Cable One, Inc. Stock

Hello, everyone. Thank you for joining us, and welcome to the Cable One Second Quarter Q2 earnings release. After today's prepared remarks, we will host a question-and-answer session. [Operator Instructions]. I will now hand the conference over to Jordan Morkert. Vice President of Investor Relations. Jordan, please go ahead.

Good afternoon, and welcome to Cable One's Second Quarter 2026 Earnings Call. We're glad to have you join us as we review our results. Before we proceed, I would like to remind you that today's discussion contains forward-looking statements relating to future events involve risks and uncertainties, including statements regarding future revenue, customer growth, connects, churn rates and ARPU, the future competitive structure of our markets, the long-term penetration opportunity in our markets, the anticipated benefits of our mobile service offering, new product rollouts, future customer retention trends, anticipated cost savings and other benefits to be derived from our billing system migration and our other investments in growth enablement platforms, our plans to expand our multi-gig capabilities in more markets, future cash flow and capital expenditures, potential uses for our cash flow, the MBI transaction, including the put purchase price MBI's future debt levels and other related matters, future tax savings, our expectations for monetizing our remaining equity investments and our future financial performance, capital allocation policy, leverage ratios and related targets and our potential financing plans.

You can find factors that could cause Cable One's actual results to differ materially from the forward-looking statements discussed during today's call in today's earnings release and in our SEC filings including our 2025 annual report on Form 10-K and our forthcoming second quarter 2026 quarterly report on Form 10-Q.

Cable ONE is under no obligation and expressly disclaims any obligation, except as required by law, to update or alter its forward-looking statements, whether as a result of new information, future events or otherwise.

Additionally, today's remarks will include a discussion of certain financial measures that are not presented in conformity with U.S. Generally Accepted Accounting Principles or GAAP. When we refer to free cash flow during today's call, we mean adjusted EBITDA less capital expenditures as defined in our earnings release.

Reconciliations of non-GAAP financial measures discussed on this call to the most directly comparable GAAP measures can be found in our earnings release or on our website at ir.cableone.net. Joining me on today's call is our CEO, Jim Holanda, and CFO, Todd Koetje.

With that, I'll turn the call over to Jim.

Thank you, Jordan, and good afternoon, everyone. We appreciate you joining us today. Last quarter, I spoke about taking the time to listen, learn and develop a clear understanding of where we are performing well and where we need to improve.

The months later, my view remains largely unchanged. And -- this is a business with a strong network, attractive markets, meaningful cash flow generation and significant potential to improve operating performance. I continue to believe the greatest opportunities in front of us are operational in nature within our control and ultimately solvable through consistent execution.

Today, I'd like to spend my time discussing what we're seeing in residential broadband, the competitive environment, the investments we're making across the business and why we remain confident in the long-term outlook.

Turning to residential broadband. We reported losses of 17,000 customers during the quarter as elevated churn continued to pressure subscriber results. These results reinforce our belief that improving customer retention is our most important operational priority.

Achieving that requires continued focus on both enhancing the customer experience and strengthening our overall value proposition. To support these efforts, we continue to augment initiatives across the business including additional speed upgrades, more gradual promotional roll-offs and a broader portfolio of products and services designed to deepen customer relationships and improve customer lifetime value supported by enhanced retention tools.

On the acquisition side, connect activity improved sequentially from the prior quarter and in each month of the second quarter providing additional confidence that our customer acquisition initiatives are moving in the right direction. We are making progress towards building a more balanced acquisition approach as investments in our people, platforms and go-to-market capabilities continue to gain traction.

Over the past year, the contribution from door-to-door sales has more than doubled as a share of our quarterly connects, and we also continue to see encouraging momentum across our digital acquisition channels. These results reflect our efforts to diversify how we acquire new customers and build a more balanced mix of acquisition channels.

Residential broadband ARPU increased sequentially during the quarter, benefiting from promotional roll-offs, the implementation of our AutoPay Plus program changes and continued adoption of higher-value products and services across the customer relationship, partially offset by customer retention initiatives and increased adoption of value-oriented offerings.

Going forward, we expect to take an increasingly targeted and segmented approach to pricing and retention initiatives tailored to the competitive dynamics of each market we serve. This approach is designed to balance revenue objectives with long-term customer relationships and lifetime value. Competitive intensity remains across portions of our footprint, particularly in markets experiencing a fiber overbuild activity.

Looking ahead, we expect the broadband landscape to consist of a mix of wired, fixed wireless, mobile-only and satellite solutions with wired broadband continuing to serve the majority of households because of its superior capacity, reliability and economics.

