Technology
Charter Announces Second Quarter 2024 Results
Published
4 months agoon
By
STAMFORD, Conn., July 26, 2024 /PRNewswire/ — Charter Communications, Inc. (along with its subsidiaries, the “Company” or “Charter”) today reported financial and operating results for the three and six months ended June 30, 2024.
Second quarter total residential and small and medium business (“SMB”) Internet customers decreased by 149,000. As of June 30, 2024, Charter served a total of 30.4 million residential and SMB Internet customers.Second quarter total residential and SMB mobile lines increased by 557,000. As of June 30, 2024, Charter served a total of 8.8 million mobile lines.As of June 30, 2024, Charter had a total of 31.8 million residential and SMB customer relationships, excluding mobile-only relationships.Second quarter revenue of $13.7 billion grew by 0.2% year-over-year, driven by residential mobile service revenue growth of 36.9% and residential Internet revenue growth of 1.3%.Net income attributable to Charter shareholders totaled $1.2 billion in the second quarter.Second quarter Adjusted EBITDA1 of $5.7 billion grew by 2.6% year-over-year.Second quarter capital expenditures totaled $2.9 billion and included $1.1 billion of line extensions.Second quarter net cash flows from operating activities totaled $3.9 billion, compared to $3.3 billion in the prior year.Second quarter free cash flow1 of $1.3 billion increased from $668 million in the prior year, primarily due to higher Adjusted EBITDA, a more favorable change in working capital and lower cash taxes due to timing.During the second quarter, Charter purchased 1.5 million shares of Charter Class A common stock and Charter Communications Holdings, LLC (“Charter Holdings”) common units for $404 million.
“We are executing well on several transformational initiatives, growing EBITDA through efficiencies, and improving our service and sales capabilities,” said Chris Winfrey, President and CEO of Charter. “We remain fully focused on driving customer growth, with a unique, high quality product set that continues to evolve, creating long term value for shareholders.”
1.
Adjusted EBITDA and free cash flow are non-GAAP measures defined in the “Use of Adjusted EBITDA and Free Cash Flow Information” section and are reconciled to net income attributable to Charter shareholders and net cash flows from operating activities, respectively, in the addendum of this news release.
Key Operating Results
Approximate as of
June 30, 2024 (c)
June 30, 2023 (c)
Y/Y Change
Footprint
Estimated Passings (d)
57,774
56,209
2.8 %
Customer Relationships (e)
Residential
29,615
30,009
(1.3) %
SMB
2,222
2,219
0.2 %
Total Customer Relationships
31,837
32,228
(1.2) %
Residential
(182)
13
(195)
SMB
3
4
(1)
Total Customer Relationships Quarterly Net Additions
(179)
17
(196)
Total Customer Relationship Penetration of Estimated Passings (f)
55.1 %
57.3 %
(2.2) ppts
Monthly Residential Revenue per Residential Customer (g)
$ 120.77
$ 120.25
0.4 %
Monthly SMB Revenue per SMB Customer (h)
$ 165.28
$ 164.56
0.4 %
Residential Customer Relationships Penetration
One Product Penetration (i)
47.7 %
46.0 %
1.7 ppts
Two Product Penetration (i)
33.2 %
33.0 %
0.2 ppts
Three or More Product Penetration (i)
19.2 %
20.9 %
(1.7) ppts
% Residential Non-Video Customer Relationships
57.1 %
53.1 %
4.0 ppts
Internet
Residential
28,318
28,549
(0.8) %
SMB
2,049
2,037
0.6 %
Total Internet Customers
30,367
30,586
(0.7) %
Residential
(154)
70
(224)
SMB
5
7
(2)
Total Internet Quarterly Net Additions
(149)
77
(226)
Video
Residential
12,718
14,071
(9.6) %
SMB
591
635
(6.9) %
Total Video Customers
13,309
14,706
(9.5) %
Residential
(393)
(189)
(204)
SMB
(15)
(11)
(4)
Total Video Quarterly Net Additions
(408)
(200)
(208)
Voice
Residential
6,170
7,248
(14.9) %
SMB
1,276
1,294
(1.4) %
Total Voice Customers
7,446
8,542
(12.8) %
Residential
(268)
(225)
(43)
SMB
(12)
4
(16)
Total Voice Quarterly Net Additions
(280)
(221)
(59)
Mobile Lines (j)
Residential
8,531
6,410
33.1 %
SMB
278
216
28.7 %
Total Mobile Lines
8,809
6,626
32.9 %
Residential
539
628
(89)
SMB
18
20
(2)
Total Mobile Lines Quarterly Net Additions
557
648
(91)
Enterprise (k)
Enterprise Primary Service Units (“PSUs”)
312
294
6.1 %
Enterprise Quarterly Net Additions
4
6
(2)
In thousands, except per customer and penetration data. See footnotes to unaudited summary of operating statistics on page 7 of the addendum of this news release. The footnotes contain important disclosures regarding the definitions used for these operating statistics. All percentages are calculated using whole numbers. Minor differences may exist due to rounding.
As of June 30, 2024, Charter had 29.6 million residential customer relationships, excluding mobile-only relationships.
Second quarter residential Internet customers decreased by 154,000, largely driven by the end of the FCC’s Affordable Connectivity Program (“ACP”) subsidies in the second quarter, compared to an increase of 70,000 during the second quarter of 2023. Spectrum Internet® delivers the fastest Internet speeds1 in the nation. Charter is evolving its connectivity network at a lower cost than its competitors to offer symmetrical and multi-gigabit Internet speeds across its entire footprint. Charter’s Advanced WiFi, a managed WiFi service that provides customers an optimized home network while providing greater control of connected devices with enhanced security and privacy is available to all Spectrum Internet customers.
Residential video customers decreased by 393,000 in the second quarter of 2024, compared to a decline of 189,000 in the second quarter of 2023. As of June 30, 2024, Charter had 12.7 million residential video customers.
During the second quarter of 2024, residential wireline voice customers declined by 268,000, compared to a decline of 225,000 in the second quarter of 2023. As of June 30, 2024, Charter had 6.2 million residential wireline voice customers.
During the second quarter of 2024, Charter added 539,000 residential mobile lines, compared to growth of 628,000 during the second quarter of 2023. Spectrum MobileTM is available to all new and existing Spectrum Internet customers and offers the fastest overall speeds,2 with plans that include 5G access, do not require contracts and include taxes and fees in the price. Spectrum Mobile is central to Charter’s converged network strategy to provide consumers a differentiated connectivity experience with highly competitive, simple data plans and pricing.
In April, Charter launched Anytime Upgrade, which is now included in the Spectrum Mobile Unlimited Plus data plan at no extra cost, and allows new and existing customers to upgrade their phones whenever they want, as many times as they want, eliminating the traditional wait times and condition requirements associated with phone upgrades. In May, Charter launched a phone balance buyout program, making it easier for customers to switch and save money. When a customer switches to Spectrum Mobile from another provider and purchases at least three lines with at least one ported line, Charter will pay off their existing phone balance on ported lines up to $2,500 while also enabling potential savings of hundreds of dollars annually on their mobile bills.
Second quarter 2024 monthly residential revenue per residential customer totaled $120.77, and increased by 0.4% compared to the prior year period, given promotional rate step-ups, rate adjustments and the growth of Spectrum Mobile, partly offset by a lower mix of video customer relationships, a higher mix of lower priced video packages within Charter’s video customer base and retention offers extended to customers that previously received an ACP subsidy.
