios, original series, next-day NBC and Bravo content, news and a full entertainment library and Peacock continues to deliver significant value. To better reflect this premium content, we recently announced a $3 price increase rolling out in July for new subscribers and in late August for existing ones. The impact of this price increase, combined with the strong upfront results I just discussed, helped position us in the fourth quarter as we launch the NBA and take on higher sports programming expenses, particularly in the first year of the NBA contract when we absorb the full impact of adding these new rights. So to wrap up, across the company, we're executing with focus, simplifying how we operate and leaning into areas where we have real competitive advantages. And we're doing it while maintaining a strong balance sheet and returning meaningful capital to shareholders. We feel great about the momentum we're building and confident in our ability to create long-term value. With that, I'll turn it over to Jason.

Thanks, Mike, and good morning, everyone. Let me start with a high-level overview of our consolidated results before getting into more detail on our businesses. Consolidated revenue increased 2%, benefiting from our core six growth drivers, three of which are organized under connectivity, including broadband, wireless and business services, and three of which are in Content & Experiences, including Parks, Streaming, and Studios. Collectively, these businesses represent nearly 60% of our total revenue and grew at a high single-digit rate this quarter. As you fast forward a couple of years, between continued investment in sustaining strong growth in these businesses and actions we are taking on other areas, including our announced spin-off of our linear cable networks into Versant and a recently announced sale of another one of our businesses, our exposure to these growth areas will be closer to 70% of our total revenue, which is fundamental to our path to reaccelerating total company revenue growth. EBITDA grew 1% this quarter. Adjusted EPS grew 3% to $1.25, and we generated $4.5 billion of free cash flow while returning $2.9 billion to shareholders, including $1.7 billion in share repurchases. Now turning to our businesses, starting with Connectivity & Platforms. Beginning with broadband, the competitive environment remains intense as we had previewed. And when combined with the typical negative seasonality in the second quarter, resulted in 226,000 subscriber losses. But as Mike described, we are encouraged by the early reaction to our new go-to-market initiatives as we started to see some early signs of stabilization in both connect activity and voluntary churn. Notably, during the quarter, we saw roughly half of our eligible new customer connects select our 5-year price guarantee, opting to pay more upfront for longer-term consistency. In addition, we've seen a 20% increase in the share of new connects choosing our premium gig plus speeds. This contributed to broadband ARPU growth in the quarter of 3.5%. Looking ahead, we continue to expect healthy broadband ARPU growth over the balance of the year, although the rollout of our new everyday pricing structure at the end of the second quarter is expected to moderate ARPU growth in the near term as we begin transitioning customers to more consistent and predictable pricing. This includes the continued offer of a free wireless line for a year to both new and existing broadband customers. Convergence revenue sustained healthy growth as well, up 3.7% in the quarter, supported by high teens growth in wireless revenue. Fueled by the strength of our Xfinity Mobile product and compelling go-to-market initiatives, including our promotion offering a free mobile line and our recently introduced premium unlimited plan, we accelerated net line additions to 378,000 in the quarter, a new high watermark for wireless net additions for our company. Our wireless lines have now reached 8.5 million and penetration of 14% of our residential broadband customer base, a rate that demonstrates both our success in entrenching our product as a competitive offering in the wireless industry, but also that highlights the tremendous runway we have ahead. So we're pleased with the results in the quarter and expect continued acceleration in the pace of net additions in the coming quarters. Turning to Business Services. Revenue increased 6% and EBITDA grew nearly 5%. Our results this quarter include the acquisition of Nitel, which closed in early April. Nitel contributed a few hundred basis points to revenue growth and about 100 basis points to EBITDA growth. And we expect a similar positive impact for the next few quarters until we anniversary this deal next year. Our strong performance continues to reflect the same framework we've seen for the last several quarters, including solid growth in SMB and even stronger growth at our Enterprise Solutions business. At SMB, despite increased competitive intensity, we continue to generate healthy revenue growth by driving higher adoption of our suite of advanced services, including cybersecurity and Comcast Business Mobile. In our Enterprise Solutions business, we continue to see strong momentum. This growing segment of our customer base has more complex needs, ranging from cybersecurity to multi-location connectivity, and they value integrated solutions and service reliability. These are areas where we continue to invest and lead. Connectivity remains the core of our business, and we continue to see a meaningful shift in advanced solutions. Three years ago, for every dollar of connectivity sold, we sold $0.20 of advanced solutions. Today, that figure has grown to approximately $0.50, underscoring the increasing value we're delivering to customers and reinforcing our competitive position. Putting all of this together, EBITDA was flat in the quarter, consistent with comments we made