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01/11 11:15
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call highlights strong financial performance with revenue and EBITDA growth, especially in the Glo Fiber segment. The company is successfully executing its fiber-first strategy, with significant subscriber additions and high incremental margins. Despite challenges in video RGUs, the overall sentiment is positive due to strong liquidity, strategic CapEx acceleration, and transparency in guidance. The Q&A session provided clear responses, reinforcing confidence in management's strategy and execution. Given these factors, the stock price is likely to experience a positive movement in the short term.
Revenue Revenue grew 3.2% to $88.6 million, driven by strong Glo Fiber markets revenue growth of $5.7 million or 40.5%, due to an increase in subscribers. This growth was partially offset by declines in incumbent broadband markets and commercial fiber revenue of $1.4 million and $1.2 million, respectively. The incumbent broadband markets revenue decline was primarily due to a 15% decline in video RGUs as customers switched to streaming video services. The commercial fiber revenue decline was due to $900,000 in early termination fees received in Q2 2024 and $800,000 in noncash deferred revenue adjustments for a national wireless carrier customer. Excluding these variances, commercial fiber revenue grew 2.7% year-over-year.
Adjusted EBITDA Adjusted EBITDA grew $5.1 million or 21.9% to $28.4 million, driven by revenue growth and $2.4 million in lower operating expenses. Adjusted EBITDA margins increased from 27.1% in Q2 2024 to 32.1% in Q2 2025, supported by high incremental margins from Glo Fiber subscriber additions and synergies from the Horizon Telecom acquisition. The Glo Fiber incremental margin was 71% in Q2 2025 compared to Q2 2024.
Glo Fiber Revenue Glo Fiber revenues grew 40.5% year-over-year to $19.8 million, driven by the addition of 5,700 new Glo Fiber subscribers and over 16,000 new Glo Fiber passings. This growth highlights the success of the fiber-first strategy.
Commercial Fiber Business The commercial fiber business achieved over $200,000 in monthly recurring revenue sales bookings, up 32% year-over-year. However, commercial fiber revenue declined by $1.2 million due to $900,000 in early termination fees received in Q2 2024 and $800,000 in noncash deferred revenue adjustments. Excluding these variances, commercial fiber revenue grew 2.7% year-over-year.
Liquidity Liquidity was $266.7 million as of June 30, 2025, including $29 million in cash, $143 million in available revolver capacity, and $94.6 million in remaining reimbursements under government grants. Outstanding debt was $513 million, with the first material maturity in July 2027.
Broadband Data ARPU Broadband data average revenue per user (ARPU) remained strong at approximately $77 in Q2 2025, supported by customer adoption of higher speed tiers. 53% of new residential subscribers chose speeds of 1 gig or higher, including 9% opting for speeds of 2 gig or higher.
Capital Expenditures (CapEx) Year-to-date capital spending was $152.2 million, net of $17 million in government subsidies. Full-year CapEx is expected to be in the range of $260 million to $290 million, net of $55 million to $65 million in government subsidies. The increase is due to accelerated incumbent broadband grant projects and network upgrades.
Glo Fiber subscribers: Added 5,700 new Glo Fiber subscribers in Q2 2025, with revenues growing 40.5% year-over-year to $19.8 million.
Glo Fiber passings: Achieved over 16,000 new Glo Fiber passings, contributing to a total of 380,000 passings and $80 million in revenue.
Fiber-to-the-home acquisition: Acquired a small fiber-to-the-home business in Blacksburg, Virginia, adding 1,500 passings and 700 customers for $5 million.
Commercial fiber business: Achieved over $200,000 in monthly recurring revenue sales bookings, indicating future growth.
Broadband data penetration: Glo Fiber markets achieved 20% broadband data penetration, up from 18% a year ago, with early cohorts reaching 36% penetration.
Revenue growth: Revenue grew 3.2% year-over-year to $88.6 million, driven by Glo Fiber markets.
