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Cable One, Inc. (CABO)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue declined 6.0% year over year to $387.2M as residential data ARPU remained stable sequentially but fell 5.0% YoY; Adjusted EBITDA was $211.0M with a 54.5% margin, down 7.0% YoY .
  • Reported net loss of $105.2M vs. $103.5M net income in Q4 2023 was driven by non‑cash items tied to MBI (unfavorable option revaluation and an investment impairment), partially offset by a $71.5M gain on the MBI amendment; free cash flow (Adj. EBITDA – capex) rose 25% YoY to $139.1M on capex reduction .
  • Residential data ARPU stabilized sequentially to $79.72 (+$0.11 q/q) as management leaned on targeted pricing, Intelligent WiFi/Secure add‑ons, and AutoPayPlus; business data revenue grew 2.3% YoY .
  • Management set 2025 capex to “trend toward the low $200s,” highlighted cap structure flexibility after upsizing the revolver to $1.25B, and quantified an estimated $410–$550M call/put purchase price for the remaining MBI stake with ~$845–$895M of MBI net debt at consolidation (earliest Oct 1, 2026) .
  • Consensus (S&P Global) estimates were unavailable at time of writing due to provider rate limits; no beat/miss analysis versus Street can be provided. Values from S&P Global were unavailable at time of request.

What Went Well and What Went Wrong

What Went Well

  • Free cash flow inflected: Adjusted EBITDA less capex increased 25% YoY to $139.1M on a 38% YoY capex reduction; operating cash flow rose to $167.6M (+10.5% YoY) .
  • Sequential ARPU stabilization and product mix: Residential data ARPU ticked up $0.11 q/q to $79.72, supported by higher gig sell‑in, Intelligent WiFi/Secure attach, promo roll‑offs, and AutoPayPlus; management expects broadband revenue growth to be driven by unit growth and ARPU expansion as appropriate .
  • Balance sheet flexibility and visibility on MBI: Revolver upsized to $1.25B; amended MBI agreement improved flexibility and reduced expected peak leverage; estimated remaining purchase price $410–$550M and MBI net debt $845–$895M at consolidation .

Management quotes:

  • “ARPU…stabilized during the second half of 2024…our residential data customer base increased by approximately 2,200 [ex‑ACP and a small acquisition]” .
  • “AI is making a difference…we launched an AI model…review 100% of call center contacts in minutes…[and] a churn propensity model…to improve the accuracy of finding customers most likely to churn” .
  • “Our total capital expenditures will trend towards the low [200s] for 2025” .

What Went Wrong

  • Top‑line pressure: Revenue down 6.0% YoY on a 5.4% decline in residential data revenue (ARPU -5.0%, subscriber reductions tied to ACP expiration) and a 14.2% decline in residential video; Adjusted EBITDA down 7.0% YoY .
  • Non‑cash hits drove net loss: $195.7M unfavorable MBI option revaluation and $111.7M non‑cash MBI impairment overshadowed a $71.5M gain from the MBI amendment; net margin -27.2% vs. 25.1% LY .
  • Unit trends mixed: Residential data PSUs and total PSUs declined YoY; SG&A up 8.2% YoY (software, system implementation, rebranding/marketing) as CABO invests for growth .

Financial Results

MetricQ4 2023Q2 2024Q3 2024Q4 2024
Revenue ($M)$411.8 $394.5 $393.6 $387.2
Diluted EPS ($)17.44 8.16 7.58 (18.71)
Net Profit Margin (%)25.1% 12.1% 11.2% (27.2%)
Adjusted EBITDA ($M)$226.9 $212.4 $213.6 $211.0
Adjusted EBITDA Margin (%)55.1% 53.8% 54.3% 54.5%
Cash from Operations ($M)$151.7 $155.5 $176.2 $167.6
Capital Expenditures ($M)$115.6 $71.6 $77.0 $71.9
Adj. EBITDA – Capex ($M)$111.3 $140.8 $136.6 $139.1

Segment revenue – Q4 YoY

Segment ($M)Q4 2023Q4 2024YoY %
Residential Data$242.34 $229.27 (5.4%)
Residential Video$59.25 $50.85 (14.2%)
Residential Voice$8.76 $7.43 (15.1%)
Business Data$56.32 $57.59 2.3%
Business Other$19.56 $16.49 (15.7%)
Other$25.59 $25.59 ~0%
Total$411.82 $387.21 (6.0%)

Key KPIs

KPIQ2 2024Q3 2024Q4 2024
Residential Data ARPU ($)79.36 79.61 79.72
Business Services ARPU ($)244.52 244.02 236.84
Data PSUs (Total, ‘000s)1,062.8 1,059.4 1,055.2
Residential Data PSUs (‘000s)963.2 959.8 955.0
Passings (‘000s)2,809.2 2,828.5 2,841.6
% Non‑Video of Customers88.3% 88.7% 89.1%
Capex as % of Adj. EBITDA33.7% 36.0% 34.1%

Guidance Changes

MetricPeriodPrevious Guidance/ContextCurrent Guidance/ContextChange
Capital ExpendituresFY 2025FY24 guide “~$300M” (context for 2024 run‑rate) ; FY24 actual $286.4M “Total capital expenditures will trend towards the low [200s] for 2025” Lowered
LeverageForwardNet leverage 3.85x in Q3; historical target 2.5–4.5x (context) LQA net leverage 4.1x; viewed as peak; expect not to exceed ~4x upon MBI consolidation Clarified/Improved outlook
LiquidityCurrentRevolver upsized to $1.25B in Oct-24 $313M drawn, $937M available at 12/31/24 Maintained capacity
MBI Call/Put2025–2026Call option window starting Q3’25; put previously expected 2025 New call option (from Q3’25); put extended to Jan 1, 2026; earliest close Oct 1, 2026 if put elected; estimated CABO purchase price $410–$550M and MBI net debt $845–$895M at consolidation Extended timeline, quantified
DividendQ1 2025—Declared $2.95/share, payable Mar 7, 2025 Maintained dividend

No quantitative revenue/EPS/EBITDA guidance provided for 2025 in filings or call.