last quarter that our new go-to-market strategy would impact our ability to grow EBITDA this year. We still believe that to be true, as our investment in our operational pivot will ramp over the remaining quarters of 2025. On the other side of this, these actions will position us well for long-term convergence revenue growth with a more durable customer base on market-based rate plans with long-term price stability and a discounted wireless offering with broader exposure across our base, giving us a large revenue and profit pool to unlock over time. In Content & Experiences, there are several key items I'd like to highlight. At Parks, revenue increased 19% this quarter, driven by the successful opening of Epic Universe on May 22, while EBITDA growth was limited to 4% due to soft opening costs at the new park. As Mike mentioned, we're really happy with the consumer response, and we're pleased with how Epic is contributing to the overall Universal Orlando guest experience and performance. We expect Epic to continue to scale over the course of the year with higher attendance and per caps as well as significantly improved operating leverage. More broadly, performance at our international parks remains strong. However, we do continue to experience pressure in Hollywood, and we think it will be a couple more quarters until we lap that. Turning to Studios. We saw strong performance from the successful theatrical launch of How to Train Your Dragon on June 13, which has grossed over $600 million in worldwide box office year-to-date, driving this franchise past the $2 billion mark. This success was followed by the July 2 opening of Jurassic World: Rebirth, which is the seventh installment of our $6 billion franchise and has already surpassed $700 million in worldwide box office this month. While the benefit of Jurassic's theatrical performance will land in the third quarter, the investment to launch 2 of our 3 tentpole releases back-to-back impacted our second quarter results and profitability. In addition to Jurassic, we look forward to several more releases in the third quarter, including: The Bad Guys 2, Nobody 2, Downton Abbey: The Grand Finale, Him, and Gabby's Dollhouse: The Movie. In Media, total advertising revenue was down 7%, in part due to the volume and timing of sports content as well as tough political comparisons. Excluding this, advertising was down low single digits. As a reminder, for us, the second quarter has historically lacked tentpole sports. So we've been more susceptible to fluctuations in general entertainment ratings. We look forward to that changing next year with the launch of the NBA. Looking ahead to the third quarter, we will have a tough comparison to the very successful Paris Olympics, but feel well positioned over the next year given our strong lineup of content, including the NBA premiering in the fourth quarter and the Winter Olympics and Super Bowl in the first quarter of 2026, all of which contributed to record upfront results that Mike highlighted earlier. Our overall Media results this quarter were driven by the continued meaningful progress we are making in our pivot to streaming. Peacock delivered double-digit revenue growth and a nearly $250 million year-over-year improvement in EBITDA losses, which landed at $100 million this quarter. Despite the second quarter being a seasonally light sports quarter, we held paid subscribers steady at 41 million, driven in part by the wildly popular new season of Love Island USA. Before wrapping up on capital allocation, let me start by spending a minute on the impact of the corporate tax provisions in the recently enacted tax legislation. The legislation restores 100% bonus depreciation, reinstating full expensing for property acquired and placed in service after January 19 of this year and restores immediate deductibility for domestic R&D expenses. So how does this impact us? We are a leader in U.S. infrastructure investment. We're a leader in domestic content production, and we're a leader in the domestic experiences category. In fact, we have the nation's largest broadband network and are extending our network by adding 1.2 million passings a year. We've just debuted the largest and most sophisticated theme park built in the U.S. in decades. We are leaders in entertainment programming and production with our film studio consistently ranked #1 or #2 in worldwide box office. And we are #2 in domestic sports programming and the home to many of the top sports in the U.S., like the NFL, the Olympics, the World Cup, golf, and will soon add the NBA. As a result of all of that, there are several things in the legislation that benefit us. And we estimate, on average, roughly $1 billion in annual cash tax benefit for the next several years, with much of the benefit relating to infrastructure investments. In broadband, we've said for some time now that we expect, in the vast majority of our domestic footprint, there will effectively be 2 multi-gig symmetrical wires running into the home. And that's exactly what we've been preparing for by further strengthening and extending our network and innovating to differentiate the in-home WiFi experience we deliver. The change in tax legislation provides a tailwind to that strategy and further supports our U.S. investment, benefiting the company, our customers and the communities we serve all across the country. So our expectation is that this legislation helps fuel the capital allocation formula that's been successful for us, which starts with reinvesting in our businesses, prioritizing a strong balance sheet and strong returns of capital to our shareholders through dividends and share buybacks. We've been shrinking our share count by mid-single digits on an annual basis for the past several years, and we expect to continue to do that as part of a robust and balanced capital allocation framework. With that, let me turn it back over to Marci.

