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Altice USA, Inc. (ATUS)·Q1 2025 Earnings Summary

Executive Summary

  • Altice USA delivered Q1 2025 revenue of $2.15B (-4.4% YoY) and Adjusted EBITDA of $799M (-5.6% YoY), with diluted EPS of -$0.16; management highlighted record fiber (+69k net adds) and mobile (+49k lines) growth and churn at a three-year low .
  • Versus S&P Global consensus, Q1 revenue modestly missed ($2.152B vs $2.157B*), Adjusted EBITDA missed ($799M vs $811M*), and EPS missed (-$0.16 vs -$0.076*); reported EBITDA margin was 37.1% .
  • FY25 guidance introduced: revenue $8.6–$8.7B, Adjusted EBITDA ≈$3.4B, total direct costs ≈$2.6B, other operating expense ≈$2.6B, cash capex ≈$1.2B; capex guide is below the prior “< $1.3B” framework from Q3/Q4 2024 .
  • Key catalysts: AI/digital operating transformation (expanded Google Cloud partnership), programming negotiation flexibility, hyper-local pricing, and Lightpath expansion into AI-grade fiber markets (Phoenix, Columbus) supporting B2B growth and potential margin tailwinds .

What Went Well and What Went Wrong

What Went Well

  • Record fiber net additions (+69k), reaching 607k fiber customers and 20.3% network penetration; mobile net adds (+49k) pushed lines to 509k; churn reached a three-year low .
  • Gross margin expanded to 68.8% (approx. 68.2% ex nonrecurring items) driven by programming savings and mix shift away from video; Adjusted EBITDA margin 37.1% despite revenue decline .
  • Management emphasized digital and AI tools embedded across operations (AVA resolving >50% inquiries) and announced an expanded partnership with Google Cloud, aiming to improve customer service and workforce efficiencies: “Optimum will use Google Cloud’s generative AI… to improve customer service…” .

What Went Wrong

  • Residential ARPU declined to $133.93 (-1.3% YoY), residential revenue fell to $1.67B (-5.7% YoY), and broadband PSUs fell (-36.6k), reflecting competitive intensity and programming credits .
  • Free Cash Flow was a deficit of -$168.6M, pressured by elevated cash interest ($547M) including timing effects (semiannual bonds, synthetic LIBOR contract) and capex; operating cash flow fell to $187.5M vs $399.7M in Q1 2024 .
  • GAAP net loss widened to -$75.7M vs -$21.2M in Q1 2024 on lower revenue and interest expense; EPS missed consensus, highlighting the need to stabilize broadband trends and ARPU .

Financial Results

MetricQ1 2024Q4 2024Q1 2025
Total Revenue ($USD Billions)$2.251 $2.235 $2.152
Net Loss ($USD Millions)-$12.9 -$46.2 -$71.3
Diluted EPS ($USD)-$0.05 -$0.12 -$0.16
Adjusted EBITDA ($USD Millions)$846.6 $837.5 $799.0
Adjusted EBITDA Margin (%)37.6% 37.5% 37.1%
Segment Revenue ($USD Millions)Q1 2024Q4 2024Q1 2025
Residential$1,768.4 $1,686.0 $1,668.2
Business Services & Wholesale$364.9 $371.3 $363.5
News & Advertising$105.7 $157.5 $102.4
Other$11.9 $20.2 $18.1
Total$2,250.9 $2,235.0 $2,152.3
KPIsQ1 2024Q4 2024Q1 2025
Residential ARPU ($)135.67 133.95 133.93
Broadband ARPU ($)——75.31
Broadband PSUs (mm)4.140 4.000 3.963
Broadband Net Adds (k)-29.4 -37.7 -36.6
Video PSUs (mm)2.095 1.880 1.792
Video Net Adds (k)-77.7 -64.3 -87.7
Mobile Ending Lines (k)352 460 509
Mobile Net Adds (k)29.3 39.5 49.0
FTTH Customers (k total relationships)395 538 607
FTTH Net Adds (k total relationships)53.2 56.6 68.5
FTTH Penetration (%)14.2 18.2 20.3
Estimates vs Actuals (Q1 2025)ActualS&P Global Consensus*Surprise
Revenue ($USD Billions)$2.152 $2.157*Miss
Adjusted EBITDA ($USD Millions)$799.0 $810.8*Miss
Diluted EPS ($USD)-$0.16 -$0.0759*Miss

Values retrieved from S&P Global.*

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY 2025Not provided $8.6–$8.7B Introduced
Programming & Other Direct CostsFY 2025Not provided ≈$2.6B Introduced
Other Operating ExpenseFY 2025Slight moderation vs FY24 implied ≈$2.6B Clarified
Adjusted EBITDAFY 2025Not provided (long-term margin targets only) ≈$3.4B Introduced
Cash Capital ExpendituresFY 2025Under $1.3B (framework) ≈$1.2B Lowered

