AU
Altice USA, Inc. (ATUS)·Q2 2025 Earnings Summary
Executive Summary
- Q2 2025 revenue was $2.15B, down 4.2% YoY and roughly flat QoQ; Adjusted EBITDA was $803.8M with margin 37.4% (down 130 bps YoY, up 30 bps QoQ) .
- EPS materially missed Street: GAAP diluted EPS was $(0.21) vs S&P Global consensus of $(0.016); revenue was modestly below consensus ($2.147B actual vs $2.152B estimate) *.
- Operational trends improved: broadband net losses decreased to -35k (vs -51k YoY and -37k QoQ), mobile lines +37.8k, fiber customers +56.3k, and video losses improved to -56.1k (best PSU trend in 10 quarters) .
- Guidance reaffirmed: management reconfirmed the Q1 outlook including FY 2025 Adjusted EBITDA ≈$3.4B, cash capex ≈$1.2B, and cost trajectory moderation in 2H with biggest step-up in Q4 .
- Capital structure catalyst: closed a landmark $1.0B asset‑backed loan secured primarily by HFC assets (8.875% fixed coupon, Jan‑2031 maturity), improving pricing vs last high‑yield issuance and creating a scalable perimeter for future debt solutions .
What Went Well and What Went Wrong
What Went Well
- Broadband stabilization: net losses improved to -35k (YoY -16k, -31%) with lowest Q2 churn in 3 years; East saw best net add trend in 10 quarters and improved win share vs ILECs/FWA .
- Product and ARPU quality: broadband ARPU rose 0.9% YoY to $74.77; value‑added services scaling (Total Care 90k, Whole Home WiFi 31k) support stickier customers and ARPU accretion over time .
- Video margin expansion and PSU improvement: video gross margin expanded >300 bps YoY; new tiers penetration reached 10% and net losses improved to -56.1k (best in ten quarters) .
What Went Wrong
- EPS miss and revenue decline: diluted EPS was $(0.21) and total revenue declined 4.2% YoY, with video cord‑cutting driving ~85% of the revenue decline .
- Higher other operating expenses: up ~4% YoY driven by ~$13M consulting/professional fees tied to transformation, increased sales/marketing and ~$12M higher employee health/wellness costs (expected to moderate in 2H) .
- Residential ARPU pressure: declined 1.7% YoY to $133.68 with video contributing a $3.74 YoY decline, despite higher video rate, due to lower video penetration .
Financial Results
Consolidated Financials (Actuals)
Revenue by Category (Quarterly)
Key KPIs
Actual vs S&P Global Consensus (Quarterly)
Values retrieved from S&P Global.*
Guidance Changes
Earnings Call Themes & Trends
Management Commentary
- “Our second quarter results reflect continued momentum… We delivered sequential and year over year improvement in broadband subscriber trends and grew broadband ARPU year over year…” — Dennis Mathew, CEO .
- “These priorities are enabling us to… drive toward approximately $3.4 billion of adjusted EBITDA in full year 2025.” — Dennis Mathew .
- “Gross margin expanded by 120 bps to 69.1%, reaching our highest level in recent history, driven by a continued shift in product mix towards broadband and our focus on optimizing video margins.” — Marc Sirota, CFO .
- “We are reconfirming our outlook… most improvement will step up in the fourth quarter.” — Marc Sirota .
- “This first‑of‑its‑kind securitized transaction… provides an opportunity to unlock leverage value in our HFC assets.” — Marc Sirota (capital structure) .
Q&A Highlights
- Mobile strategy: Management emphasized higher‑quality gross adds (ports 57%, device financing 31%, unlimited 74%), improved churn (-600 bps YoY), and a path to 1M lines by 2027; satisfied with MVNO partner (T‑Mobile) .
- Competitive posture: Hyper‑local and income‑constrained strategies delivering 10–13% lifts; improved win share vs fiber overbuilders and mature telcos; willingness to invest surgically in marketing with AI‑enabled efficiency .
- Capital structure / maturities: New ABS structure diversifies funding, improves pricing vs last HY issuance, adds capacity; management will explore options to address 2027–2028 maturities and target 4.5–5.0x sustainable leverage over time .