Thanks, Jason. Operator, let's open the call for Q&A, please.

First on broadband, you mentioned the early reaction that you've seen from the adjustments to your go-to-market. Curious if you could give some more details on the competitive landscape and how that influences the pace over which you'd expect to improve quarterly broadband performance going forward?

Mike, this is Dave. So starting with the competitive landscape, it remains intense, as we've noted. Fixed wireless remains very active in the marketplace. Fiber competitors continue to build more passing. So that certainly hasn't changed in terms of the landscape. From our perspective, we want to make these changes that will help our competitive position, leverage our strengths, but change the experience side of things to address some of the pain points that we've talked about. So while it remains intense, what doesn't change is our tremendous sense of urgency around getting to the other side, around whether it's all-in pricing, whether leveraging the gateway included unlimited, the free mobile line that's part of it, the lowering everyday pricing, the 5-year price guarantee that's key, and all the customer experience changes. Those things are underway. It's real early to comment in terms of any impact at this point other than to say, as Jason brought up, that the early connect activity is very encouraging. Half of the eligible new customer connects selected the 5-year price guarantee. And we saw a 20% increase in the share of new connects choosing the premium gig speed. So I like the early results, but we're moving with a lot of speed and I like the early results.

Mike, I want to join the conversation and commend Dave, Steve, and their team for their strong approach to addressing the competitive landscape. Their dedication is impressive. In response to your question, all the tools related to our go-to-market changes, including the seven strategies I mentioned earlier, along with our efforts to reduce customer friction and enhance the experience in engaging with us—whether through automated response systems, online platforms, or sales channels—are actively in play. As we connect with customers, whether during promotional moments, onboarding new clients, or in standard interactions, all these initiatives are taking effect. We are committed to continuous improvement across our business. As new challenges arise, we will implement solutions to tackle the competitive environment, recognizing the importance of our broadband and connectivity services. Our objective is to create a highly loyal customer base that experiences the true value of our offerings, leading to increased retention and exposure to our mobile services, which we believe adds significant value. This strategy will position us effectively for the long-term competitive scenario that Jason outlined earlier, aiming for dual service lines in each household over time. Our plan involves delivering exceptional products, outstanding service, and a robust network, all supported by the initiatives that Dave and Steve are driving.

Let me stay with broadband, if I could. Charter called out involuntary disconnects, there's nonpay disconnects as one of the headwinds. I wonder if you're seeing any of the same thing, which I suspect would point to some continuation of the market impact of discontinuing the ACP program. And then if I think about Project Genesis and where you are with your network upgrades, have you seen any material differences in the way you're competing in Project Genesis markets where you're finished versus where you're not finished yet? What kind of market impact is that having?

