Cable ONE, Inc ((CABO)) has held its Q1 earnings call. Read on for the main highlights of the call.
Meet Samuel – Your Personal Investing Prophet
- Start a conversation with TipRanks’ trusted, data-backed investment intelligence
- Ask Samuel about stocks, your portfolio, or the market and get instant, personalized insights in seconds
Cable ONE’s latest earnings call struck a cautious tone, as management acknowledged weaker near-term performance while highlighting solid free cash flow and disciplined spending. Revenues and subscribers declined, EBITDA margins compressed and ARPU came under pressure, yet the company pointed to improving connects, early mobile momentum, expanding multi-gig capability and active balance-sheet moves as building blocks for a longer-term recovery.
Strong Free Cash Flow Generation
Cable ONE underscored its cash engine, reporting roughly $115 million of free cash flow in the first quarter and about $500 million over the past four quarters. This cash generation gives management optionality to reduce debt, fund acquisitions and reinvest in the network, an important offset to top-line softness and subscriber losses.
Connects Improved and Early Mobile Traction
Gross connects improved year over year in the first quarter, which management framed as an early sign that commercial execution is turning. The company also highlighted encouraging initial response to its MSO-wide mobile launch, now about two months in, reinforcing a multiproduct strategy that could enhance customer stickiness and reduce churn over time.
Cost and SG&A Reductions
Operating expenses fell 6 percent year over year to $93.9 million, while SG&A dropped to $87.2 million from $95.4 million, trimming SG&A to 24.7 percent of revenue. Management credited lower labor costs and reduced billing conversion expenses, signaling that efficiency initiatives are beginning to offset some of the revenue pressure.
Capital Discipline and CapEx Control
Capital spending remained tightly managed, with CapEx at $68.4 million in the quarter, down 3.8 percent from a year ago. The company said it is pacing toward 2025 CapEx levels for the full year, even as it invested $5.1 million in new market expansion projects to support future growth.
Network Investment and Multi-Gig Expansion
Roughly 53 percent of Cable ONE’s markets are now multi-gig capable, a key competitive lever as customers demand higher speeds. Management plans to extend multi-gig capability to most markets by year-end, positioning the company to better defend share against fiber and fixed wireless rivals.
Investment Partnerships Driving Growth and Realizations
Unconsolidated investments posted strong momentum, with last-quarter annualized revenue of about $542 million and adjusted EBITDA of $262 million, up roughly 17 percent and 36 percent, respectively, from a year earlier. These ventures added around 22,900 broadband customers and more than 80,000 new fiber passings, and several stakes, including CTI Towers, Ziply and Metronet, were monetized at attractive returns.
Active Balance Sheet Management and Liquidity
Management detailed aggressive balance-sheet moves, including repaying $575 million of convertible notes via a revolver draw and paying down $90.6 million of debt in the quarter, most of it voluntary. With $165.6 million of cash, total debt of about $3.1 billion, an undrawn $700 million revolver and last-quarter annualized net leverage near 4 times, the company emphasized its liquidity to fund strategic actions.
Non-Operating Gain from Asset Sale
Cable ONE realized a $26.6 million gain from selling fiber-to-the-tower contract rights for $42 million in March. Management used the proceeds to accelerate debt reduction, illustrating a willingness to monetize non-core assets to support balance-sheet objectives.
Business Services Showing Early Improvement
Business services showed signs of life toward the back half of the quarter after the company invested in targeted sales efforts and training. Under new leadership, management described trends in this segment as encouraging, suggesting a potential incremental growth driver if momentum continues.
Revenue Decline Year-over-Year
Total revenue fell to $353.0 million in the first quarter of 2026 from $380.6 million a year earlier, a drop of about 7.3 percent. The decline was driven mainly by weaker residential video revenue of roughly $10 million and a $11.6 million decrease in residential data, underscoring the pressure on the core consumer business.
Residential Subscriber Losses and Elevated Churn
The company reported sequential net losses of 12,600 residential broadband customers in the quarter, with residential data subscribers down about 6.1 percent year over year. These losses translated into a 5.1 percent decline in residential data revenue and reflect ongoing churn challenges in key competitive markets.
Adjusted EBITDA and Cash Flow Compression
Adjusted EBITDA slipped to $183.3 million, or 51.9 percent of revenue, from $202.7 million and a 53.3 percent margin in the prior year’s quarter. Adjusted EBITDA less CapEx declined to $114.9 million from $131.6 million, highlighting that even with lower capital spending, profitability and cash spreads are under pressure.
ARPU Pressure and Back-Book Risk
Average revenue per user came under pressure as Cable ONE leaned on promotional and retention offers and adjusted its go-to-market tactics. Management warned of potential back-book rate increases of roughly $2 to $5 over time and flagged quarter-to-quarter volatility, even as they expect ARPU to be broadly stable for the full year.
Competitive Intensity Concentrated in Key Markets
Management said churn and competitive pressures are heavily concentrated in about 15 percent of the footprint, where fixed wireless, fiber overbuilders and other rivals are most active. This concentration allows for targeted retention efforts but also raises execution risk, as the company must deliver consistent performance across disparate local markets.
MBI Performance and Transaction Considerations
MBI recorded net losses of just under 2,000 subscribers in the first quarter, reflecting its own competitive and operational challenges. Cable ONE reiterated that the purchase consideration remains unchanged but now expects to assume or refinance between $895 million and $925 million of MBI debt, with closing targeted for early in the fourth quarter.
Leverage and Large Outstanding Debt Load
With total debt around $3.1 billion, including sizable term loans, a revolver draw and unsecured notes, leverage remains a central investor focus. Management cautioned that net leverage could tick up modestly after the MBI deal closes, but stressed ongoing efforts to reduce debt levels over time using free cash flow and asset sale proceeds.
Margin Impact from Video and Other Revenue Losses
Declines in residential video revenue of roughly $10 million and minor impacts from an EchoStar decommissioning weighed on margins and segment performance. While the EchoStar impact was relatively small, management acknowledged that video erosion remains a drag on both top-line growth and profitability.
Outlook and Forward Guidance
Looking ahead, management guided to broadly stable ARPU for 2026 while pushing multi-gig capability from about 53 percent of markets to most of the footprint by year-end and holding full-year CapEx near 2025 levels. They plan to close the MBI acquisition at the previously disclosed purchase price, assume or refinance roughly $895 million to $925 million of MBI debt and continue prioritizing debt reduction, supported by strong recent free cash flow and robust results from investment partnerships.
Cable ONE’s call painted a story of a business under competitive and revenue strain but not standing still, leaning on free cash flow, cost discipline and targeted investments to navigate the turbulence. For investors, the key questions will be whether improving connects, mobile traction and multi-gig expansion can stabilize subscriber trends before leverage and top-line erosion overshadow the company’s financial flexibility.