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SHENANDOAH TELECOMMUNICATIONS CO/VA/ (SHEN)·Q2 2025 Earnings Summary

Executive Summary

  • SHEN delivered solid Q2 with revenue of $88.6M (+3.2% y/y) and Adjusted EBITDA of $28.4M (+21.9% y/y), expanding margins to 32% as Glo Fiber scale and Horizon synergies flowed through . Against S&P Global consensus, revenue was slightly below ($88.6M vs $89.9M*) while Primary EPS beat (-$0.13* vs -$0.19*), marking a mixed headline with an earnings quality positive from margin expansion .
  • Glo Fiber remained the growth engine: +5,700 subs q/q to ~76k (+43% y/y), revenue +40.5% y/y to $19.8M with 71% incremental margin, while legacy markets continued to decline on video cord-cutting and a timing-driven dip in Commercial Fiber YoY due to prior-year termination fees and a deferred revenue accounting step-down .
  • Management initiated FY25 guidance: revenue $352–$357M, Adjusted EBITDA $113–$118M, and capex net of grants $260–$290M (capex slightly raised vs Q1 due to accelerated grant projects); midpoints imply ~8% revenue and ~22% EBITDA growth y/y .
  • CEO succession announced: Ed McKay to become CEO on Sept 1; management emphasized confidence in executing the fiber-first strategy and accelerating growth as passings, penetration, and mix shift to higher speeds continue .

What Went Well and What Went Wrong

  • What Went Well

    • Glo Fiber momentum: +5,700 net subs and +16,000 passings; revenue +40.5% y/y to $19.8M; incremental margin 71% driving company-wide EBITDA margin to 32% .
    • EBITDA strength: Adjusted EBITDA +21.9% y/y to $28.4M, margin +500 bps y/y to 32% on Glo Fiber scale and full-quarter Horizon synergies ($13.8M annual run-rate) .
    • Commercial fiber sales/bookings and backlog: record $203k MRR new contracts (+32% y/y), $210k MRR installed, backlog $493k MRR with very low churn (0.4%); a leading indicator for future revenue .
    • Quote: “Glo Fiber revenue grew 40.5% over the same period a year ago with an incremental margin of 71%... full impact of our projected $13.8 million of annual run-rate synergies” .

  • What Went Wrong

    • Legacy revenue pressure: Incumbent Broadband -$1.4M y/y (-3.2%) on video RGU declines (-14.5%) and Commercial Fiber -$1.2M y/y (-6.0%) due to prior-year early termination fees and a non-cash deferred revenue adjustment .
    • GAAP loss persists: Net loss from continuing operations of $9.0M; GAAP diluted EPS of -$0.19, reflecting elevated D&A from network expansion and a $4.2M write-off of plant under construction .
    • Capex intensity remains high near term: FY25 net capex guided up to $260–$290M (from $250–$280M in Q1), as grant projects and network upgrades are accelerated into 2025 .

Financial Results

MetricQ2 2024Q1 2025Q2 2025
Revenue ($USD Millions)$85.8 $87.9 $88.6
GAAP Diluted EPS ($)$(0.24) (cont. ops) $(0.19) $(0.19)
Adjusted EBITDA ($USD Millions)$23.3 $27.6 $28.4
Adjusted EBITDA Margin (%)27% 31% 32%
Revenue Consensus Mean ($USD Millions)$89.6*$89.3*$89.9*
Primary EPS Consensus Mean ($)$(0.1465)*$(0.1380)*$(0.1930)*
Primary EPS Actual ($)$(0.1289)*$(0.1847)*$(0.1342)*

Values with asterisks (*) retrieved from S&P Global.

Segment revenue ($USD Millions)

SegmentQ2 2024Q1 2025Q2 2025
Residential & SMB – Incumbent Broadband Markets$44.2 $43.4 $42.8
Residential & SMB – Glo Fiber Expansion Markets$14.1 $18.4 $19.8
Commercial Fiber$20.7 $19.6 $19.5
RLEC & Other$6.7 $6.5 $6.5
Total Revenue$85.8 $87.9 $88.6

Key KPIs

KPIQ4 2024Q1 2025Q2 2025
Homes & businesses passed – Incumbent239,041 240,788 244,007
Homes & businesses passed – Glo Fiber346,299 362,861 378,916
Total homes & businesses passed585,340 603,649 622,923
Glo Fiber subscribers (RGUs)65,140 70,565 76,276
Broadband Data RGUs176,465 182,425 188,006
Monthly broadband data churn – Glo Fiber0.94% (Q4) 0.90% (Q1) 1.15% (Q2)
Penetration – Glo Fiber18.8% 19.4% 20.1%
Broadband Data ARPU ($)$83.67 (FY avg) $81.09 $80.56

Estimate vs. Actuals (S&P Global)

MetricQ4 2024Q1 2025Q2 2025
Revenue Consensus Mean ($M)89.65*89.31*89.94*
Revenue Actual ($M)85.41 87.90 88.57
Primary EPS Consensus Mean ($)-0.1465*-0.1380*-0.1930*
Primary EPS Actual ($)-0.1289*-0.1847*-0.1342*

Values with asterisks (*) retrieved from S&P Global.