Craig, this is Dave. From our perspective, we've noticed a slight increase in nonpay, but it has been offset by stabilization in connects and voluntary churn going into Q2 compared to Q1, as Jason and Mike mentioned. The increase in nonpay isn't significant. Regarding Project Genesis, as Mike discussed the network, we've consistently invested over time, which has positioned us well. Currently, we offer gig-plus speeds everywhere, enabling us to compete effectively across all segments. We're ahead of schedule on upgrades and making rapid progress toward DOCSIS 4.0. Our network is strong, and a key differentiator for us is WiFi, which we define as matching the network's capability. This means great coverage, high speeds, and intelligent management for numerous devices. Overall, our network position looks very robust.

I just have two on broadband. First on pricing. I was just wondering if you could talk a little bit about this concept of everyday pricing as a potential drag to ARPU growth. How many of your broadband customers are on pricing that are above those headline everyday price rates today? I'm just trying to understand how long these ARPU headwinds may persist. And then second, I was just wondering if you could talk about whether we're back to seasonal on domestic broadband net adds. Could we see improving net additions next quarter just given back-to-school?

Our focus on everyday pricing is to make an impact in the early stages, especially with Connect. We've seen encouraging early results, with half of the eligible customers participating. We plan to offer existing customers appropriate packages to suit their needs without hesitation. While I can't provide specific customer details at this time, we are committed to being disciplined and purposeful in managing our base and improving retention by ensuring all relevant packages are accessible. We intend to be proactive in encouraging customers to opt for longer-term packages, as this benefits us when they are willing to invest a bit more upfront for stability. This approach is aimed at reducing churn while fully utilizing our new marketing strategies. Regarding seasonal trends, we've observed a gradual increase in seasonal activity, particularly around back-to-school in Q3, and we are well-prepared to capitalize on that. There have also been seasonal patterns in Q2 that we've discussed, but we notice a shift towards more predictable seasonal trends that we have observed in the past.

Michael, it's Jason. Just to round out the ARPU question. So as we said in the upfront remarks, 3.5% growth this quarter, we expect it to moderate in the next couple of quarters as we migrate more customers onto new pricing with the goal being it takes several quarters to do this. But if you fast forward a year, two years out, we've got a substantial portion of our base migrated on the new packaging. We gave a guide that said we still expect healthy ARPU growth in this time frame, but moderated a little bit from where we are right now.

Jason, you called out 3.7%, I think, convergence revenue growth, which is a nice way to kind of cut through all the GAAP allocations. When you look at the business in the back half, should we expect any movement up or down in that when you sort of think about the volume improvements in mobile offset by your ARPU commentary? And I was also curious if you had a cash tax number or help for 2025, given all the changes, that would be helpful. And then for Mike, just on Peacock, you've got a lot going on in that business. You're going to have a lot of revenue coming in with that price increase and the upfront, but also the NBA. Just can you talk a little bit about how you see the rest of the year playing out for that business just as we think about all those moving pieces?

Several questions there, Ben. Let me start with cash taxes. We expect an average of $1 billion a year for the next several years due to significant domestic infrastructure investments. Our company particularly benefits from these investments. I anticipate that figure will be about the same for 2025. We won’t continue to provide guidance on this, but it should help set expectations for that year. Regarding convergence revenue, I’ll team up with Dave on this. For this quarter, we have 3.7% growth, and looking ahead, we are establishing a base that includes repackaged broadband and a larger wireless business, as we've engaged more customers. This will allow us to grow when customers transition from free lines. Many of these customers wouldn’t have been attracted under previous pricing and packaging strategies, so now we can introduce them to our products and adjust pricing in a year. That presents a significant opportunity. Meanwhile, you may notice some pressure on the convergence revenue metric. As we mentioned, ARPU growth will slow down slightly in the coming quarters. In wireless, part of our base is on free lines, which also affects that metric, but overall, we are positioning ourselves for a stronger reacceleration in one to two years.