Adjusted EBITDA: Increased by 21.9% to $28.4 million, with margins improving to 32.1% due to high incremental margins from Glo Fiber.
Capital expenditure: Year-to-date capital spending reached $152.2 million, with full-year guidance of $260-$290 million, net of government subsidies.
CEO succession plan: Ed McKay promoted to President and CEO effective September 1, 2025, as part of a planned leadership transition.
Fiber-first strategy: Continued focus on transitioning from a cable and telephone operator to a fiber-first business, with accelerating growth in fiber network expansion.
Decline in Incumbent Broadband Markets Revenue: The company experienced a 15% decline in video RGUs due to customers switching to streaming video services, which negatively impacted incumbent broadband markets revenue by $1.4 million.
Commercial Fiber Revenue Decline: Commercial fiber revenue declined by $1.2 million, primarily due to $900,000 in early termination fees received in the second quarter of 2024 and $800,000 in noncash deferred revenue adjustments for a national wireless carrier customer.
Pricing Step Down for National Wireless Carrier: A new agreement with a national wireless carrier customer includes a pricing step down for former Horizon circuits beginning in 2027, which could impact future revenue.
High Capital Expenditures: The company expects capital expenditures to be in the range of $260 million to $290 million for 2025, which is slightly higher than previous guidance. This elevated spending could strain financial resources.
Churn in Video Customers: The company continues to face challenges with video customers moving to online streaming options, contributing to a decline in video RGUs and overall revenue.
Integration and Backlog Challenges: The company is still working to complete the installation backlog inherited from Horizon, which could delay revenue realization and operational efficiency.
Revenue Expectations: 2025 revenues are expected to be in the range of $352 million to $357 million, implying an 8.1% year-over-year growth.
Adjusted EBITDA: 2025 adjusted EBITDA is projected to be between $113 million and $118 million, reflecting a 21.6% year-over-year growth.
Capital Expenditures (CapEx): CapEx, net of grant reimbursements, is expected to range from $260 million to $290 million in 2025, representing an approximate 8.3% decline year-over-year.
Glo Fiber Revenue Growth: Combined residential and commercial Glo Fiber revenues are expected to surpass incumbent revenues by 2026.
Commercial Fiber Business: The company expects to complete the original backlog of commercial fiber installations inherited from Horizon by year-end 2025.
Broadband Data Penetration: Broadband data penetration in Glo Fiber markets is projected to continue its growth trajectory, with early cohorts achieving 36% penetration and newer neighborhoods reaching 9% penetration shortly after launch.
Network Expansion: The company plans to continue expanding its fiber network, with significant construction and customer acquisition efforts ongoing.
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The earnings call presents a mixed outlook. Financial performance shows growth in Glo Fiber revenues and EBITDA, but there are declines in incumbent markets and ARPU. The Q&A reveals management's openness to M&A and strategic expansions but lacks clarity on execution plans. The market may react neutrally due to the balance of positive growth and strategic uncertainty. The lack of guidance raise despite growth in gross adds suggests cautious optimism. High capital expenditures and ARPU decline pose risks, offsetting potential gains from the fiber expansion and strategic initiatives.
The earnings call highlights strong financial performance with revenue and EBITDA growth, especially in the Glo Fiber segment. The company is successfully executing its fiber-first strategy, with significant subscriber additions and high incremental margins. Despite challenges in video RGUs, the overall sentiment is positive due to strong liquidity, strategic CapEx acceleration, and transparency in guidance. The Q&A session provided clear responses, reinforcing confidence in management's strategy and execution. Given these factors, the stock price is likely to experience a positive movement in the short term.
The earnings call presents a mixed picture: strong revenue growth and improved EBITDA margins are positive, but the EPS miss and high capital expenditures raise concerns. The Q&A reveals plans to reduce debt costs, which is positive, but lacks clarity on refinancing timelines. No shareholder return plan and competitive pressures in broadband markets are additional negatives. Overall, the positive and negative factors balance out, leading to a neutral prediction for stock price movement.
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