SMB customer relationships increased by 3,000 in the second quarter of 2024, while second quarter 2023 SMB customer relationships grew by 4,000. Enterprise PSUs grew by 4,000 in the second quarter of 2024 versus 6,000 added in the second quarter of 2023.
Charter continues to work with federal, state and local governments to bring Spectrum Internet to unserved and underserved communities. During the second quarter of 2024, Charter activated 89,000 subsidized rural passings. Within Charter’s subsidized rural footprint, total residential and SMB customer relationships increased by 36,000 in the second quarter of 2024.
1.
Based on Broadband Download Speed nationally in Opensignal USA: Fixed Broadband Experience Report – National View, May 2024. Based on Opensignal independent analysis of mean download speed. © 2024 Opensignal Limited.
2.
Based on Charter’s analysis of Ookla® Speedtest Intelligence® data for overall mobile WiFi and Cellular performance for 1Q24 in Charter’s footprint.
Second Quarter Financial Results
(in millions)
Three Months Ended June 30,
2024
2023
% Change
Revenues:
Internet
$ 5,806
$ 5,733
1.3 %
Video
3,867
4,188
(7.7) %
Voice
350
365
(4.2) %
Mobile service
737
539
36.9 %
Residential revenue
10,760
10,825
(0.6) %
Small and medium business
1,101
1,094
0.6 %
Enterprise
721
690
4.5 %
Commercial revenue
1,822
1,784
2.1 %
Advertising sales
397
384
3.3 %
Other
706
666
6.0 %
Total Revenues
$ 13,685
$ 13,659
0.2 %
Net income attributable to Charter shareholders
$ 1,231
$ 1,223
0.5 %
Net income attributable to Charter shareholders margin
9.0 %
9.0 %
Adjusted EBITDA1
$ 5,665
$ 5,522
2.6 %
Adjusted EBITDA margin
41.4 %
40.4 %
Capital Expenditures
$ 2,853
$ 2,834
0.7 %
Net cash flows from operating activities
$ 3,853
$ 3,311
16.4 %
Free cash flow1
$ 1,296
$ 668
94.0 %
All percentages are calculated using whole numbers. Minor differences may exist due to rounding.
1.
Adjusted EBITDA and free cash flow are non-GAAP measures defined in the “Use of Adjusted EBITDA and Free Cash Flow Information” section and are reconciled to net income attributable to Charter shareholders and net cash flows from operating activities, respectively, in the addendum of this news release.
Revenues
Second quarter revenue increased by 0.2% year-over-year to $13.7 billion, driven by growth in residential mobile service, residential Internet, enterprise and other revenues, partly offset by lower residential video revenue.
Residential revenue totaled $10.8 billion in the second quarter, a decrease of 0.6% year-over-year.
Internet revenue grew by 1.3% year-over-year to $5.8 billion, driven by promotional rate step-ups and rate adjustments, partly offset by lower bundled revenue allocation and retention offers extended to customers that previously received an ACP subsidy.
Video revenue totaled $3.9 billion in the second quarter, a decrease of 7.7% compared to the prior year period, driven by a decline in video customers during the last year and a higher mix of lower priced video packages within Charter’s video customer base, partly offset by promotional rate step-ups and video rate adjustments that pass through programmer rate increases.
Voice revenue decreased by 4.2% year-over-year to $350 million, driven by a decline in wireline voice customers over the last twelve months, partly offset by voice rate adjustments.
Second quarter mobile service revenue totaled $737 million, an increase of 36.9% year-over-year, driven by mobile line growth and higher bundled revenue allocation.
Commercial revenue increased by 2.1% year-over-year to $1.8 billion, driven by enterprise and SMB revenue growth of 4.5% and 0.6% year-over-year, respectively. The year-over-year increase in second quarter 2024 SMB revenue was driven by higher monthly SMB revenue per SMB customer, primarily due to rate adjustments, and customer relationship growth. Enterprise revenue excluding wholesale increased by 5.9% year-over-year, mostly reflecting PSU growth.
Second quarter advertising sales revenue of $397 million increased by 3.3% compared to the year-ago quarter, primarily driven by higher political revenue. Excluding political revenue in both periods, advertising sales revenue decreased by 2.2% year-over-year due to a more challenged advertising market, partly offset by higher advanced advertising revenue.
Other revenue totaled $706 million in the second quarter, an increase of 6.0% compared to the second quarter of 2023, primarily driven by higher mobile device sales.
Operating Costs and Expenses
Second quarter programming costs decreased by $268 million, or 9.8% as compared to the second quarter of 2023, reflecting fewer video customers and a higher mix of lower cost packages within Charter’s video customer base, partly offset by contractual programming rate increases and renewals.
Other costs of revenue increased by $171 million, or 12.6% year-over-year, primarily driven by higher mobile service direct costs and mobile device sales.
Costs to service customers decreased by $88 million, or 4.2% year-over-year, primarily due to lower labor costs and lower bad debt expense.
Sales and marketing expenses increased by $17 million, or 1.9% year-over-year, primarily due to higher marketing costs.
Other expenses increased by $51 million, or 4.7% as compared to the second quarter of 2023, mostly driven by an insurance expense benefit in the year-ago quarter.
Net Income Attributable to Charter Shareholders
Net income attributable to Charter shareholders totaled $1.2 billion in the second quarter of 2024, compared to $1.2 billion in the second quarter of 2023, with higher Adjusted EBITDA mostly offset by higher other operating expense primarily due to restructuring and severance costs and net amounts of litigation settlements.
Net income per basic common share attributable to Charter shareholders totaled $8.58 in the second quarter of 2024 compared to $8.15 during the same period last year. The increase was primarily the result of the factors described above in addition to a 4.5% decrease in basic weighted average common shares outstanding versus the prior year period.
Adjusted EBITDA
Second quarter Adjusted EBITDA of $5.7 billion grew by 2.6% year-over-year, reflecting growth in revenue of 0.2% and a decrease in operating expenses of 1.4%.
Capital Expenditures
Capital expenditures totaled $2.9 billion in the second quarter of 2024, an increase of $19 million compared to the second quarter of 2023. Line extensions capital expenditures totaled $1.1 billion in the second quarter of 2024, driven by Charter’s subsidized rural construction initiative and continued network expansion across residential and commercial greenfield and market fill-in opportunities. Second quarter capital expenditures excluding line extensions totaled $1.7 billion, a decrease of $18 million compared to the second quarter of 2023.
Charter now expects full year 2024 capital expenditures to total approximately $12.0 billion, a decrease from Charter’s previously expected range of between $12.2 billion and $12.4 billion. The decrease reflects lower Internet and video customer net additions, including the impact of the end of the ACP, which drives lower CPE and capitalized installation costs. Charter continues to expect line extensions capital expenditures of approximately $4.5 billion and network evolution spend of approximately $1.6 billion, compared to $4.0 billion and $0.9 billion, respectively, in 2023. The actual amount of capital expenditures in 2024 will depend on a number of factors including, but not limited to, the pace of Charter’s network evolution and expansion initiatives, supply chain timing and growth rates in Charter’s residential and commercial businesses.
Cash Flow and Free Cash Flow
During the second quarter of 2024, net cash flows from operating activities totaled $3.9 billion, compared to $3.3 billion in the prior year quarter. The year-over-year increase in net cash flows from operating activities was primarily due to higher Adjusted EBITDA, lower cash taxes due to timing and a more favorable change in working capital.
Free cash flow in the second quarter of 2024 totaled $1.3 billion, an increase of $628 million compared to the second quarter of 2023. The year-over-year increase in free cash flow was primarily driven by an increase in net cash flows from operating activities and a more favorable change in accrued expenses related to capital expenditures.