This is Brian. I just want to, just on the cash tax point, just use it as an opportunity just to say that any policy that encourages American investment really lines up extremely well with everything we've done since the founding of the company. So for decades, we've been investing mostly here in America, building the biggest broadband network, opening theme parks, high skilled workforce. And we believe where technology is headed, especially with AI and all the different connectivity uses to reshape our society and everything we do, that we are in a great position to continue to lead and invest in the nation's broadband fiber Internet infrastructure as we always have done. So I think it leads to the cash tax question that we are going to be able to take advantage of that policy in a way that's great for our customers.

Thank you, Ben. This is Mike. We have a lot happening with Peacock and NBC, so I want to take a moment to discuss some key points. I'm very pleased with the team's efforts. NBC is doing well, and we'll touch on Parks later, but the Parks business is also thriving. The Studio segment has excelled. Our Media businesses face challenges in the current ecosystem, but we embraced the opportunity to create Peacock as a streaming service, and I'm proud of the strong momentum we continue to see. In the second quarter, our revenues grew significantly by 18%, as Jason mentioned, reflecting a $250 million year-over-year improvement in EBITDA, now at a loss of $100 million. Looking ahead, after the Versant spin, our Media business will integrate NBC Broadcast, Bravo, Telemundo, and Peacock, all working in harmony to leverage the strengths of our entertainment offerings, including scripted content, reality TV, sports, and news, as well as our Pay-One movies. This new NBC Media segment is strategically positioned to compete effectively, especially as we celebrate NBC's 100th anniversary next year. The business has stood the test of time with numerous advantages, and I’m glad we've structured it to serve customers digitally through Peacock, something we didn't have four or five years ago. We are excited to bring the NBA back to NBC, which will start in the fall and extend into the first half of next year, providing us with a full year of sports programming. This will address the lack of sports in our second quarter. The NBA holds significant cultural relevance, and we're brainstorming ways to engage with new audiences beyond sports. This season will require us to amortize a full year's costs related to the NBA, which begins in the first quarter. We'll account for this with straight-line amortization over the 11-year contract, even though our cash costs will be lower initially, leading to initial working capital benefits. On the revenue side, we are implementing a significant price increase for Peacock subscribers, which will take effect for existing subscribers at the end of August. As I mentioned earlier, the sports upfront has been very strong, partly due to the inclusion of the NBA. Over the coming years, we aim to increase Peacock subscribers by leveraging the NBA and other content as consumer trends shift from linear to streaming. Our distribution deals will reset over the next three years, allowing us to capture more revenue. We’ll also have opportunities to rebalance programming commitments for Peacock and NBC as we move forward. While I won't provide a specific forecast for the second half, we are gearing up for a strong next year. I look forward to discussing our progress a year from now after one season. NBC's Media business is poised for growth after the Versant spin, the return of the NBA, and with an expanded Peacock service. Lastly, our properties and assets are well-positioned to appeal to consumers and to participate in potential re-bundling of streaming services. I'm proud of the significant strides our media teams have made in recent years.

I guess it's tied to get to parks. Could you maybe give us some more color on what you're seeing in the market dynamics in Orlando, whether it's overall market growth? You mentioned that you're not seeing that much cannibalization in your own parks. And maybe like kind of ultimate operating leverage and how you see CapEx flowing through? You have great IP, but ultimately, you'll add more. And then maybe just stepping back, like kind of a broader question for Brian. As you look out over the next couple of years, there's been so much going on in all of your businesses. What do you view as the most underappreciated growth levers for Comcast as a whole? And then sorry, but Mike, a follow-up. You mentioned NBA, the costs kick in Q1. Why not Q4 of '25?

It's Mike speaking. I apologize for the earlier mistake. The changes will indeed take effect at the beginning of the season, starting in the fourth quarter and continuing through the full season. Regarding Orlando, I believe it remains a strong destination for consumers, supported by both our business and other parks in the area. With significant investments from both sides, this trend should continue, benefiting everyone in the market. Our main focus is on Epic, which is new and shows promising revenue growth in Orlando, reflecting a year-over-year increase across all parks with higher per capita spending, largely thanks to the appealing experience that Epic offers. Looking ahead to the second half of the year, we anticipate positive operating leverage from our efforts in Orlando and Epic. This operating leverage is expected to improve due to the conclusion of the initial soft opening phase we experienced compared to the first quarter when Epic was only recently fully operational. That's the situation in Orlando.

