Internet, cable TV, and phone provider Cable One (NYSE: CABO) met Wall Street’s revenue expectations in Q2 CY2025, but sales fell by 3.4% year on year to $381.1 million. Its non-GAAP profit of $7.73 per share was 6% below analysts’ consensus estimates.

Is now the time to buy CABO? Find out in our full research report (it’s free).

StockStory’s Take

Cable One’s second quarter reflected a mix of internal pricing actions, increased competitive overlap with fiber internet providers, and persistent churn in key customer segments. Management attributed the decline in residential data subscribers to promotional roll-offs, segmented pricing adjustments, and seasonal softness in college markets. CEO Julia Laulis noted, “Elevated disconnects this quarter were driven by customer response to recent segmented pricing changes, churn arising from promotional roll-offs and seasonal churn in our college markets.” The company emphasized progress on sequential improvement in new customer connects, even as subscriber losses continued.

Looking forward, Cable One is focused on stabilizing average revenue per user (ARPU) and leveraging its new unified billing platform to drive agility in product launches and customer engagement. The company’s pilot mobile service and recently introduced tech support subscription are expected to broaden its value proposition. While management does not anticipate total residential broadband customer growth in 2025, Laulis stated, “We believe our drive towards simplified pricing, segmented marketing campaigns and value-enhancing product and service offerings is laying the groundwork for stronger subscriber uptake and improved operating performance over time.”

Key Insights from Management’s Remarks

Management cited sequential improvement in customer connects and operational milestones, such as the billing system migration, as building blocks for future growth, despite ongoing subscriber losses and margin pressures.

• Subscriber losses tied to internal actions: The company attributed residential broadband subscriber declines to targeted pricing changes, promotional roll-offs that doubled versus typical volumes, and the final rollout of the AutoPayPlus program. These actions, while intended to improve ARPU, created short-term churn.
• ARPU stability despite churn: Higher ARPU was driven by segmented pricing, increased adoption of value-added services like SecurePlus and Ultimate Wi-Fi, and the $5 AutoPayPlus surcharge for non-enrolled customers. Management expects ARPU to remain stable through year-end as these trends persist.
• Unified billing platform completed: The final phase of the billing system migration was finished, consolidating more than 30 legacy programs and enabling all acquired companies to operate under the Sparklight brand. This initiative is expected to yield several million dollars in annual cost savings starting late 2025 and improve customer experience through simplified pricing and faster service adjustments.
• Mobile pilot launch: Cable One signed an agreement with a mobile virtual network enabler to begin piloting mobile service in select markets. Management views mobile as a strategic extension to reinforce broadband offerings, reduce churn, and compete more effectively against converged telco rivals.
• Competitive intensity and product innovation: Over 53% of passings now face direct fiber competition, and fixed wireless (cellphone internet) options are nearly ubiquitous. The company is responding with differentiated products like Tech Assist, an AI-powered assistant (“Ask Tommy”), and segmented marketing to defend share and support long-term profitability.

Drivers of Future Performance

Management expects competitive headwinds and customer retention challenges to remain primary themes, while cost savings and new product initiatives are key levers for future performance.

• Competitive landscape pressures: With fiber-to-the-home and fixed wireless alternatives covering a growing share of its markets, Cable One anticipates ongoing subscriber losses and muted broadband revenue trends. Management described the environment as “fierce” and does not expect total residential broadband customer growth in 2025.
• Operational efficiency and cost savings: The unified billing platform and ongoing investments in automation, such as the AI-powered Ask Tommy and streamlined service provisioning, are expected to deliver annual run-rate cost savings of about $15 million. These savings may be partially reinvested in growth initiatives but are seen as supporting long-term margin improvement.
• New product launches and bundling: Management highlighted the potential for recently introduced offerings like Tech Assist and the mobile pilot to improve retention and customer lifetime value. Success in these areas depends on execution and customer adoption, as well as the ability to combat rising churn from pricing and promotional changes.

Catalysts in Upcoming Quarters

In the coming quarters, our analysts will monitor (1) the adoption and customer impact of the new mobile pilot and Tech Assist offerings, (2) execution and realized cost savings from the unified billing platform, and (3) the trajectory of broadband subscriber losses in the face of persistent fiber and wireless competition. The progress of the CEO succession process and its effect on strategic continuity will also be important to track.

Cable One currently trades at $139.18, up from $127.94 just before the earnings. At this price, is it a buy or sell? The answer lies in our full research report (it’s free).

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