Liquidity & Financing
As of June 30, 2024, total principal amount of debt was $96.5 billion and Charter’s credit facilities provided approximately $4.1 billion of additional liquidity in excess of Charter’s $602 million cash position.
In May 2024, Charter Communications Operating, LLC (“Charter Operating”) and Charter Communications Operating Capital Corp. jointly issued $1.5 billion of 6.100% senior secured notes due June 2029 at a price of 99.944% of the aggregate principal amount and $1.5 billion of 6.550% senior secured notes due June 2034 at a price of 99.755% of the aggregate principal amount. The net proceeds were used to fund a concurrent tender offer to repurchase $2.7 billion in aggregate principal amount of Charter Operating’s 4.908% senior secured notes due July 2025, to prepay Charter Operating’s outstanding Term B-1 Loan and to pay related fees and expenses.
In June 2024, a bankruptcy remote special purpose vehicle and consolidated subsidiary of the Company, CCO EIP Financing, LLC, (the “SPV Borrower”) entered into a senior secured revolving credit facility to finance the purchase of equipment installment plan receivables (“EIP Receivables”) with a number of financial institutions (the “EIP Financing Facility”). Borrowings under the EIP Financing Facility are secured by the EIP Receivables transferred to the SPV Borrower, future collections on such EIP Receivables, and related assets consisting primarily of restricted cash.
The revolving credit facility under the EIP Financing Facility bears interest on the outstanding borrowings based on lenders’ cost of funds plus an applicable margin and was 6.46% as of June 30, 2024. The EIP Financing Facility has a final maturity date of June 20, 2028, comprised of a one-year revolving loan period, subject to annual renewal, and if not renewed, cash flows on EIP Receivables are applied to amortize the loan which may occur over a period of up to three years. SPV Borrower may borrow up to $1.25 billion under the EIP Financing Facility. As of June 30, 2024, the carrying value of the EIP Financing Facility was $873 million and is included in the Company’s consolidated balance sheets.
Share Repurchases
During the three months ended June 30, 2024, Charter purchased 1.5 million shares of Charter Class A common stock and Charter Holdings common units for $404 million.
Webcast
Charter will host a webcast on Friday, July 26, 2024 at 8:30 a.m. Eastern Time (ET) related to the contents of this release.
The webcast can be accessed live via the Company’s investor relations website at ir.charter.com. Participants should go to the webcast link no later than 10 minutes prior to the start time to register. The webcast will be archived at ir.charter.com two hours after completion of the webcast.
Additional Information Available on Website
The information in this press release should be read in conjunction with the financial statements and footnotes contained in the Company’s Quarterly Report on Form 10-Q for the three and six months ended June 30, 2024, which will be posted on the “Results & SEC Filings” section of the Company’s investor relations website at ir.charter.com, when it is filed with the Securities and Exchange Commission (the “SEC”). A slide presentation to accompany the conference call and a trending schedule containing historical customer and financial data will also be available in the “Results & SEC Filings” section.
Use of Adjusted EBITDA and Free Cash Flow Information
The Company uses certain measures that are not defined by U.S. generally accepted accounting principles (“GAAP”) to evaluate various aspects of its business. Adjusted EBITDA and free cash flow are non-GAAP financial measures and should be considered in addition to, not as a substitute for, net income attributable to Charter shareholders and net cash flows from operating activities reported in accordance with GAAP. These terms, as defined by Charter, may not be comparable to similarly titled measures used by other companies. Adjusted EBITDA and free cash flow are reconciled to net income attributable to Charter shareholders and net cash flows from operating activities, respectively, in the Addendum to this release.
Adjusted EBITDA is defined as net income attributable to Charter shareholders plus net income attributable to noncontrolling interest, net interest expense, income taxes, depreciation and amortization, stock compensation expense, other income (expenses), net and other operating (income) expenses, net, such as special charges and (gain) loss on sale or retirement of assets. As such, it eliminates the significant non-cash depreciation and amortization expense that results from the capital-intensive nature of the Company’s businesses as well as other non-cash or special items, and is unaffected by the Company’s capital structure or investment activities. However, this measure is limited in that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues and the cash cost of financing. These costs are evaluated through other financial measures.
Free cash flow is defined as net cash flows from operating activities, less capital expenditures and changes in accrued expenses related to capital expenditures.
Management and Charter’s board of directors use Adjusted EBITDA and free cash flow to assess Charter’s performance and its ability to service its debt, fund operations and make additional investments with internally generated funds. In addition, Adjusted EBITDA generally correlates to the leverage ratio calculation under the Company’s credit facilities or outstanding notes to determine compliance with the covenants contained in the facilities and notes (all such documents have been previously filed with the SEC). For the purpose of calculating compliance with leverage covenants, the Company uses Adjusted EBITDA, as presented, excluding certain expenses paid by its operating subsidiaries to other Charter entities. The Company’s debt covenants refer to these expenses as management fees, which were $366 million and $335 million for the three months ended June 30, 2024 and 2023, respectively, and $737 million and $709 million for the six months ended June 30, 2024 and 2023, respectively.
About Charter
Charter Communications, Inc. (NASDAQ:CHTR) is a leading broadband connectivity company and cable operator with services available to more than 57 million homes and businesses in 41 states through its Spectrum brand. Over an advanced communications network, the Company offers a full range of state-of-the-art residential and business services including Spectrum Internet®, TV, Mobile and Voice.
For small and medium-sized companies, Spectrum Business® delivers the same suite of broadband products and services coupled with special features and applications to enhance productivity, while for larger businesses and government entities, Spectrum Enterprise® provides highly customized, fiber-based solutions. Spectrum Reach® delivers tailored advertising and production for the modern media landscape. The Company also distributes award-winning news coverage and sports programming to its customers through Spectrum Networks. More information about Charter can be found at corporate.charter.com.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This communication includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, regarding, among other things, our plans, strategies and prospects, both business and financial. Although we believe that our plans, intentions and expectations as reflected in or suggested by these forward-looking statements are reasonable, we cannot assure you that we will achieve or realize these plans, intentions or expectations. Forward-looking statements are inherently subject to risks, uncertainties and assumptions including, without limitation, the factors described under “Risk Factors” from time to time in our filings with the SEC. Many of the forward-looking statements contained in this communication may be identified by the use of forward-looking words such as “believe,” “expect,” “anticipate,” “should,” “planned,” “will,” “may,” “intend,” “estimated,” “aim,” “on track,” “target,” “opportunity,” “tentative,” “positioning,” “designed,” “create,” “predict,” “project,” “initiatives,” “seek,” “would,” “could,” “continue,” “ongoing,” “upside,” “increases,” “grow,” “focused on” and “potential,” among others. Important factors that could cause actual results to differ materially from the forward-looking statements we make in this communication are set forth in our annual report on Form 10-K, and in other reports or documents that we file from time to time with the SEC, and include, but are not limited to:
our ability to sustain and grow revenues and cash flow from operations by offering Internet, video, voice, mobile, advertising and other services to residential and commercial customers, to adequately meet the customer experience demands in our service areas and to maintain and grow our customer base, particularly in the face of increasingly aggressive competition, the need for innovation and the related capital expenditures;the impact of competition from other market participants, including but not limited to incumbent telephone companies, direct broadcast satellite (“DBS”) operators, wireless broadband and telephone providers, digital subscriber line (“DSL”) providers, fiber to the home providers and providers of video content over broadband Internet connections;general business conditions, unemployment levels and the level of activity in the housing sector and economic uncertainty or downturn;our ability to obtain programming at reasonable prices or to raise prices to offset, in whole or in part, the effects of higher programming costs (including retransmission consents and distribution requirements);our ability to develop and deploy new products and technologies including consumer services and service platforms;any events that disrupt our networks, information systems or properties and impair our operating activities or our reputation;the effects of governmental regulation on our business including subsidies to consumers, subsidies and incentives for competitors, costs, disruptions and possible limitations on operating flexibility related to, and our ability to comply with, regulatory conditions applicable to us;the ability to hire and retain key personnel;our ability to procure necessary services and equipment from our vendors in a timely manner and at reasonable costs including in connection with our network evolution and rural construction initiatives;the availability and access, in general, of funds to meet our debt obligations prior to or when they become due and to fund our operations and necessary capital expenditures, either through (i) cash on hand, (ii) free cash flow, or (iii) access to the capital or credit markets; andour ability to comply with all covenants in our indentures and credit facilities, any violation of which, if not cured in a timely manner, could trigger a default of our other obligations under cross-default provisions.
All forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by this cautionary statement. We are under no duty or obligation to update any of the forward-looking statements after the date of this communication.
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED RECONCILIATION OF NON-GAAP MEASURES TO GAAP MEASURES
(dollars in millions)
Three Months Ended June 30,
Six Months Ended June 30,
2024
2023
2024
2023
Net income attributable to Charter shareholders
$ 1,231
$ 1,223
$ 2,337
$ 2,244
Plus: Net income attributable to noncontrolling interest
192
190
366
352
Interest expense, net
1,328
1,298
2,644
2,563
Income tax expense
427
444
873
818
Depreciation and amortization
2,170
2,172
4,360
4,378
Stock compensation expense
153
168
367
376
Other, net
164
27
215
141
Adjusted EBITDA (a)
$ 5,665
$ 5,522
$ 11,162
$ 10,872
Net cash flows from operating activities
$ 3,853
$ 3,311
$ 7,065
$ 6,634
Less: Purchases of property, plant and equipment
(2,853)
(2,834)
(5,644)
(5,298)
Change in accrued expenses related to capital expenditures
296
191
233
(4)
Free cash flow (a)
$ 1,296
$ 668
$ 1,654
$ 1,332
The above schedule is presented in order to reconcile Adjusted EBITDA and free cash flow, non-GAAP measures, to the most directly comparable GAAP measures in accordance with Section 401(b) of the Sarbanes-Oxley Act.
UNAUDITED ALTERNATIVE PRESENTATION OF ADJUSTED EBITDA
(dollars in millions)
Three Months Ended June 30,
Six Months Ended June 30,
2024
2023
% Change
2024
2023
% Change
REVENUES:
Internet
$ 5,806
$ 5,733
1.3 %
$ 11,632
$ 11,451
1.6 %
Video
3,867
4,188
(7.7) %
7,775
8,442
(7.9) %
Voice
350
365
(4.2) %
724
738
(1.9) %
Mobile service
737
539
36.9 %
1,422
1,036
37.4 %
Residential revenue
10,760
10,825
(0.6) %
21,553
21,667
(0.5) %
Small and medium business
1,101
1,094
0.6 %
2,189
2,185
0.2 %
Enterprise
721
690
4.5 %
1,429
1,372
4.2 %
Commercial revenue
1,822
1,784
2.1 %
3,618
3,557
1.7 %
Advertising sales
397
384
3.3 %
788
739
6.5 %
Other
706
666
6.0 %
1,405
1,349
4.2 %
Total Revenues
13,685
13,659
0.2 %
27,364
27,312
0.2 %
COSTS AND EXPENSES:
Programming
2,472
2,740
(9.8) %
5,042
5,539
(9.0) %
Other costs of revenue
1,538
1,367
12.6 %
2,996
2,695
11.2 %
Costs to service customers
1,981
2,069
(4.2) %
4,075
4,164
(2.1) %
Sales and marketing
912
895
1.9 %
1,832
1,841
(0.5) %
Other expense (b)
1,117
1,066
4.7 %
2,257
2,201
2.5 %
Total operating costs and expenses (b)
8,020
8,137
(1.4) %
16,202
16,440
(1.4) %
Adjusted EBITDA (a)
$ 5,665
$ 5,522
2.6 %
$ 11,162
$ 10,872
2.7 %
All percentages are calculated using whole numbers. Minor differences may exist due to rounding.
See footnotes on page 7.
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in millions, except per share data)
Three Months Ended June 30,
Six Months Ended June 30,
2024
2023
2024
2023
REVENUES
$ 13,685
$ 13,659
$ 27,364
$ 27,312
COSTS AND EXPENSES:
Operating costs and expenses (exclusive of items shown separately below)
8,173
8,305
16,569
16,816
Depreciation and amortization
2,170
2,172
4,360
4,378
Other operating (income) expenses, net
79
(58)
41
(48)
10,422
10,419
20,970
21,146
Income from operations
3,263
3,240
6,394
6,166
OTHER INCOME (EXPENSES):
Interest expense, net
(1,328)
(1,298)
(2,644)
(2,563)
Other expenses, net
(85)
(85)
(174)
(189)
(1,413)
(1,383)
(2,818)
(2,752)
Income before income taxes
1,850
1,857
3,576
3,414
Income tax expense
(427)
(444)
(873)
(818)
Consolidated net income
1,423
1,413
2,703
2,596
Less: Net income attributable to noncontrolling interests
(192)
(190)
(366)
(352)
Net income attributable to Charter shareholders
$ 1,231
$ 1,223
$ 2,337
$ 2,244
EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CHARTER
SHAREHOLDERS:
Basic
$ 8.58
$ 8.15
$ 16.24
$ 14.89
Diluted
$ 8.49
$ 8.05
$ 16.03
$ 14.69
Weighted average common shares outstanding, basic
143,329,828
150,091,880
143,920,073
150,761,406
Weighted average common shares outstanding, diluted
144,914,860
151,975,698
145,742,397
152,727,540
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in millions)
June 30,
December 31,
2024
2023
ASSETS
(unaudited)
CURRENT ASSETS:
Cash and cash equivalents
$ 602
$ 709
Accounts receivable, net
3,000
2,965
Prepaid expenses and other current assets
531
458
Total current assets
4,133
4,132
INVESTMENT IN CABLE PROPERTIES:
Property, plant and equipment, net
41,256
39,520
Customer relationships, net
1,319
1,745
Franchises
67,444
67,396
Goodwill
29,668
29,668
Total investment in cable properties, net
139,687
138,329
OTHER NONCURRENT ASSETS
4,791
4,732
Total assets
$ 148,611
$ 147,193
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable, accrued and other current liabilities
$ 10,726
$ 11,214
Current portion of long-term debt
—
2,000
Total current liabilities
10,726
13,214
LONG-TERM DEBT
96,692
95,777
EQUIPMENT INSTALLMENT PLAN FINANCING FACILITY
873
—
DEFERRED INCOME TAXES
18,927
18,954
OTHER LONG-TERM LIABILITIES
4,679
4,530
SHAREHOLDERS’ EQUITY:
Controlling interest
12,879
11,086
Noncontrolling interests
3,835
3,632
Total shareholders’ equity
16,714
14,718
Total liabilities and shareholders’ equity
$ 148,611
$ 147,193
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in millions)
Three Months Ended June 30,
Six Months Ended June 30,
2024
2023
2024
2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Consolidated net income
$ 1,423
$ 1,413
$ 2,703
$ 2,596
Adjustments to reconcile consolidated net income to net cash flows from
operating activities:
Depreciation and amortization
2,170
2,172
4,360
4,378
Stock compensation expense
153
168
367
376
Noncash interest, net
8
7
16
4
Deferred income taxes
(34)
(40)
(13)
(63)
Other, net
90
83
105
187
Changes in operating assets and liabilities, net of effects from acquisitions
and dispositions:
Accounts receivable
6
(13)
(33)
57
Prepaid expenses and other assets
101
(25)
(265)
(361)
Accounts payable, accrued liabilities and other
(64)
(454)
(175)
(540)
Net cash flows from operating activities
3,853
3,311
7,065
6,634
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment
(2,853)
(2,834)
(5,644)
(5,298)
Change in accrued expenses related to capital expenditures
296
191
233
(4)
Other, net
(172)
(207)
(225)
(287)
Net cash flows from investing activities
(2,729)
(2,850)
(5,636)
(5,589)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings of long-term debt
8,822
3,944
14,743
11,048
Borrowings of equipment installment plan financing facility
876
—
876
—
Repayments of long-term debt
(10,068)
(3,995)
(15,784)
(10,735)
Payments for debt issuance costs
(25)
—
(27)
(18)
Purchase of treasury stock
(361)
(326)
(877)
(1,238)
Proceeds from exercise of stock options
—
3
2
5
Purchase of noncontrolling interest
(46)
(54)
(141)
(176)
Distributions to noncontrolling interest
(61)
(80)
(64)
(83)
Other, net
(280)
(9)
(224)
(15)
Net cash flows from financing activities
(1,143)
(517)
(1,496)
(1,212)
NET DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH
(19)
(56)
(67)
(167)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period
661
534
709
645
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period
$ 642
$ 478
$ 642
$ 478
CASH PAID FOR INTEREST
$ 1,362
$ 1,243
$ 2,598
$ 2,432
CASH PAID FOR TAXES
$ 569
$ 845
$ 647
$ 906
As of June 30, 2024, cash, cash equivalents and restricted cash includes $40 million of restricted cash included in prepaid expenses and other current assets in the consolidated balance sheets.