Thank you, Jessica. This is an important question that merits a longer perspective. There are several reasons why we might be underestimated in terms of growth potential. We have previously identified six growth areas, so I won't go over them again. A lot of our focus is on broadband for both residential and business services. We've revitalized our culture to prioritize innovation delivery. We're making a pivot with our products, especially with wireless, which is becoming a key part of our offerings for all customers, along with a greater emphasis on transparency and customer focus. This is an exciting direction, and I believe the way we communicate this to consumers, with the team we're putting together, will really strike a chord. I'm thrilled about the ongoing efforts. Looking at the Versant spin, you'll hear from Mark Lazarus and Anand Kini about that before the year ends. This move will significantly benefit our growth sectors. As of now, those six businesses account for about 60% of our revenues, up from 50%. After the spin, they could represent 65% of our revenues, and if the trends hold, we could see that rise to 70% shortly after. This marks a substantial shift in narrative from a situation where half of the company was declining to one where the majority is experiencing growth. Each of these businesses holds significant growth potential, making us a unique company. Those of you who visited Epic Universe can appreciate that not many companies can undertake a decade-long project to create what could be the best theme park in the world, and we're excited about expanding that in the London area. We also have smaller projects launching this summer in Las Vegas, with new ventures announced in Chicago, Texas, and horror films. Additionally, we have Peacock. There’s a lot of enthusiasm within our company, and I anticipate a time when our story will be more straightforward, which is already developing organically. I’m very optimistic, and I believe the best days are ahead.

I wanted to ask about M&A. There's been a fair amount of dealmaking across your peers, particularly on the communications side. Comcast has a long history of M&A, though I realize it's a nuanced regulatory backdrop at the moment. So how should we think about your interest level for potential acquisitions beyond some of the tuck-ins that you continue to make on Business Services? And maybe relatedly, I know it's maybe too early to talk about the path ahead at Versant, but whatever you could share on its inorganic opportunities as well would be very helpful ahead of the expected spin later this year.

Before we discuss M&A, this is Brian speaking, and Mike can add to this as well. I want to highlight something we accomplished this quarter that Dave mentioned, which is T-Mobile in Business Services. Business Services now constitutes about 25% of our Connectivity business, representing a $10 billion segment of the company. We have been focusing on smaller organic growth and acquisitions. Currently, we connect more small businesses than any other company in the country and are seeing significant progress with larger enterprises. It was essential for us to leverage mobile in our mid-market relationships to capture more market share. Our partnership with T-Mobile enables us to offer solutions we haven’t been able to before, making it a strategic move that we believe will lead to an excellent partnership, and we're eager to get started. Additionally, we have a valuable relationship with Verizon through our MVNO. Coupled with our deal with T-Mobile, we are confident in our capital-light strategy for wireless. As Dave mentioned, our wireless strategy is built on WiFi, which currently handles about 90% of our traffic—a fact that often surprises people. WiFi performs better when in proximity to a wired connection, and we are capable of integrating networks more effectively than anyone else. Our customers will benefit from access to two strong national 5G networks. Now, I will pass it over to you, Mike, as we are truly excited about the progress we've made with smaller acquisitions and innovative partnerships.

Yes. Regarding M&A, my comments align with what we've shared previously. It begins with our responsibility to assess potential opportunities and evaluate them with care. While I'm speaking generally, you can assume that we thoughtfully consider opportunities that could add value to us. However, we maintain a high standard, especially given the ongoing transitions in our businesses, which I believe are being executed well. We have ample opportunities to create value by effectively managing our current operations and making strategic growth investments, whether directly in our businesses or through smaller acquisitions that enhance our capabilities in areas such as Business Services. When we discuss our portfolio and capital allocation for our shareholders, it ties into Versant. To address your question, everything is on track for Versant to launch either at the end of this year or the beginning of next year. The leadership team is strong and energetic, and the preparations are well underway. They will be ready to hit the ground running. I’ll leave the details of their strategies to them, but they've been focused on the future of Versant since we announced the changes to responsibilities almost a year ago. This transition affects our capital usage; Versant will generate substantial cash, which will be reinvested into its business. Meanwhile, the remaining businesses will experience revenue growth and greater focus on the other aspects I mentioned earlier. We sold a business in Germany that was part of Sky, illustrating that M&A is multifaceted, and we're making thoughtful decisions about balancing our options for inorganic growth. Nonetheless, we set a high bar for ourselves because we want to leverage our management capabilities to enhance our existing businesses.