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024 and Q4 2024)Current Period (Q1 2025)Trend
AI/Digital transformationFocus on AI tools, network monitoring, and operational efficiencies Expanded Google Cloud partnership; AVA resolving >50% inquiries; embedding AI across ops Accelerating
Programming negotiationsEvolving video packages; margin optimization Two temporary non-carriage events; 99.8% retention; cost savings; customer-first approach More flexible, data-driven
Hyper-local pricing/low-income offersStreamlined pricing; rate discipline Launch of everyday low-price offer; targeted hyper-local playbook with 10%+ revenue lift in markets Scaling
Fiber rollout/penetration3.0m passings YE’24; penetration 18.2% 3.0m passings; penetration 20.3%; +69k net adds; targeting 30% by YE’26 Improving
Mobile convergenceLines +137k in FY24; 5.7% base converged +49k lines; ~6.3% base converged Improving
B2B/Lightpath & hyperscalersUFD acquisition; ~$1B AI pipeline; +5.5% FY24 revenue Phoenix and Columbus AI-grade networks; $110M AI bookings in 2024 Expanding
Regional competition (East vs West)Elevated competition; fixed wireless impacts East improved; West challenged by overbuilders; hyper-local playbook to mitigate Mixed, improving East
Capital structure/debtWACD ~6.7%; leverage ~7.3x (Q4) WACD 6.8%; leverage 7.6x L2QA; no maturities until 2027; asset sales to boost flexibility Stable, proactive

Management Commentary

  • CEO: “We achieved record customer growth in our fiber and mobile businesses… transforming our operations to drive efficiency, leading to our lowest churn levels in three years… we expect to deliver approximately $3.4bn of Adjusted EBITDA in Full Year 2025” .
  • CFO: “We expect full year adjusted EBITDA of approximately $3.4 billion in 2025 and full year revenue between $8.6 billion and $8.7 billion… programming costs moderating by 12% YoY in Q1; other operating expense ≈$2.6B in FY25; capex ≈$1.2B” .
  • On AI/digital: “Optimum will use Google Cloud’s generative AI… to improve customer service… and unlock meaningful workforce efficiencies” .

Q&A Highlights

  • Competitive dynamics: Management sees intense competition from telco fiber and fixed wireless (particularly West); hyper-local, income-constrained offers and MDU strategy are key to improving gross adds; churn improved 90bps YoY .
  • Low-income product rollout: Phased expansion to 0.5M homes; disciplined gating to limit cannibalization; device insurance penetration already at ~10% of mobile base .
  • Capital structure: Negotiations with the co-op concluded without a deal; runway viewed as solid with maturities starting 2027; exploring options to manage debt portfolio .
  • Pricing strategy: Greater “science” in pricing via AI and localized tactics; 60% of new customers on 1Gb+ tiers supports ARPU quality and VAS attachment .

Estimates Context

  • Q1 2025 came in below consensus on revenue ($2.152B vs $2.157B*), Adjusted EBITDA ($799M vs $811M*), and EPS (-$0.16 vs -$0.076*), driven by revenue credits and timing-related costs from programming interruptions, alongside competition effects .
  • Given FY25 guidance (EBITDA ≈$3.4B; capex ≈$1.2B), estimate models may need to reflect sustained programming savings, scaling VAS/mobile convergence, and disciplined opex, while embedding ongoing competitive and macro pressures in residential trends .

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Near-term: Print was modestly below consensus on revenue/EBITDA/EPS; stock reaction likely hinges on confidence in FY25 EBITDA trajectory and evidence that hyper-local pricing and low-income offers improve gross adds without ARPU erosion .
  • Medium-term margin story: Programming savings, mix shift away from video, and scaling VAS/mobile converge support gross margin expansion toward the 70% longer-term target by YE’26 .
  • Fiber/mobile growth engines: Record fiber and mobile net adds, higher 1Gb+ tier mix, and convergence momentum provide a path to stabilizing top line despite competitive headwinds .
  • Capex discipline: FY25 capex guide ($1.2B) below prior <$1.3B framework; network upgrades continue (mid-split, fiber builds), supporting ROI focus and liquidity preservation .
  • Balance sheet: No maturities until 2027; WACD 6.8%, leverage 7.6x L2QA; asset sales (towers, i24NEWS) and Lightpath growth provide flexibility, but cash interest remains a drag on FCF normalization near term .
  • B2B tailwinds: Lightpath’s AI-grade network builds (Phoenix, Columbus) and ~$110M AI bookings with ~$1B pipeline underscore potential growth in enterprise connectivity .
  • Watch KPIs: Broadband ARPU, churn, gross add ARPU, VAS/mobile attachment, and regional East/West trends as leading indicators of stabilization .