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED SUMMARY OF OPERATING STATISTICS
(in thousands, except per customer and penetration data)
Approximate as of
June 30,
2024(c)
March 31,
2024(c)
December 31,
2023 (c)
June 30,
2023(c)
Footprint
Estimated Passings (d)
57,774
57,351
56,986
56,209
Customer Relationships (e)
Residential
29,615
29,797
29,904
30,009
SMB
2,222
2,219
2,222
2,219
Total Customer Relationships
31,837
32,016
32,126
32,228
Residential
(182)
(107)
(108)
13
SMB
3
(3)
(2)
4
Total Customer Relationships Quarterly Net Additions
(179)
(110)
(110)
17
Total Customer Relationship Penetration of Estimated Passings (f)
55.1 %
55.8 %
56.4 %
57.3 %
Monthly Residential Revenue per Residential Customer (g)
$ 120.77
$ 120.48
$ 119.41
$ 120.25
Monthly SMB Revenue per SMB Customer (h)
$ 165.28
$ 163.44
$ 162.38
$ 164.56
Residential Customer Relationships Penetration
One Product Penetration (i)
47.7 %
47.3 %
46.7 %
46.0 %
Two Product Penetration (i)
33.2 %
33.0 %
33.1 %
33.0 %
Three or More Product Penetration (i)
19.2 %
19.7 %
20.2 %
20.9 %
% Residential Non-Video Customer Relationships
57.1 %
56.0 %
54.8 %
53.1 %
Internet
Residential
28,318
28,472
28,544
28,549
SMB
2,049
2,044
2,044
2,037
Total Internet Customers
30,367
30,516
30,588
30,586
Residential
(154)
(72)
(62)
70
SMB
5
—
1
7
Total Internet Quarterly Net Additions
(149)
(72)
(61)
77
Video
Residential
12,718
13,111
13,503
14,071
SMB
591
606
619
635
Total Video Customers
13,309
13,717
14,122
14,706
Residential
(393)
(392)
(248)
(189)
SMB
(15)
(13)
(9)
(11)
Total Video Quarterly Net Additions
(408)
(405)
(257)
(200)
Voice
Residential
6,170
6,438
6,712
7,248
SMB
1,276
1,288
1,293
1,294
Total Voice Customers
7,446
7,726
8,005
8,542
Residential
(268)
(274)
(248)
(225)
SMB
(12)
(5)
(3)
4
Total Voice Quarterly Net Additions
(280)
(279)
(251)
(221)
Mobile Lines (j)
Residential
8,531
7,992
7,519
6,410
SMB
278
260
247
216
Total Mobile Lines
8,809
8,252
7,766
6,626
Residential
539
473
532
628
SMB
18
13
14
20
Total Mobile Lines Quarterly Net Additions
557
486
546
648
Enterprise (k)
Enterprise Primary Service Units (“PSUs”)
312
308
303
294
Enterprise Quarterly Net Additions
4
5
5
6
See footnotes on page 7.
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED CAPITAL EXPENDITURES
(dollars in millions)
Three Months Ended June 30,
Six Months Ended June 30,
2024
2023
2024
2023
Customer premise equipment (l)
$ 562
$ 576
$ 1,197
$ 1,113
Scalable infrastructure (m)
362
353
690
707
Upgrade/rebuild (n)
389
392
870
681
Support capital (o)
421
431
809
825
Capital expenditures, excluding line extensions
1,734
1,752
3,566
3,326
Subsidized rural construction line extensions
565
529
992
900
Other line extensions
554
553
1,086
1,072
Total line extensions (p)
1,119
1,082
2,078
1,972
Total capital expenditures
$ 2,853
$ 2,834
$ 5,644
$ 5,298
Capital expenditures included in total related to:
Commercial services
$ 382
$ 409
$ 757
$ 776
Subsidized rural construction initiative (q)
$ 567
$ 541
$ 994
$ 932
Mobile
$ 64
$ 82
$ 123
$ 159
See footnotes on page 7.
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
FOOTNOTES
(a)
Adjusted EBITDA is defined as net income attributable to Charter shareholders plus net income attributable to noncontrolling interest, net interest expense, income taxes, depreciation and amortization, stock compensation expense, other (income) expenses, net and other operating (income) expenses, net such as special charges and (gain) loss on sale or retirement of assets. As such, it eliminates the significant non-cash depreciation and amortization expense that results from the capital-intensive nature of our businesses as well as other non-cash or special items, and is unaffected by our capital structure or investment activities. Free cash flow is defined as net cash flows from operating activities, less capital expenditures and changes in accrued expenses related to capital expenditures.
(b)
Other expense excludes stock compensation expense. Total operating costs and expenses excludes stock compensation expense, depreciation and amortization and other operating (income) expenses, net.
(c)
We calculate the aging of customer accounts based on the monthly billing cycle for each account in accordance with our collection policies. On that basis, at June 30, 2024, March 31, 2024, December 31, 2023 and June 30, 3023, customers included approximately 79,400, 110,000, 135,800 and 128,600 customers, respectively, whose accounts were over 60 days past due, approximately 10,000, 42,600, 54,700 and 47,000 customers, respectively, whose accounts were over 90 days past due and approximately 13,500, 283,100, 286,000 and 229,200 customers, respectively, whose accounts were over 120 days past due. The decrease in accounts past due is predominately due to revisions to customer account balances associated with the end of the Affordable Connectivity Program, including balance write-offs and conversion to payment plans. Bad debt expense associated with these past due accounts was predominantly reflected in our consolidated statements of operations in prior periods.