The number of wired gig capable competitors varies across our footprint, and we increasingly tailor our products, marketing strategies and competitive responses to the local dynamics of each market. While those competitive responses may differ by market, our commitment to the communities we serve and our local operating presence remain unchanged.

Our objective is to deliver an experience that earns long-term customer loyalty and positions us to compete effectively over time. As we evaluate the competitive environments across our footprint and where we expect them to stabilize over time, we believe our long-term penetration opportunity remains meaningfully above current penetration levels.

This analysis reinforces our confidence in the business' long-term growth and value creation potential. Turning to Business Services. As we noted last quarter, our reported business services results reflect the impact of the previously announced sale of certain fiber-to-the-tower assets, which occurred in late Q1. Within Business Services, we continue to see encouraging momentum in portions of the business particularly within our enterprise, wholesale and carrier offerings as these higher-value fiber-based offerings benefit from long-term contracts, recurring revenue streams and attractive customer economics.

During the second quarter, our SMB broadband business remained under pressure. To strengthen our offering, we expanded our product portfolio with the launch of Unified Communications as a Service, or UCaaS providing customers with a cloud-based communications solution that complements our existing connectivity services.

UCaaS broadens the solutions we offer and represents another step in deepening relationships over time. Combined with improvements in sales execution and our go-to-market approach, we believe we are well positioned to build the momentum we're seeing across these higher-value commercial segments.

Underpinning both our residential and commercial businesses is the quality and capabilities of our network. Today, essentially, all of our network is capable of delivering gigabit speeds -- and by the end of this year, the vast majority of our customers will be served by multi-gig capable infrastructure.

This progress is not the result of a major new capital program, but rather a years of disciplined, capital-efficient investment in our network architecture and technology platforms. We believe these upgrades improve the value we deliver to customers while further strengthening our competitive position in the markets we serve.

More broadly, we continue to invest in technology, automation, and AI-enabled tools designed to improve the customer experience, enhance employee productivity and drive greater operational efficiency across the business.

Turning to mobile. We are pleased with the early progress of the business. While it remains small relative to our core broadband operations today, customer adoption trends and the pace of growth across the platform are encouraging. As we've said previously, building awareness and changing customer perception takes time.

Customers have known us as a broadband provider for many years, and we expect it will take time for customers to view us as a mobile provider. Across the broadband industry, mobile is an increasingly important part of the customer relationship. While it remains early on in our launch, we believe it is an effective way to improve customer acquisition, deepen customer relationships and strengthen retention over time.

As penetration grows, we expect those benefits to become more meaningful to customer lifetime value and the economics of the business. As we continue to invest across the business, we remain disciplined in how we allocate capital. Our capital allocation priorities remain unchanged.

We will invest in opportunities to improve the customer experience and strengthen our competitive position, while pursuing balance sheet flexibility and seeking to reduce leverage over time. Todd will provide additional detail on our balance sheet, liquidity position and capital allocation priorities in his remarks.

Before I hand it over to Todd, I'd like to reiterate our confidence in the long-term opportunity ahead. We're seeing encouraging progress across a number of the initiatives we've discussed today while continuing to invest in our network, our products and the capabilities that we believe will strengthen our competitive position. Combined with the positive cash flow generating characteristics of the business, and a disciplined approach to capital allocation, we continue to pursue long-term value creation for our stakeholders.

And now Todd will provide a recap of our second quarter financial performance.

Thanks, Jim. Beginning with the top line, total revenues were $348.9 million for the second quarter of 2026 compared to $381.1 million in the second quarter of 2025 with residential video responsible for $9.7 million of the decrease. Residential data revenues decreased $16.7 million or 7.3% year-over-year driven by a 6.6% decrease in subscribers, while ARPU remained relatively flat.

On a sequential basis, residential data revenues declined by $1 million or 0.5%. Data revenues on the business side declined by $3.8 million year-over-year or 6.6%. However, $2.2 million of this decline was attributable to the revenues associated with the tower contracts divested during the first quarter of 2026. Operating expenses declined by $3.6 million or 3.5% compared to the second quarter of 2025 driven by lower programming costs offset by ongoing investments in customer experience.

OpEx was 28.3% of revenues in Q2 of 2026 versus 26.9% in the prior year quarter. SG&A expenses for the second quarter of 2026 fell by $4.3 million or 4.7% year-over-year, due to lower labor expense and reduced billing system conversion costs. This was offset by continued investment in customer acquisition channels and related marketing. SG&A represented 25.1% of total revenues in the current quarter compared to 24.1% in the second quarter of last year.

