Cable One, Inc. (CABO)·Q1 2025 Earnings Summary

Executive Summary

• Q1 2025 revenue declined 5.9% year over year to $380.6M; GAAP diluted EPS fell to $0.46 as equity method losses (including a non-cash impairment at an investee) drove net income down 93% to $2.6M; Adjusted EBITDA decreased 6.6% to $202.7M with a 53.3% margin .
• Management suspended the quarterly cash dividend to prioritize accelerated debt repayment and organic growth; this frees ~$67M per year and >$200M over three years for deleveraging and growth initiatives—a key stock narrative change .
• Residential data—core to the thesis—declined: subscribers and ARPU fell, while business data grew 1.2% YoY; management outlined new “FlexConnect” and “Internet Lift” products and AI-driven retention as levers to return to residential broadband revenue growth in 2025 .
• Capex outlook shifted higher versus Q4 remarks: management now plans “low 300s” for FY25 capex (vs “low 200s” indicated in Q4), supporting growth and systems work; weighted average cost of debt was 3.9% and revolver availability was $977M as of 3/31/25 .
• Near-term stock catalysts: dividend suspension (capital allocation reset), capex guide change, clarity on broadband growth path (FlexConnect/Lift ramp), and expected monetization proceeds from unconsolidated investments to fund deleveraging .

What Went Well and What Went Wrong

What Went Well

• Business data revenue grew 1.2% YoY, with carrier and enterprise fiber showing durable growth and new multi‑million‑dollar long-term contracts; average carrier contract term ~5 years .
• Margin discipline: Adjusted EBITDA margin held >53% despite revenue declines; operating expenses decreased YoY, aided by lower programming costs; AI-enabled service and retention platforms implemented .
• Capital allocation pivot strengthens balance sheet: dividend suspended to redirect >$200M over three years toward debt repayment and organic investments; additional $10M revolver repayment in April .
• Management quote: “We are executing on a multi-year plan...to build a customer acquisition engine that will drive meaningful growth over the long term.” — CEO Julie Laulis .

What Went Wrong

• Core residential data softness: subscribers and ARPU declined; residential data revenue fell 4.5% YoY; residential video revenue fell 15.8% YoY amid product sunset .
• Equity method drag: equity method investment loss widened to $57.0M; net income collapsed to $2.6M, including a $28.0M non-cash impairment charge at an equity method investee .
• Cash generation down: cash from operations fell 29.4% YoY to $116.3M on unfavorable working capital and lower EBITDA; SG&A rose YoY on stock comp, billing system costs, and insurance .

Financial Results

Headline financials (chronological: Q3’24 → Q4’24 → Q1’25)

Segment revenue mix (quarterly)

KPIs and ARPU (period-end/customer metrics)

Note: “As of” counts are quarter-end; ARPU is quarterly.

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “Although our residential data subscribers decreased during the quarter, we believe we have the right people, platforms and processes in place to build a customer acquisition engine that will drive meaningful growth over the long term.” — CEO Julie Laulis .
• “Carrier sales recently reached their highest monthly levels since 2022, and we secured several new multimillion dollar long-term contracts…” — CFO Todd Koetje .
• “A great example…is our homegrown AI‑driven churn propensity model which rapidly identifies the customers most at risk of leaving.” — CEO Julie Laulis .
• “We have decided to suspend our quarterly cash dividend…allocate towards accelerated debt repayment, refinancing support and ongoing investment in organic growth initiatives.” — CFO Todd Koetje .

Q&A Highlights

• Dividend suspension rationale: no going concern or covenant issues; reallocation to deleveraging and growth; adds ~$120M of incremental debt paydown over two years to already >$300M annual levered FCF .
• Timing of broadband growth: focus on connects; churn reverting to historically low; CEO confident in delivering residential broadband revenue growth in 2025, but avoided a precise month for subscriber inflection .
• Unusual churn/Q1 events: billing migration churn, shutdown of unprofitable acquired FWA towers, and severe weather; management characterized as non‑recurring .
• New products: FlexConnect (value-by-choice vs FWA) with $45 and $75 tiers; Internet Lift (value-by-need) incremental, non‑cannibalizing; broader rollouts planned .
• Competitive overlap: a little over 50% fiber overlap; FWA nearly all markets; churn lowest in most competitive markets; intent to compete head-to-head .

Estimates Context

Q1 2025 vs S&P Global consensus and actuals

Values marked with * retrieved from S&P Global. Company reported GAAP diluted EPS of $0.46; S&P “Primary EPS” is a normalized series and not directly comparable to GAAP diluted EPS .

Implications: Revenue and EBITDA missed consensus, while S&P Primary EPS exceeded; we expect estimate revisions to reduce revenue/EBITDA for Q2 and potentially increase dispersion around EPS normalization given equity-method volatility and non-cash items .

Key Takeaways for Investors

• Capital allocation reset is the near-term narrative: dividend suspension plus deleveraging and potential investee monetizations support balance sheet resilience ahead of 2026 convert/MBI timelines .
• Core growth thesis hinges on improving gross adds: FlexConnect/Lift rollouts, AI-driven retention, and customer acquisition “factory” are central to returning residential broadband revenue growth in 2025 .
• Business services remains a steady ballast with LT contracts; monitor carrier/enterprise bookings momentum and SMB initiatives for incremental upside .
• Watch capex cadence: FY25 capex “low 300s” supports platforms/new builds; expect FCF seasonality near term from higher capex and lower Q1 cash from ops .
• Estimate dispersion likely: revenue/EBITDA misses vs S&P, GAAP EPS suppressed by equity-method losses; investors should track equity-method line and any investee impairments or monetizations for EPS volatility .
• Competitive intensity stabilizing: half+ footprint fiber overbuilt and FWA prevalent, but churn remains low; localized tactics (pricing, bundles, product tiering) should drive selective share defenses and ARPU improvements through roll-offs .

Supporting Detail

Additional Liquidity/Leverage Context

• Cash and cash equivalents: $149.1M (3/31/25); Total debt $3.57B; Revolver availability $977.0M; WACD 3.9% in Q1 .
• Q1 repayments: $40M revolver repaid during quarter; +$10M in April .

Q1 Operating Drivers

• Residential ARPU decrease (−3.1%) tied to promos, pays adoption, and credits for third-party fiber cuts; management expects improvement via higher-tier sell-in, SecurePlus/Ultimate WiFi bundle uptake, and discount roll-offs .
• Unfavorable working capital and lower EBITDA reduced CFO to $116.3M (−29.4% YoY) .
• Capex: $71.1M with heavier CPE and support capital; line extensions solid; integration spend ongoing .

All citations:

• Q1 2025 press release and financials
• Q1 2025 8‑K/Item 2.02 and exhibits
• Q1 2025 earnings call transcript
• Q4 2024 press release
• Q4 2024 earnings call transcript
• Q3 2024 press release
• Dividend declaration (Feb 4, 2025)

S&P Global consensus/actuals used in the Estimates Context table are marked with an asterisk and were retrieved from S&P Global.