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Altice USA, Inc. (ATUS)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue was $2.24B (-2.9% YoY); Adjusted EBITDA $0.84B (-7.3% YoY; 37.5% margin); diluted EPS was -$0.12; Free Cash Flow was $49.9M. Management highlighted record fiber and mobile performance and maintained positive FCF despite higher cash interest .
  • Operational highlights: record fiber net adds (+57k in Q4; +197k FY; 538k total fiber customers; 18.2% fiber penetration) and best mobile net adds in 5 years (+40k in Q4; 460k lines), while video attachment inflected to ~20% on new packages and programming inflation per sub improved to ~4% .
  • 2025 plan: capex targeted at ~$1.3B; initiatives to stabilize Adjusted EBITDA, expand multi‑gig (path to 65% coverage by 2028), and leverage AI/digital/self‑service to reduce operating costs 4–6% by end of 2026 .
  • Potential stock reaction catalysts: evidence of broadband stabilization in East footprint, sustained mobile momentum, Lightpath hyperscaler wins ($110M awards; ~$1B pipeline), and execution on capex discipline amid a 2027 maturity runway .

What Went Well and What Went Wrong

What Went Well

  • Record fiber net additions and penetration: “Q4 marked our best ever quarter for fiber net additions of 57,000 … we surpassed the milestone of 500,000 fiber customers, ending the year with 538,000 … over 18% penetration of our fiber network.” .
  • Mobile momentum: +40k lines in Q4 (best in 5 years); +137k FY; convergence penetration reached 5.7% of broadband base, supporting ARPU stability narrative through value‑added services and bundles .
  • Video strategy execution: new Entertainment/Extra/Everything TV packages lifted video gross add attachment to ~20% (up >200 bps QoQ) and reduced programming inflation per subscriber to ~4% (vs 6–8% prior years) .

What Went Wrong

  • Broadband subscriber losses continued: -39k in Q4 (vs -27k in Q4’23); -170k FY, driven by low switching activity, heightened competition (fiber overbuilds, fixed wireless), and pressures in income‑constrained segments (plus storm impacts) .
  • Profitability pressure: Adjusted EBITDA fell 7.3% YoY (Q4 margin 37.5%), with management citing onetime storm credits/repair costs and transformation expenses; normalized Adjusted EBITDA down ~5% in Q4 .
  • Residential revenue/ARPU softness: Residential revenue declined -5.6% YoY in Q4 and ARPU fell to $133.95 (-1.5% YoY), reflecting credits (e.g., Hurricane Helene) and macro/competitive pressures despite stabilization efforts .

Financial Results

Key Financials by Quarter

MetricQ2 2024Q3 2024Q4 2024
Total Revenue ($USD Millions)$2,240.8 $2,227.7 $2,235.0
Adjusted EBITDA ($USD Millions)$867.2 $862.0 $837.5
Adjusted EBITDA Margin (%)38.7% 38.7% 37.5%
Net Income (Loss) to ATUS Stockholders ($USD Millions)$15.4 $(43.0) $(54.1)
Diluted EPS ($USD)$0.03 $(0.09) $(0.12)
Net Cash from Operating Activities ($USD Millions)$306.8 $436.0 $439.9
Cash CapEx ($USD Millions)$347.7 $359.2 $390.0
Free Cash Flow ($USD Millions)$(40.9) $76.9 $49.9
Residential ARPU ($)$135.95 $135.77 $133.95

Segment Revenue ($USD Millions)

SegmentQ2 2024Q3 2024Q4 2024
Broadband$914.99 $913.42 $900.06
Video$739.45 $715.12 $686.44
Telephony$71.70 $69.88 $65.39
Mobile$27.48 $30.56 $34.15
Residential Revenue$1,753.62 $1,728.97 $1,686.05
Business Services & Wholesale$369.29 $366.36 $371.26
News & Advertising$105.28 $117.68 $157.49
Other$12.57 $14.69 $20.24
Total Revenue$2,240.76 $2,227.70 $2,235.03

KPIs

KPIQ2 2024Q3 2024Q4 2024
Broadband Net Adds (k)-51.0 -49.2 -37.7
Mobile Line Net Adds (k)+33.0 +35.5 +39.5
FTTH Total Customer Net Adds (k)+39.5 +47.4 +56.6
Residential ARPU ($)$135.95 $135.77 $133.95
Video Gross Add Attachment Rate (%)N/AN/A~20%
FTTH Passings Additions (k)+62.0 +51.7 +68.1

Results vs Estimates (Wall Street Consensus)

MetricActual Q4 2024Consensus Q4 2024
Revenue ($USD Millions)$2,235.0 N/A – SPGI consensus unavailable
Diluted EPS ($USD)$(0.12) N/A – SPGI consensus unavailable

Note: We attempted to retrieve S&P Global consensus estimates but they were unavailable at this time due to a daily request limit. Values would be anchored to S&P Global if accessible.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Cash CapEx ($USD Billions)FY 2025“Under $1.3” FY25 target (Q3 PR) “~$1.3” FY25 target (Q4 call) Maintained
Adjusted EBITDA TrajectoryFY 2025Path to normalized ~40% margin by 2026 (framework) EBITDA stabilization expected in 2025 (trajectory) Qualitative update (maintained medium‑term)
Gross Margin TargetBy 2026~70% target by YE 2026 Reaffirmed ~70% by 2026 Maintained
Other Operating Expense ImprovementBy 2026Improve OOE by 4–6% by YE 2026 Identified efficiencies; moderate OOE by 4–6% by end of 2026 Maintained
New Passings AdditionsFY 2025N/A specific prior FY25 number“>175k” new passings expected New detail
Multi‑Gig AvailabilityBy 2028Path to ~65% multi‑gig enabled Reaffirmed path to ~65% by YE 2028 Maintained