(d)
Passings represent our estimate of the number of units, such as single family homes, apartment and condominium units and SMB and enterprise sites passed by our cable distribution network in the areas where we offer the service indicated. These estimates are based upon the information available at this time and are updated for all periods presented when new information becomes available.
(e)
Customer relationships include the number of customers that receive one or more levels of service, encompassing Internet, video, voice and mobile services, without regard to which service(s) such customers receive. Customers who reside in residential multiple dwelling units (“MDUs”) and that are billed under bulk contracts are counted based on the number of billed units within each bulk MDU. Total customer relationships exclude enterprise and mobile-only customer relationships.
(f)
Penetration represents residential and SMB customers as a percentage of estimated passings. Penetration excludes mobile-only customers.
(g)
Monthly residential revenue per residential customer is calculated as total residential quarterly revenue divided by three divided by average residential customer relationships during the respective quarter and excludes mobile-only customer relationships.
(h)
Monthly SMB revenue per SMB customer is calculated as total SMB quarterly revenue divided by three divided by average SMB customer relationships during the respective quarter and excludes mobile-only customer relationships.
(i)
One product, two product and three or more product penetration represents the number of residential customers that subscribe to one product, two products or three or more products, respectively, as a percentage of residential customer relationships, excluding mobile-only customers.
(j)
Mobile lines include phones and tablets which require one of our standard rate plans (e.g., “Unlimited” or “By the Gig”). Mobile lines exclude wearables and other devices that do not require standard phone rate plans.
(k)
Enterprise PSUs represents the aggregate number of fiber service offerings counting each separate service offering at each customer location as an individual PSU.
(l)
Customer premise equipment includes equipment and devices located at the customer’s premise used to deliver our Internet, video and voice services (e.g., modems, routers and set-top boxes), as well as installation costs.
(m)
Scalable infrastructure includes costs, not related to customer premise equipment or our network, to secure growth of new customers or provide service enhancements (e.g., headend equipment).
(n)
Upgrade/rebuild includes costs to modify or replace existing fiber/coaxial cable networks, including our network evolution initiative.
(o)
Support capital includes costs associated with the replacement or enhancement of non-network assets (e.g., back-office systems, non-network equipment, land and buildings, vehicles, tools and test equipment).
(p)
Line extensions include network costs associated with entering new service areas (e.g., fiber/coaxial cable, amplifiers, electronic equipment, make-ready and design engineering).
(q)
The subsidized rural construction initiative subcategory includes projects for which we are receiving subsidies from federal, state and local governments, excluding customer premise equipment and installation.
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SOURCE Charter Communications, Inc.
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About GW Allen
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Contact:
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Kevinfields@gw-allen.com
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AI in Military Market to grow by USD 55.2 billion (2024-2028), rising defense spending amid conflicts driving growth, Report with market evolution powered by AI – Technavio
Published
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November 15, 2024By
NEW YORK, Nov. 15, 2024 /PRNewswire/ — Report on how AI is driving market transformation – The global artificial intelligence (AI) in military market size is estimated to grow by USD 55.2 billion from 2024-2028, according to Technavio. The market is estimated to grow at a CAGR of 43.61% during the forecast period. Increased government spending on defense due to conflicts is driving market growth, with a trend towards growing integration of ai in space-based systems. However, shortage of ai experts poses a challenge.Key market players include Anduril Industries Inc., BAE Systems Plc, C3.ai Inc, Charles River Analytics Inc., Darktrace Holdings Ltd., General Dynamics Corp., International Business Machines Corp., L3Harris Technologies Inc., Lockheed Martin Corp., Northrop Grumman Corp., NVIDIA Corp., Palantir Technologies Inc., Rafael Advanced Defense Systems Ltd., RTX Corp., Rheinmetall AG, Saab AB, Safran SA, Shield AI, SparkCognition Inc., and Thales Group.
AI-Powered Market Evolution Insights. Our comprehensive market report ready with the latest trends, growth opportunities, and strategic analysis- View Free Sample Report PDF
Forecast period
2024-2028
Base Year
2023
Historic Data
2017 – 2021
Segment Covered
Component (Software, Hardware, and Services), Type (New procurement and Upgradation), and Geography (North America, Europe, APAC, Middle East and Africa, and South America)
Region Covered
North America, Europe, APAC, Middle East and Africa, and South America
Key companies profiled
Anduril Industries Inc., BAE Systems Plc, C3.ai Inc, Charles River Analytics Inc., Darktrace Holdings Ltd., General Dynamics Corp., International Business Machines Corp., L3Harris Technologies Inc., Lockheed Martin Corp., Northrop Grumman Corp., NVIDIA Corp., Palantir Technologies Inc., Rafael Advanced Defense Systems Ltd., RTX Corp., Rheinmetall AG, Saab AB, Safran SA, Shield AI, SparkCognition Inc., and Thales Group
Key Market Trends Fueling Growth
The military sector is increasingly adopting Artificial Intelligence (AI) to enhance security and defense strategies in the face of evolving threats and geopolitical tensions. Defense agencies, technology companies, and research institutions are collaborating to develop AI-powered solutions for situational awareness, proactive defense measures, and agile decision-making. Military applications of AI include autonomous vehicles like drones and military laser systems, decision support systems, and operational efficiency improvements. Security concerns surrounding cybercrime, theft, hacking, and data destruction have heightened the need for advanced AI and Machine Learning (ML) technologies. Defense contractors are investing in technological infrastructure, including AI processors, memory, and quantum computing, to stay ahead of adversaries. Ethical considerations and responsible AI practices are crucial as AI programs process military data and encrypted communication. The industry outlook for AI in the military market is promising, with trends in cognitive electronic warfare, threat detection, anomaly detection, and predictive analysis. Hardware segments like memory, AI processors, and quantum computing are essential for next-generation warfare systems. Private companies like Google and Microsoft are developing AI systems for logistics & transportation, simulation & training, and warfare platforms. Despite the benefits, challenges remain, including ethical considerations, protocols and standards, and the integration of AI into existing defense infrastructure. The military industry must work together to ensure the responsible use of AI in warfare systems, cybersecurity, and other applications. In summary, AI is transforming the military sector, offering solutions for security, defense, and operational efficiency. However, ethical considerations, cybersecurity, and integration challenges must be addressed to ensure responsible use and effective implementation.
Artificial Intelligence (AI) plays a crucial role in military applications, particularly in the context of space exploration. In space missions, AI enhances data processing, analysis, and communication capabilities. Satellite sensors and camera data are analyzed using AI algorithms to detect objects and potential threats. The integration of AI in space-based systems is a significant trend, driven by its advantages in handling vast amounts of data and improving mission efficiency. Both developed and developing countries are increasing their adoption of AI technologies in their space programs due to these benefits. The expansion of space programs and the integration of AI are projected to fuel the growth of the global AI in military market in the coming years.