Adjusted EBITDA for the second quarter of 2026 was $173.5 million, representing 49.7% of revenues versus $203.2 million or 53.3% of revenues in Q2 of 2025. Capital expenditures of $74 million or 42.7% of adjusted EBITDA and increased $5.6 million year-over-year.

This was primarily attributable to our investments in the latest in-home advanced WiFi technologies and security solutions to drive increased customer satisfaction and related loyalty. We reaffirm our previous guidance that full year CapEx is expected to remain consistent with the prior year, and we will continue to remain disciplined and balanced on capital allocation priorities that are centered around the highest network reliability standards and debt reduction.

Adjusted EBITDA less CapEx was $99.5 million in the second quarter of 2026, and versus $134.8 million in the second quarter of 2025. During the quarter, we recognized several noncash impairment charges and fair value adjustments related to our franchise agreements, goodwill in our investment in MBI.

These accounting charges do not impact our cash flow, liquidity, operating strategy or long-term growth initiatives. Additional details are included in our earnings release and Form 10-Q. During the quarter, we reduced our debt balances by $63 million, including nearly $60 million of reduction via voluntary repurchases at attractive discounts.

Through the first 2 quarters of the year, we have reduced our total debt balances by nearly $130 million. At the end of the second quarter, we had $166.2 million of cash and equivalents on hand while our gross debt balance was $3.06 billion, consisting of approximately $1.66 billion of term loans, $550 million of revolver draws, $503 million of unsecured notes, $345 million of convertible notes and $3 million of finance lease liabilities.

We also had $700 million of undrawn capacity under our $1.25 billion revolving credit facility at quarter end. Our net leverage ratio on a last quarter annualized basis was 4.2x. Our balance sheet continues to be supported by committed sources of capital and strong operating liquidity. We remain focused on strengthening it and continue to actively evaluate a range of financing alternatives with the objective of maintaining financial flexibility over the long term.

With respect to MDI, we continue to evaluate the appropriate next steps and do not have any additional updates to announce today. As previously announced, during the quarter, 2 of our unconsolidated equity joint ventures Point Broadband and Clearway Fiber merged. Our existing interest in Clearway Fiber was exchanged for additional equity interest in the surviving point broadband entity.

Our investment had a $135 million carrying value at June 30 and is now classified as an equity method investment with a 1 quarter reporting lag. We continue to assess potential monetization opportunities for our remaining unconsolidated equity investments whose proceeds could be allocated towards accelerated debt reduction as we have in the past.

With that, I'll turn it over for questions.

We will now begin the question-and-answer session. [Operator Instructions]. Your first question comes from the line of Brandon Nispel with KeyBanc. Please go ahead.

Two, if I could, and 1 for Todd. Jim, you guys talked about having long-term confidence in the business because of the low penetration rate, but that's been sort of the case for a while. So can you talk more specifically about what you guys are doing to change that? And then on Todd, there's been some reports that you need to get some -- and you need to get some financing transactions done. Can you give us an update on where you stand with some of those.

Thanks for the question, Brandon. It's Jim. The immediate opportunity, 5.5, 6 months ago when I walked through the door was to really balance and invest in additional sales channels, primarily on the digital and e-commerce side along with the direct sales side.

And when you look back over a year ago, those 2 sales channels accounted for less than 10% of sales. In Q2, they accounted for roughly 35% of sales. And that still benchmarks quite significantly under where I would say the rest of the industry is at. So we continue to invest in those channels. And as a result, as we stated earlier, we saw a strong connect momentum in the second quarter, which continues into the third quarter.

And then on the retention side, which is the other side of that equation, again, ceding market share to FWA by not having a mobile and a bundled offering strategy, I think, set us behind. We have worked quickly to close that gap. Mobile officially launched across the footprint in March of this year.

As I mentioned, the early results are good, slow at first tiers as we get customers used to the idea of the broadband provider providing mobile, but now we actually have a competitive response, both in terms of price and product set, that we didn't have before. And then again, the ancillary services that we're using to increase the value proposition for our existing broadband customers. We're highly focused on and deploying in real time.

So those are the things that give me confidence in terms of our ability to take advantage of what I perceive certainly as historically being underpenetrated and the opportunity to have a product set and a pricing set to go after all households within our footprint.