Earnings Call Themes & Trends

TopicQ2 2024 (Prior‑2)Q3 2024 (Prior‑1)Q4 2024 (Current)Trend
AI/technology initiativesBegan leveraging digital/self‑service tools, speed rightsizing; network awards (PCMag/Ookla) Transformation plan unveiled; focus on efficiency and product evolution AI/digital/self‑service to reduce costs 4–6% by 2026; value‑added services roadmap; Lightpath AI pipeline ~$1B Expanding scope and quantification
Macro/housing & demandOperational improvements; ARPU stabilization efforts Low switching activity; competitive pressures noted Lowest home sales in ~30 years dampening gross adds; hurricane impacts; income‑constrained pressure Macro headwinds intensified
Product performance (Fiber/Mobile)Fiber +40k adds; mobile +33k adds Fiber +47k adds; mobile +36k adds Record fiber +57k; mobile +40k; convergence penetration up Accelerating
Regional trends (East vs West)Not emphasizedGo‑to‑market evolution; video packages East: improved churn and Q4 performance; West: more overbuild and fixed wireless, hyper‑local pricing pilots with positive results Divergence persisting; tactical response scaling
Video strategy & economicsLaunched Entertainment TV; evolving video model Introduced new packages; optimizing programming Attachment inflects to ~20%; programming inflation ~4%; ARPU up YoY in video; MSG drop addressed via customer‑centric packaging Improving attach/margins
Capital & leverageWACD ~6.5%; leverage ~7.2x L2QA WACD 6.8%; leverage ~7.1x L2QA WACD 6.7%; leverage ~7.3x L2QA; ~$1B liquidity; maturities start 2027 Stable near term; focus on optionality
Regulatory/ACP & low‑incomeACP sunset impact flagged on low‑income segment Continued income‑constrained pressure Launching new low‑income program (pricing, flexibility, mobile offers) Addressing segment with targeted offers

Management Commentary

  • “2024 was a transformative year for Optimum … We delivered record fourth quarter and full‑year fiber and mobile performance, improved operational efficiency, and maintained positive Free Cash Flow despite a challenging macro and competitive environment.” — Dennis Mathew, CEO .
  • “Our approach to rate actions, base management and acquisition pricing … is expected to deliver up to an incremental $100 million in revenue in '25.” — Dennis Mathew (pricing/VA services roadmap) .
  • “Gross margin of 67.7% grew ~50 bps YoY … targeting 70% gross margins by 2026 … normalized adjusted EBITDA margins would have been 38.7%.” — Marc Sirota, CFO .
  • “Lightpath’s best performance … $414M revenue (+5.5% YoY) … $110M hyperscaler contract value … AI‑related connectivity pipeline nearly $1B.” — Marc Sirota .
  • “We remain well positioned with no maturities until 2027 … WACD 6.7% … liquidity of ~ $1B … leverage 7.3x L2QA.” — Marc Sirota .

Q&A Highlights

  • Regional competition: East improving (lower churn, better Q4), West challenged by overbuilders and fixed wireless; hyper‑local pilots delivered ~20% improvements in sales/installs; scaling tactical playbooks .
  • Profitability trajectory: Q4 EBITDA had onetime storm/transformational costs; normalized decline ~5% in Q4; management expects EBITDA stabilization in 2025 .
  • Balance sheet optionality: Exploring all options to address 2027 maturities; no intent to monetize Lightpath currently; focus on growth and strategic value .
  • Capex outlook: FY25 capex targeted at $1.3B; mid‑split upgrades ($100+/passing) and fiber new builds (~$800–900/passing) to drive multi‑gig efficiently .
  • Video churn/MSNBC/MSG topic: Company repositioning video with customer‑centric packages; saving customers ~$25/month on average; attachment improving despite package rationalization .

Estimates Context

  • We attempted to retrieve S&P Global consensus for Q4 2024 revenue, EPS, and EBITDA, but estimates were unavailable due to a daily request limit. As a result, beats/misses vs consensus cannot be assessed at this time. We would anchor comparisons to S&P Global once accessible.

Key Takeaways for Investors

  • Fiber and mobile execution are clear bright spots; watch for continued fiber migrations, rising penetration, and mobile convergence to support ARPU stabilization and churn improvement, especially in the East .
  • Hyper‑local pricing/offer segmentation appears to be working in the West against overbuilders; scaling these tactics is a near‑term lever to stabilize broadband net adds .
  • Video economics improving: attachment inflecting and programming inflation moderating; this supports gross margin trajectory toward ~70% by 2026 and medium‑term EBITDA recovery .
  • Capex discipline (~$1.3B FY25) with efficient mid‑split upgrades should preserve FCF while enabling multi‑gig expansion; monitor execution vs >175k passings target .
  • Balance sheet is manageable near term (no maturities until 2027; WACD 6.7%; ~ $1B liquidity), but deleveraging plans and any capital structure actions are key medium‑term catalysts .
  • Lightpath is a strategic asset with hyperscaler traction and an AI‑driven pipeline; continued bookings and success‑based capital could be an upside contributor .
  • Trading setup: near term, shares likely react to signs of broadband stabilization (especially East) and sustained mobile momentum; medium term, progress toward EBITDA stabilization, margin targets, and capital structure clarity could drive re‑rating.