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Cable One, Inc. (CABO)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 revenues were $376.0M, down 4.5% YoY, while diluted EPS rose to $14.52 (vs. $7.58 YoY), driven largely by $67M gains on equity investment sales; Adjusted EBITDA was $201.9M with a 53.7% margin .
  • Residential data customers declined by 21,600 amid a churn spike from billing migration touchpoints and elevated promo rolloffs; October showed both higher connects and lower disconnects vs. prior year, suggesting churn normalization .
  • Cable One paid down ~$198M of debt in Q3 (>$313M YTD), ending with $3.3B total debt, $167M cash, and net leverage of 3.9x; target leverage bias is “high-2x to low-3x” with continued deleveraging focus .
  • FY2025 CapEx outlook lowered to “high $200M range” from “~$300M area,” reflecting spend discipline as platform migrations conclude; ARPU is expected to remain stable through year-end .
  • Consensus context: Q3 revenue modest miss (376.0 vs 379.1), EPS a significant beat due to non-operating gains; estimate revisions likely to reflect lower revenue trajectory but stronger GAAP EPS on discrete gains (see Estimates Context; values from S&P Global).*

What Went Well and What Went Wrong

What Went Well

  • Debt reduction and liquidity: ~$198M repaid in Q3 (revolver, senior notes, amortization), $1.195B revolver availability; net leverage 3.9x with CFO prioritizing “disciplined debt repayment” .
  • ARPU resilience and product mix: Residential data ARPU up 3.2% YoY to $82.17; strong sell-in to gig/multi-gig tiers (~50% of new customers), TechAssist adoption exceeding expectations .
  • Operational momentum signs: October was the first month in 17 months with YoY improvement in both connects and disconnects; management sees churn back to pre-migration levels and stable ARPU ahead .

Management quote: “ARPU performance… allowed us to deliver financial results largely consistent with the second quarter… we expect… stable ARPU through the balance of the year” — Julie Laulis .

What Went Wrong

  • Broadband subscriber losses and churn spike: Residential data customers declined by 21,600 in Q3, impacted by billing migration touches (~750k customers), higher promo rolloffs, and competitive pressures (notably FWA) .
  • Elevated SG&A: SG&A rose to $100.8M (26.8% of revenue) on non-cash stock comp, labor, and platform investments; cost savings are expected to materialize more fully in 2026 .
  • Ongoing video attrition: Residential video revenue down 16.2% YoY and video PSUs fell ~20% YoY; management continues converting video to IP and reallocating spectrum to data .

Financial Results

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD Millions)$380.6 $381.1 $376.0
Diluted EPS ($)$0.46 $(77.70) $14.52
Net Profit Margin (%)0.7% (114.9)% 23.0%
Adjusted EBITDA ($USD Millions)$202.7 $203.2 $201.9
Adjusted EBITDA Margin (%)53.3% 53.3% 53.7%
Cash from Operations ($USD Millions)$116.3 $144.9 $156.5
Capital Expenditures ($USD Millions)$71.1 $68.4 $71.8

Segment revenue breakdown

Segment ($USD Thousands)Q1 2025Q2 2025Q3 2025
Residential Data225,121 229,336 227,599
Residential Video50,805 48,158 44,971
Residential Voice7,044 6,733 6,692
Business Data57,293 57,385 57,486
Business Other16,883 16,515 15,117
Other23,455 22,945 24,147
Total Revenues380,601 381,072 376,012

KPIs

KPIQ1 2025Q2 2025Q3 2025
Residential Data ARPU ($)$78.84 $81.23 $82.17
Business Services ARPU ($)$234.48 $234.93 $227.50
Residential Data PSUs (000s)945.0 932.0 910.4
Residential Video PSUs (000s)101.3 96.2 89.6
Total Customers (000s)1,075.1 1,060.5 1,042.3

Actual vs. Wall Street Consensus (S&P Global)

MetricQ1 2025Q2 2025Q3 2025
Revenue Consensus Mean ($USD Millions)*386.6*379.7*379.1*
Revenue Actual ($USD Millions)*380.6*381.1*376.0*
Outcome (Rev)Miss*Beat*Miss*
Primary EPS Consensus Mean ($)*8.00*7.37*7.46*
Primary EPS Actual ($)*12.58*7.73*18.89*
Outcome (EPS)Beat*Beat*Beat*

*Values retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Capital Expenditures ($)FY 2025“~$300M area” “High $200M range” Lowered
Dividend PolicyFY 2025+Quarterly cash dividend paid (pre-Q1 2025) Dividend suspended starting Q1 2025 Lowered
Net Leverage TargetOngoingN/AFocus toward high-2x to low-3x Set Target
ARPU OutlookH2 2025Stability ± ~$1 (prior commentary) Stable through year-end Maintained
Cash TaxesNear termN/A“Minuscule” cash taxes due to recent legislation Favorable
Mobile OfferingQ4 2025Pilot planned (Aug call reference) Launching unlimited plans at $25/line in select markets in Nov Initiated