Maybe first a follow-up on Brian's comments on the business market for Dave. It looks like you guys are seeing some additional pressure on subs there. Can you talk about the competitive market you're seeing in that segment? And as it relates to the T-Mobile MVNO, you've got 14% penetration on the resi side. Do you expect the penetration of mobile into the business segment to sort of follow a similar slope? And then for Jason, on the $1 billion in cash tax savings, can you talk a little bit about what you see in terms of CapEx trends? Maybe on the cable side, are there opportunities to deploy additional capital maybe for further footprint expansion? And then how should we think of the CapEx as it relates to the parks, especially with all the new projects you guys have laid out?

This is Dave. Let me start with the Business Services follow-up. So there are a couple of huge categories for us within Business Services, as you know. On the competitive side that you mentioned, it's been this way the last several quarters. In SMB, we are the market share leader. There's increased competition. We see some certainly with fixed wireless. Fixed wireless at this point is not really affecting our high-end part of SMB. And so with all of the core mid-market and certainly enterprise, it's real value and the reliability, multiproduct solutions that we have and we have a balanced approach towards growing revenue and relationships across the board. So it's a little bit more competitive in the SMB side. Mid-market and enterprise, though, strong momentum. And as Mike mentioned, integration of Nitel is well underway and adding capabilities of aggregation in the U.S. and further the network aggregation, expanding sales channels, broadening of the product portfolio, in particular, advanced security. And then as you mentioned, mobile. So mobile, as Brian mentioned, the relationship, we've got a great one with Verizon on resi is a really important one with T-Mobile and business. So it's early stage, comes at a really good time for us to kick start a higher gear for our business services team and including mobile a big part of how they compete. So more to come on that.

John, on the CapEx side related to any sort of cash tax relief that we've articulated, let me step back on infrastructure as a category. A few of you have asked sort of questions related to this, but we are building out 1.2 million homes per year. We've done that. We're on pace to do that this year, did this last year. If you really step back, this is a validation of how we see ultimately the market for broadband, right? And we're in a competitive period right now. Not sure we expect that to change. Fiber will continue to be built out against us. Fixed wireless is going to continue to have sort of a niche it carves out in the value-conscious world. When we build new homes, though, it is against a framework that the competition of the future will involve two wires coming into the vast majority of the territory that we serve in addition to fixed wireless having carved out a more permanent niche in the market. Despite that, we feel very comfortable competing in that sort of environment. And so as we look to invest, you can look at the cash tax profile, the changes that sort of dictate in terms of return profiles around investment. I would tell you it strengthens the case on the infrastructure side. So I would look for us to continue to be very aggressive in building out new homes, very aggressive in infrastructure investments to support the Genesis investment around mid-splits, DOCSIS 4.0, and how quickly we upgrade the network. So I think, as I said in my prepared remarks, any incremental cash will fit into our traditional framework, which is, number one, investing in our businesses. And on the infrastructure side, this new legislation is a tailwind to that. On the park side, I think as we've articulated before, you've called it right in your research, we get a little bit of a break here post-Epic. So obviously, we had substantial investments going into Epic. That was a big new launch. We'll trail down off of that for, call it, a couple of years. We still have obviously a lot of investment going on in parks, including the smaller parks we've talked about, that will sort of fill a little bit of the void, but nonetheless, we'll trend down for a couple of years, and then we'll ramp back up as we approach the park in London, but I'd look for that to be a couple of years from now.

Thanks, John, and thank you all for joining us this morning.