Interpretation:

  • Q2 revenue modest miss vs consensus; Primary EPS beat (less negative than expected), supported by mix and synergy-driven margin expansion .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total RevenueFY 2025—$352–$357MIntroduced
Adjusted EBITDAFY 2025—$113–$118MIntroduced
Capex (net of grant reimbursements)FY 2025$250–$280M (net of $60–$70M subsidies) $260–$290M (net of $55–$65M subsidies) Raised (accelerated grant projects)
Tariff assumptionsFY 2025—Not reflected in guidance Not applicable

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’24, Q1’25)Current Period (Q2’25)Trend
Glo Fiber growth/penetrationRecord 2024 adds; 18.8% penetration; 49% choosing ≥1Gb +5,700 subs; 20.1% penetration; 53% of new subs ≥1Gb; ARPU ~$77 Improving scale and mix
Competition/pricingCable promos; low-end tiers discounted; targeted promos by SHEN Cable offering 5-year guarantees; SHEN leaning on speed/reliability; net adds +20% y/y Competitive but manageable
Commercial fiber backlog/churnBookings up; backlog ~$587k MRR; T-Mobile churn headwind largely done Record $203k MRR bookings; $493k backlog; very low churn 0.4% Executing installations; positive trajectory
Capex cadenceFY25 net capex $250–$280M; peak intensity through 2026; long-term 20–25% rev FY25 net capex raised to $260–$290M due to accelerated grant projects Near-term higher, long-term downshift intact
Tariffs/supply chainLimited impact; US-made materials; potential CPE exposure manageable FY25 guidance excludes tariff impacts Monitoring; low immediate risk
Financing/refinancePlanning ABS for fiber + revolver for incumbent; ~100 bps interest savings targeted Not updated on Q2 call; liquidity $260M; debt $513M; first maturity 2027 Plan progressing; balance sheet stable
CEO succession—Ed McKay to CEO (Sep 1) with Chris French as Executive Chairman Leadership continuity

Management Commentary

  • Strategic focus: “It’s been truly rewarding to see the transformation from a mature cable and telephone operator into a rapidly growing fiber-first business.” — Christopher French .
  • Margin drivers: “Adjusted EBITDA margins increased… to 32%... driven by the high incremental margin associated with the Glo Fiber subscriber additions and a full quarter of… $13.8 million in annual run-rate synergies” — James Volk .
  • Network and sales execution: “Constructing over 500 new route miles… added 16,000 new Glo Fiber passings… added 5,700 new customers… 53% of new residential subscribers chose speeds of 1 Gb or higher” — Ed McKay .

Q&A Highlights

  • Competition: Cable providers are offering long-term price guarantees; management believes SHEN’s speed, reliability, and local service sustain differentiation; net adds up 20% y/y in the quarter .
  • Capex acceleration: Pulling 2026 grant construction into 2025 due to better build execution; expected to aid subscriber and revenue growth in 2026 as passings come online .
  • Guidance rationale: Initiated annual guidance to enhance transparency and set expectations for ongoing disclosure .

Estimates Context

  • Q2 2025 vs S&P consensus: Revenue $88.6M vs $89.9M* (slight miss); Primary EPS -$0.1342* vs -$0.1930* (beat). Q1 2025 also had a modest revenue miss with softer Primary EPS vs consensus; Q4 2024 showed a revenue miss but a Primary EPS beat relative to very small negative estimates .
  • Implications: Despite modest top-line shortfalls, mix and synergy capture are improving profitability metrics; consensus may need to reflect higher FY25 EBITDA margin trajectory and slightly higher capex phasing (timing) while maintaining multi-year capex downshift post-2026 .
    Values with asterisks (*) retrieved from S&P Global.

Key Takeaways for Investors

  • Margin expansion is outpacing revenue growth as Glo Fiber scales and Horizon synergies fully annualize; watch for continued EBITDA margin gains into 2H25 and FY25 (midpoint +22% y/y) .
  • Capex is front-loaded in 2025 as grant projects are accelerated; this should translate into higher 2026 subscriber/revenue contributions; long-term capital intensity still expected to step down post-2026 .
  • Commercial fiber sales momentum and backlog conversion underpin 2026 revenue visibility; low churn supports durable cash flows .
  • Competitive dynamics are active, but SHEN’s speed advantages and service model continue to win share without deep discounting; mix shifting to ≥1Gb supports ARPU resilience .
  • Liquidity remains ample ($260M) with first meaningful maturity in 2027; ABS refinancing plan (from Q1) aims to lower cost of capital by ~100 bps, a potential medium-term EPS/FCF catalyst .
  • CEO transition to Ed McKay maintains operational continuity during the crucial final build phase; expect consistent strategy execution and transparency via introduced annual guidance .

Appendix: Source Highlights

  • Q2 2025 results and KPIs: press release and 8-K exhibit (Revenue $88.6M; Adj. EBITDA $28.4M; Glo Fiber revenue +40.5%; passings 622,923; Glo Fiber subs 76,276; EBITDA margin 32%) .
  • Q2 2025 call: detailed revenue drivers, synergy realization, capex and liquidity; competition and guidance commentary .
  • Q1 2025 and Q4 2024 historicals for trend: press releases and transcripts for growth, capex plans, refinancing, and penetration/ARPU trends .