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In the military market, artificial intelligence (AI) is revolutionizing defense strategies with advanced solutions for situational awareness, proactive defense measures, and agile decision-making. However, security concerns around AI-powered systems, such as cybercrime, theft, hacking, and data destruction, necessitate responsible AI practices and ethical considerations. Defense agencies, technology companies, and research institutions collaborate to develop next-generation warfare systems, including autonomous vehicles, surveillance drones, and decision support systems. AI and machine learning (ML) are essential components of these systems, enabling threat detection, anomaly detection, and predictive analysis. The hardware segment, including AI processors and memory, plays a crucial role in the development of these advanced systems. Ethical considerations and responsible AI practices are essential to prevent potential misuse of these technologies. Geopolitical tensions and evolving threats require defense forces to invest in technological infrastructure, including quantum computing, encrypted communication, and advanced computing. Private companies like Google and Microsoft are also contributing to the industry outlook with quantum processors and AI programs. The military sector faces challenges in implementing AI systems, including cybersecurity, logistics and transportation, warfare platforms, and information processing. OpenAI and other AI programs are essential for military data analysis, while new procurement and upgrades in cybersecurity and logistics and transportation are necessary for operational efficiency and decision-making accuracy. Military laser systems, autonomous military systems, and defense forces are investing in AI-powered solutions to enhance their capabilities and stay ahead of the curve in the face of international conflicts and protocols and standards. The industry outlook is positive, with continued investment in AI systems, learning and intelligence, and applications across airborne, land, naval, space, and simulation and training.Many businesses in the military market are eager to leverage Artificial Intelligence (AI) for advanced capabilities, yet face challenges in doing so. The implementation of AI applications, such as machine learning and deep learning, necessitates significant investments in data sets, infrastructure, and processing power. Additionally, a team of specialized AI experts is required to execute tasks effectively. However, finding and hiring these experts is a competitive process, making it a significant challenge for many companies, particularly smaller ones, to fully capitalize on AI technology. Careful consideration of appropriate use cases and applications is essential before implementing AI at scale to ensure maximum return on investment.
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This artificial intelligence (ai) in military market report extensively covers market segmentation by
Component 1.1 Software1.2 Hardware1.3 ServicesType 2.1 New procurement2.2 UpgradationGeography 3.1 North America3.2 Europe3.3 APAC3.4 Middle East and Africa3.5 South America
1.1 Software- The AI software segment is poised for significant growth in the global artificial intelligence in military market. Defense organizations are increasingly adopting AI software solutions to strengthen their IT infrastructure and enhance cybersecurity capabilities. With data privacy regulations becoming stricter, militaries are investing in AI-powered software tools to detect, prevent, and mitigate security breaches and cyber threats. Advanced technologies like machine learning, virtual assistants, and speech/voice recognition are utilized in these software systems. They collect data from connected hardware systems, process it using AI algorithms, and generate intelligent insights to support critical decision-making processes. Leading AI technology providers, such as IBM, are supplying sophisticated software platforms to defense forces to boost operational efficiency and strategic advantages. The growing investments by militaries worldwide in advanced AI software solutions are fueling the segment’s growth.
Download complimentary Sample Report to gain insights into AI’s impact on market dynamics, emerging trends, and future opportunities- including forecast (2024-2028) and historic data (2017 – 2021)
Artificial Intelligence (AI) is revolutionizing the military sector, bringing advanced capabilities to Defense Forces in Security concerns and Defense strategies. AI applications include Military Laser Systems, Autonomous Military Systems, and Cyber Security. Evolving threats from Cybercrime, Theft, Hacking, and Data destruction necessitate the integration of AI in the Military Industry. Global Military Spending on new procurement and upgrades is driving the adoption of AI in various domains such as Airborne, Land, Naval, Space, and Logistics and Transportation. Protocols and Standards are being established to ensure ethical use and interoperability. Private Companies are collaborating with Defense Forces to leverage AI in Quantum Computing and Learning and Intelligence. However, concerns around Ethics, Accountability, and Transparency persist. International Conflicts and geopolitical tensions fuel the race for advanced AI technologies. AI in Military is a complex and evolving landscape that requires continuous monitoring and adaptation.
Artificial Intelligence (AI) is revolutionizing the military sector as defense agencies seek AI-powered solutions to address evolving threats and geopolitical tensions. The military industry is investing heavily in AI technologies to enhance situational awareness, proactive defense measures, and agile decision-making. AI applications in the military sector include autonomous vehicles, surveillance drones, decision support systems, and cognitive electronic warfare. These technologies enable operational efficiency, decision-making accuracy, and next-generation warfare systems. However, the integration of AI in the military sector raises security concerns, particularly in relation to cybercrime, theft, hacking, and data destruction. Defense agencies must prioritize ethical considerations and responsible AI practices to mitigate these risks. The hardware segment, including AI processors and memory, plays a crucial role in the development and deployment of AI systems. Technology companies and research institutions are collaborating to advance AI and machine learning (ML) capabilities, including quantum computing and AI programs. Defense contractors are also investing in technological infrastructure, such as encrypted communication and protocols and standards, to ensure the security of military data. The military sector is also exploring AI applications in logistics and transportation, simulation and training, battlefield healthcare, and information processing. New procurement and upgrade initiatives are underway for AI systems, warfare platforms, and autonomous war vehicles and robots across airborne, land, naval, space, and cybersecurity domains. Despite the benefits, the integration of AI in the military sector raises ethical considerations and the need for responsible AI practices. The industry outlook is positive, with continued investment and innovation expected in the coming years.
1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation
ComponentSoftwareHardwareServicesTypeNew ProcurementUpgradationGeographyNorth AmericaEuropeAPACMiddle East And AfricaSouth America
7 Customer Landscape
8 Geographic Landscape
9 Drivers, Challenges, and Trends
10 Company Landscape
11 Company Analysis
12 Appendix
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SOURCE Technavio
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2 hours agoon
November 15, 2024By
NEW YORK, Nov. 15, 2024 /PRNewswire/ — Report with the AI impact on market trends – The global virtual reality vr headset market size is estimated to grow by USD 25.2 billion from 2024-2028, according to Technavio. The market is estimated to grow at a CAGR of 45.95% during the forecast period. Rising interest and growth in gaming industry is driving market growth, with a trend towards growing ar/vr integration introduced by vendors. However, rising health concerns and problems related to user comfort poses a challenge.Key market players include Alphabet Inc., Apple Inc., ASUSTeK Computer Inc., ByteDance Ltd., FOVE Inc., Goertek Inc., HP Inc., HTC Corp., LG Electronics Inc., Meta Platforms Inc., Microsoft Corp., NOLO Co. Ltd., Pimax Inc., Samsung Electronics Co. Ltd., Seiko Epson Corp., Sony Group Corp., Valve Corp., Varjo Technologies Oy, WorldViz Inc., and Xiaomi Communications Co. Ltd..
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Virtual Reality VR Headset Market Scope
Report Coverage
Details
Base year
2023
Historic period
2018 – 2022
Forecast period
2024-2028
Growth momentum & CAGR
Accelerate at a CAGR of 45.95%
Market growth 2024-2028
USD 25199.01 million
Market structure
Fragmented
YoY growth 2022-2023 (%)
41.74
Regional analysis
North America, APAC, Europe, Middle East and Africa, and South America
Performing market contribution
North America at 34%
Key countries
US, China, Japan, Germany, and UK
Key companies profiled
Alphabet Inc., Apple Inc., ASUSTeK Computer Inc., ByteDance Ltd., FOVE Inc., Goertek Inc., HP Inc., HTC Corp., LG Electronics Inc., Meta Platforms Inc., Microsoft Corp., NOLO Co. Ltd., Pimax Inc., Samsung Electronics Co. Ltd., Seiko Epson Corp., Sony Group Corp., Valve Corp., Varjo Technologies Oy, WorldViz Inc., and Xiaomi Communications Co. Ltd.