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3)Trend
Broadband subs & churnQ1: Residential data subs decreased; pricing changes and competitive backdrop . Q2: Sequential connects improving; migration ongoing .Residential data -21,600; churn spike from billing migration, promo rolloffs; October YoY improvement in both connects and disconnects; churn back to pre-migration levels .Improving connects; churn normalizing.
ARPU & pricingQ1 ARPU down on targeted pricing . Q2 ARPU up; stability ±$1 near $81 .ARPU to remain stable through year-end; supported by product mix and promo expirations .Stabilizing.
Competition (FWA, fiber)Risk highlighted in filings .FWA overlap in nearly all markets; AT&T Air rollout accelerating; fiber overlap low-to-mid-50% and stable .FWA intensity rising; fiber steady.
Billing migration & efficienciesQ1 risk disclosure . Q2 platform investments; savings expected over time .Migration touched ~750k customers; churn spike attributable; cost savings to show more fully in 2026 .Migrations winding down; efficiencies to ramp.
Mobile initiativeN/A.Launching unlimited plans at $25/line; pilot-to-learn approach .New growth lever.
Capital allocation & leverageQ1 dividend suspended; $40M revolver repayment . Q2 $70.8M debt reductions .~$198M Q3 debt paydown; net leverage 3.9x; longer-term target high-2x to low-3x .Accelerated deleveraging.
Asset monetizationQ1: $10.7M equity sale proceeds .$124M proceeds from Ziply/Metronet; $67M gains; $42M fiber-to-tower contract rights agreement .Continued monetization.
Video lifecycleDeclines ongoing .Video revenue -16.2% YoY; continued IP conversion strategy .Structural decline continues.

Management Commentary

  • “Residential data customers declined by 21,600 in the third quarter… churn improved in October… we expect… stable ARPU through the balance of the year.” — Julie Laulis .
  • “We plan to launch unlimited [mobile] plans starting at $25 per line in select markets later this month.” — Julie Laulis .
  • “Adjusted EBITDA for Q3 2025 was $201.9 million… CapEx totaled $71.8 million… we now expect full-year CapEx to come in at the high $200 million range.” — Todd Koetje .
  • “We paid down nearly $200 million of debt during the third quarter… net leverage… was 3.9x.” — Todd Koetje .
  • “Philosophical approach… much more in the high two, low three times overall leverage ratio… with disciplined debt repayment.” — Todd Koetje .

Q&A Highlights

  • Leverage policy: Management aims for high-2x to low-3x net leverage over time, continuing debt paydown and opportunistic capital markets monitoring ahead of March 2026 convert maturity .
  • Churn drivers and normalization: Billing migration (new bill names/dates, cycle freeze, larger bills) and promo rolloffs lifted churn; non-pay attrition in October was ~half of August/September levels; churn back to pre-migration levels .
  • Competitive landscape: Fiber overlap stable (low-to-mid-50%); FWA present in nearly all markets, with AT&T’s Air rollout accelerating in copper-only areas; Flex and mobile initiatives positioned to compete at low-end price points .
  • SG&A trajectory: Elevated in Q3 on stock comp and migration-related labor; cost savings from platforms to be more visible in late 2025 and run-rate in 2026 .
  • Asset sales: ~$42M agreement to sell certain fiber-to-the-tower contract rights; Clearwave JV asset sale to same third party (undisclosed); $124M Q3 proceeds from Ziply/Metronet monetizations .

Estimates Context

  • Q3: Revenue missed consensus ($376.0M vs $379.1M, ~0.8% miss); Primary EPS significantly beat ($18.89 vs $7.46), largely reflecting $67M gains on equity sales and lower cash taxes .
  • Q2: Revenue beat ($381.1M vs $379.7M); Primary EPS slight beat ($7.73 vs $7.37); Adjusted EBITDA was in line with typical margin profile .
  • Q1: Revenue missed ($380.6M vs $386.6M); Primary EPS beat ($12.58 vs $8.00) despite diluted EPS of $0.46, highlighting classification differences between GAAP diluted and “Primary EPS” tracking.*

Implication: Consensus models may trim near-term revenue and subscriber expectations while GAAP EPS may be volatile due to non-operating items; focus on normalized margin and cash flow trajectory into 2026 as platform savings ramp .

*Values retrieved from S&P Global.

Key Takeaways for Investors

  • Near-term stock narrative hinges on confirmation of October/4Q churn normalization and sustained sequential improvement in connects; monitor December trends and Q4 call color .
  • Expect ARPU stability through year-end with mix shift toward higher-speed tiers and incremental wallet-share products (TechAssist, SecurePlus); this should partly offset subscriber pressure .
  • Deleveraging remains a core catalyst: ~$313M YTD debt reduction, 3.9x net leverage, and high-2x/low-3x target support multiple stabilization as free cash flow remains robust .
  • CapEx outlook lowered to high-$200M for FY2025, freeing cash for debt repayment; platform migration set to drive OpEx/SG&A savings more visibly in 2026 .
  • Competitive risks persist (FWA, fiber), but Flex and mobile launch ($25/line) present tools to defend/expand low-end segments; watch uptake and churn impact from bundled offerings .
  • Video declines are structural; conversion to IP continues, enabling spectrum reclamation for data, reinforcing long-term broadband focus .
  • EPS volatility from non-operating items (investment gains, tax effects) suggests focusing on Adjusted EBITDA, cash from operations, and leverage as truer performance indicators .