- Broadband trajectory & ARPU: Stabilization amid macro headwinds (low moves, housing formation); ARPU supported by new add‑ons (Total Care, Whole Home WiFi, B2B services) and disciplined offer management .
- FY 2025 trajectory: Reaffirmed revenue/direct cost/OpEx outlook; sequential EBITDA improvement expected, with largest impact in Q4 from workforce actions and lower third‑party transformation costs .
Estimates Context
- Q2 2025 revenue modestly missed consensus: $2,147.2M actual vs $2,152.7M estimate* .
- Q2 2025 EPS materially missed: $(0.21) actual vs $(0.0157) estimate*; Q1 2025 also missed (actual $(0.16) vs $(0.0759) estimate*) *.
- Prior quarter revenue was slightly below estimates (Q1 2025 actual $2,152.3M vs $2,156.8M estimate*), while Q4 2024 was just below ($2,235.0M actual vs $2,239.7M estimate*) *.
Values retrieved from S&P Global.*
Guidance Changes
Financial Call Themes & Trends
Management Commentary
- “We remain focused on capturing new growth opportunities… improve broadband subscriber trends… broadband ARPU increased 0.9% YoY.” — Dennis Mathew .
- “Adjusted EBITDA margin of 37.4%… slightly sequentially higher; other operating expenses increased ~4% YoY… expected to moderate in the second half.” — Marc Sirota .
- “Liquidity ≈$1.5B; leverage 7.8x L2QA… weighted average cost of debt 6.9% (pro forma ABS).” — Marc Sirota .
- “We estimate $250–$350M of tax savings over 2025–2027; 2025 cash tax under $200M.” — Marc Sirota .
Q&A Highlights
- Mobile runway and MVNO: Penetration ~7% with path to 1M lines by 2027; management “very happy” with T‑Mobile MVNO; expanding sales channels within care/retention .
- Competitive dynamics: Hyper‑local deployment (~600k homes) driving 13% connect lift and 20–40% win‑share improvements; balancing rate/volume in income‑constrained markets .
- Debt maturities wall: ABS structure adds flexibility; company evaluating timing and conditions to term out 2027 maturities; sustained leverage target 4.5–5.0x .
- ARPU and product add‑ons: ARPU supported by Total Care ($15–$30 tiers), Whole Home WiFi ($10), and SMB services; tighter control of offer/pricing and promo rolls in 2H .
Estimates Context
- Q2 2025: revenue slight miss; EPS significant miss versus S&P Global consensus; Q1 2025 also modest revenue miss and EPS miss* *.
- Given reaffirmed FY guide and expected Q4 step‑up in EBITDA, Street models may need to shift mix toward 2H cost moderation and News/Advertising/Lightpath contributions .
Values retrieved from S&P Global.*
Key Takeaways for Investors
- EPS miss versus consensus and continued revenue pressure from video cord‑cutting are near‑term negatives; however, KPIs (broadband churn, mobile/fiber net adds, video margins) show tangible operational momentum .
- Reaffirmed FY 2025 Adjusted EBITDA ≈$3.4B and capex ≈$1.2B, with biggest EBITDA improvement in Q4, points to back‑half execution and potential beat‑and‑raise risk if cost moderation exceeds plan .
- The $1.0B ABS loan improves pricing vs last HY notes and creates a scalable financing perimeter, offering optionality to address 2027–2028 maturities — a medium‑term de‑risking catalyst .
- Product attach strategies (Total Care, Whole Home WiFi, OTT bundles) and hyper‑local GTM are improving win share and ARPU quality; watch for sustained broadband stabilization and further mobile conversion .
- News & Advertising growth (+12.8% YoY in Q2) and Lightpath hyperscaler pipeline augment diversified revenue avenues amid residential softness .
- External legal investigation headlines (not company‑issued) present a potential sentiment overhang; monitor for any formal proceedings or company responses .
- Trading lens: near‑term sentiment may hinge on EPS miss magnitude and Street skepticism about 2H step‑up; upside skew if cost moderation and ABS‑enabled flexibility are validated on Q3/Q4 prints .