Market Driver
The Virtual Reality market is experiencing significant growth with various companies leading the way. Google Cardboard and Move Motion Controller offer affordable, non-immersive VR experiences. PlayStation Headset, Quest, Microsoft HoloLens, and others provide semi- to fully immersive experiences. Virtual training and designing applications are trending in commercial industries, healthcare, and military sectors. Virtual Reality headsets, also known as Head-Mounted Displays (HMD), include devices from Oculus Rift, PlayStation VR, HTC Vive, and new entrants like Pico and Meta. Health concerns such as dizziness, lethargy, and eyesight/hearing issues are being addressed through advancements in software, hardware, and content. VR simulators and glasses are transforming industries like healthcare, with applications in medical training, patient care systems, and planned surgeries using companies like VirtaMed. The Virtual Reality market also caters to entertainment, with live events like Foo Fighters’ Meta virtual stage, and devices like Oculus Rift and PlayStation VR. The market is driven by large technology companies and start-ups, offering a range of devices from compact, high-resolution HMDs to head-up displays and VR projectors. The adoption of VR is expanding beyond gaming into retail sectors, military training, and even commercial real estate. With advancements in sensors, processors, and AR devices, the future of Virtual Reality is promising.
The Virtual Reality (VR) and Augmented Reality (AR) markets are experiencing significant growth due to the integration of these technologies. AR overlays digital content onto the physical world, enhancing user experiences. In the gaming industry, major players like Microsoft with HoloLens 2, are combining AR and VR for holographic games. Outside of gaming, businesses use AR/VR for training, simulations, and collaboration. Companies such as Oculus and HTC produce VR headsets with AR capabilities for enterprise applications. This technology revolution is transforming industries by providing interactive and engaging solutions.
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Market Challenges
The Virtual Reality (VR) headset market is experiencing significant growth with major players like Google Cardboard, Move Motion Controller, PlayStation Headset, Oculus Quest, Microsoft HoloLens, and others leading the way. Virtual training and designing are key industries adopting VR technology for assistance and simulation events. Commercial industries, healthcare, and military are also exploring VR for patient care systems, medical training with companies like VirtaMed, and planned surgeries. Challenges include health concerns such as dizziness, lethargy, and eyesight or hearing issues. Hardware and software development, content creation, and VR simulators are crucial for VR headsets like Pico, Meta, and VR glasses (Head Mounted Displays). The VR market includes devices like Oculus Rift, PlayStation VR, and HTC Vive, as well as non-immersive and semi-immersive devices. Large technology companies and start-ups are investing in VR devices, head-up displays, VR projectors, and compact devices with high-resolution displays. VR adoption is expanding in sectors like retail, gaming, computer hardware, and live virtual entertainment, with events featuring artists like Foo Fighters on Meta’s virtual stage. However, challenges remain in addressing VR sickness, neck pain, and low resolution.Virtual Reality (VR) headsets offer an experience, but their long-term use comes with health risks. One such risk is motion sickness or virtual reality sickness, which occurs when there’s a discrepancy between the user’s perceived motion and actual motion. This can lead to symptoms like nausea, vertigo, and pain, making VR technology less accessible. Additionally, prolonged usage can cause visual fatigue and eye strain due to the intense focus required in virtual environments. Manufacturers are working to address these issues by creating more comfortable headsets and reducing motion sickness symptoms to expand the user base.
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Segment Overview
This virtual reality vr headset market report extensively covers market segmentation by
Application1.1 Commercial1.2 IndividualType2.1 Mid-range device2.2 Low-end device2.3 High-end deviceGeography3.1 North America3.2 APAC3.3 Europe3.4 Middle East and Africa3.5 South America
1.1 Commercial- The commercial segment holds a substantial share in the global virtual reality (VR) headset market. Businesses utilize VR technology in various ways to enhance training, experiences, and productivity. Applications span across industries, including education, entertainment, and enterprise solutions. VR headsets are increasingly adopted for corporate training and simulation, enabling staff to practice skills in a risk-free virtual environment, thereby reducing training costs. Architectural and design firms also leverage VR for three-dimensional concept visualization and collaboration, fostering creativity and teamwork. Leading VR market players, like HTC Vive, Pico Interactive, and Meta-owned Oculus, cater to commercial needs with customized solutions. The demand for corporate VR headsets is projected to expand significantly, transforming collaboration and training methods in numerous industries. In addition, VR has revolutionized entertainment, with applications extending from gaming to virtual tourism to live events. Gaming experiences have fueled commercial VR adoption, attracting a dedicated user base. VR extends the reach of live events by providing spectators a front-row seat from home, such as concerts and sports. These factors contribute to the growth of the global VR headset market in the forecast period.
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Research Analysis
Virtual Reality (VR) headsets have revolutionized the way we experience technology. These devices transport users into a 3D world, providing an unparalleled level of engagement. Notable VR headsets include Google Cardboard, PlayStation Headset, Quest, HoloLens, Pico, and Meta Quest. The VR market is expanding rapidly, with healthcare, military, and consumer sectors leading the adoption. In healthcare, VR is used for surgeon training, while the military employs it for simulation-based training. Retail sectors also leverage VR for virtual try-ons. Sensors and processors are crucial components, enhancing the user experience. Virtual reality technology continues to evolve, with companies investing heavily to push the boundaries of this exciting technology. The Apple Vision Pro and Meta Quest Pro are upcoming releases that promise to further advance the VR experience.
Market Research Overview
The Virtual Reality (VR) market is experiencing rapid growth with various types of VR headsets available, including Google Cardboard, Move Motion Controller, and standalone devices like Quest. VR technology is revolutionizing industries, from healthcare to commercial sectors, with applications in virtual training, designing, assistance, simulation events, and more. In healthcare, VR is used for planning surgeries, healthcare provisions, patient care systems, and medical training through companies like VirtaMed. The VR market also caters to live virtual entertainment, with events featuring artists like Foo Fighters and Meta virtual stages. VR headsets, also known as Head Mounted Displays (HMDs), come in various forms, from non-immersive to fully immersive, and include devices from Oculus Rift, PlayStation VR, HTC Vive, and Pico. The market also includes compact devices, high-resolution displays, and sensors, processors, and software for VR simulators and glasses. However, health concerns such as dizziness, lethargy, eyesight issues, and hearing issues are potential challenges. The VR market is not limited to large technology companies but also includes start-ups and innovations in AR devices, head-up displays, and VR projectors. The consumer market, retail sectors, military, and gaming industries are also adopting VR technology.
Table of Contents:
1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation
ApplicationCommercialIndividualTypeMid-range DeviceLow-end DeviceHigh-end DeviceGeographyNorth AmericaAPACEuropeMiddle East And AfricaSouth America
7 Customer Landscape
8 Geographic Landscape
9 Drivers, Challenges, and Trends
10 Company Landscape
11 Company Analysis
12 Appendix
About Technavio
Technavio is a leading global technology research and advisory company. Their research and analysis focuses on emerging market trends and provides actionable insights to help businesses identify market opportunities and develop effective strategies to optimize their market positions.
With over 500 specialized analysts, Technavio’s report library consists of more than 17,000 reports and counting, covering 800 technologies, spanning across 50 countries. Their client base consists of enterprises of all sizes, including more than 100 Fortune 500 companies. This growing client base relies on Technavio’s comprehensive coverage, extensive research, and actionable market insights to identify opportunities in existing and potential markets and assess their competitive positions within changing market scenarios.
Contacts
Technavio Research
Jesse Maida
Media & Marketing Executive
US: +1 844 364 1100
UK: +44 203 893 3200
Email: media@technavio.com
Website: www.technavio.com/
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SOURCE Technavio
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