Earnings Call Themes & Trends

TopicQ2 2024 (Q-2)Q3 2024 (Q-1)Q4 2024 (Current)Trend
ARPU strategyExpected stabilization in 2H; implemented $5 AutoPayPlus credit/price action; higher sell‑in to premium tiers ARPU stabilized; sequentially flat; targeted competitive responses ARPU stable; +$0.11 q/q to $79.72; gig sell‑in +10% seq; add‑ons (Intelligent WiFi, Secure) Improving/stabilizing
ACP impactLost ~4k ACP subs in Q2; further churn expected in Q3 ~5.3k ACP losses in Q3; churn at multi‑year lows ex‑ACP Above‑average churn from remaining ACP cohort early Q4; overall churn second‑lowest quarter in 3 years Fading headwind
Competition (fiber/overbuilders)Overbuild economics challenging; pricing discipline returning Signs of stabilizing competition; rational pricing emerging Third‑party overbuild moderating; overlap high 40s% (gig‑capable ~high‑50s%); incumbent fiber main driver Stabilizing
Fixed wireless (cell phone Internet)Emphasized wireline reliability vs. fixed wireless Continued watch on FWA; product/marketing tactics evolving Confident to win value segment; pay‑as‑you‑go adoption; plan targeted actions vs. FWA Addressed tactically
AI/digital transformationNew billing migration drives savings; AI starts in CX Expanded AI for insights; leadership/talent additions AI models for QA, PM automation, churn propensity; proactive network operations Expanding deployment
Capex outlook2024 capex “~$300M” Network investments ongoing (DOCSIS roadmap) 2025 capex to “low $200s” Lower intensity
MBI pathCall expired; put window Q3’25; fundable with revolver/OCF Updated estimates; liquidity improved Call from Q3’25; put to Jan 1, 2026; est. price $410–$550M; MBI net debt $845–$895M at consolidation De‑risking timeline

Management Commentary

  • Strategic focus: “We are executing a phased plan for long‑term growth…broadband revenue growth remains our top priority” .
  • Network/customer experience: “We’re moving beyond reliability/capacity to how customers experience our network…proactive support with intelligent tools reduces churn and costs” .
  • ARPU/units playbook: “We can grow units and…expand ARPU…market and segment specific…over 30% of pay‑as‑you‑go customers signed up for 500 Mbps+” .
  • AI traction: “We launched an AI model…review 100% of call center contacts in minutes…[and] an internal churn propensity model…already helped reduce customer losses” .
  • Capex and leverage: “Total capital expenditures will trend towards the low [200s] for 2025…net leverage ratio…4.1x…we believe will be our peak leverage” .

Q&A Highlights

  • ARPU outlook: Management aims to balance unit growth and ARPU expansion by segment; occasional rate actions possible where value is clear; AutoPayPlus can function as an effective rate change for non‑adopters .
  • Mobile bundling: Open to MVNO partnerships if economically compelling, but focus remains on organic broadband growth given churn lows and accretive data economics; mixed results observed among smaller operators .
  • Competitive dynamics: Overbuild overlap in high‑40s% (gig‑capable ~high‑50s% including non‑fiber); incumbents main builders; most competitive markets now showing lowest churn and, in some cases, returning to growth after normalization .
  • Capital markets/convertibles: Company will proactively evaluate markets; expects proceeds from monetizing strategic investments (e.g., Metronet/Ziply/CTI) to reduce leverage and help address 2026 converts .

Estimates Context

  • Street consensus (S&P Global) for Q4 2024 EPS, revenue, and EBITDA was unavailable due to provider rate limits during retrieval; therefore, we cannot assess beat/miss versus consensus at this time. We will update this section once S&P Global data access is restored.

Key Takeaways for Investors

  • Free cash flow resilience amid top‑line pressure: Capex discipline (2025 guide to “low $200s”) plus stable mid‑50s EBITDA margins support cash generation even with modest revenue declines .
  • ARPU stabilized sequentially; multiple levers for 2025: gig sell‑in, Intelligent WiFi/Secure attach, AutoPayPlus, and targeted pricing by market/segment can underpin broadband revenue growth .
  • Competitive normalization: Early signs of moderating third‑party overbuild and rational pricing; incumbents remain the key fiber competitors, but CABO’s markets and service model favor durable returns .
  • MBI de‑risked with clearer path and reduced peak leverage: Extended put timing, new call option, and quantified consideration improve planning; monetizations of minority investments can further reduce leverage .
  • Dividend maintained ($2.95/share); liquidity ample: $937M revolver availability at year‑end and improved optionality support capital allocation flexibility .
  • Trading setup: Near‑term narrative shifts to execution—ARPU/unit growth balance, capex downshift, and evidence of competitive stabilization are potential catalysts; non‑cash MBI items likely to continue causing GAAP volatility but not cash .
  • Watchlist for next quarter: Unit momentum (connects vs. FWA), ARPU trajectory by cohort, capex run‑rate, and progress on billing migration savings and AI‑driven efficiency .

Supporting detail and disclosures:

  • Q4 2024 results and KPIs per 8‑K/press release on Feb 27, 2025 and companion press release -.
  • Prior quarters for trend analysis: Q3 2024 8‑K and call (Nov 7, 2024) - -; Q2 2024 8‑K and call (Aug 1, 2024) - -.
  • Guidance and strategic commentary from Q4 2024 call transcript -.
  • Dividend declaration (Feb 4, 2025) .