And then Brandon, as it relates to the financing question, as in my prepared remarks, I outlined that we remain very focused on strengthening the balance sheet and continue to actively evaluate financing alternatives, given the consideration of that active evaluation, we are not in a position to answer any questions related to our financing efforts at Cabo or the financing efforts at MBI at this time, but we will continue to explore, evaluate, pursue all potential opportunities because we know we need to provide clarity and additional stability to the balance sheet. .

Your next question comes from the line of Greg Williams with TD Cowen. .

My first 1 is on the cost to acquire. You're changing your go-to-market strategy. You used to be more of an inbound model. Now you're doing, as you said, more direct. -- more to door-to-door, which I'd imagine increases your cost to acquire. But then you noted that your digital mix is now, I think you said 35%, which would help. So a few moving parts there, what does that mean to the overall cost to acquire our customers. .

Second question is just on ARPU. You preannounced pretty good ARPU numbers in July and ARPU rebound. And you mentioned a lot of moving parts whether it was promo roll-off AutoPay, product adoptions, but then you have retention and your front book is pretty aggressive. How do I put that all together in terms of or the ARPU trajectory is going, is the strategy to maybe you have a stable ARPU and try to grow subs on that or sacrifice a little ARPU going forward longer term?

Thanks for the question, Greg. I'll take the cost to acquire question and turn the ARPU question over to Todd. But on the cost to acquire, yes, correct that direct sales is a more expensive channel that's roughly 10% to 12% of sales today. And so to your point, the digital channel is very efficient -- and we're seeing strong momentum there. And so I expect the overall CAC to increase slightly but not materially to where it really impacts margin overall. To the extent that changes as we continue to beef up those and those mixes changes, we'll be happy to update on future calls. .

Greg, ARPU question, both for the quarter, as you noted, as well as how you think about that going forward. The pricing adjustments that we made specifically in this quarter that were related to some of our AutoPay and paperless billing programs did support that ARPU.

I would say it also as usual, does result in some heightened customer attrition when you make that, but it supported the incremental ARPU there. The AutoPay Plus program, as we've talked about quite extensively in the past is something we're very focused on because that set forget it also improves the retention qualities of the customers that adopt into that, and we save money, of course because of the paperless billing dynamic associated with that.

And so do our customers save money. So everybody benefits from that perspective. And then we continue to focus on the sell-in, right? It's not just a binary broadband product, it's a broadband product with the most advanced in-home technology, the euro system, on top of that Hero system, the security solutions that honestly every customer should have given the ongoing attacks that are out there on that front. -- the sell-in to the full assist solution that we have that we've been introducing to our customers over the last 3 to 4 quarters, we call it tech assist, where you basically are supporting everything that our broadband connects in the home that we see adoption and a customer's willingness to pay for in addition to, of course, then selling in other products like video streaming.

Some of those products people won't pay for. Some of those products will subsidize to improve the retention side of the equation because getting more products and more value into this we'll then continue to support the overall ARPU going forward as well as improve the retention.

We do have some headwinds there as well because you talked about the front book the customer acquisition strategy is not just an inheritance model anymore. It's not just answer the phones. It's the offensive side that Jim just talked about. And we are willing to sell in to new customers at a lower price point. And some of that's a phone ringer to get them to call. Some of that's an engagement at the front door, but then working on selling in those additional products and then the promotional roll-offs help support that ARPU over time at the right level, not the kind of shock and all that drives more attrition.

And I would expect that ARPU, while we continue to focus on expanding the penetration, as Jim outlined in his prepared remarks, will be something that will also then have some pressure on ARPU but a balanced way in terms of adding customers and a willingness as we've talked about quite a bit in the past of giving up some of the enterprise ARPU to drive long-term customer growth.

Your next question comes from the line of Steven Cahall with Wells Fargo. Please go ahead.

Kind of rolling it all up, I was wondering if you could just talk a little bit about your expectations for subscriber trends for the next quarter or 2. I mean you talked about the improvement in gross adds. It sounds like retention is what you're looking to attack next. I know the goal is to start to see some improvement in the year-on-year trend. Is that something you think you can get to by the third quarter, which I think is also typically seasonally a little better.

And then with mobile being bundled in, maybe a little bit more aggressively, I think, Todd, you were just talking about some of the ARPU impacts. Maybe you can think about -- or maybe, sorry, you can mention how we should think about that trade-off between price and volume that you might be attacking right now?

Yes, Steve, I mean, similar to what I just said, but I can kind of go, I guess, a little bit deeper subscriber trends. We are encouraged by some of the platforms that we've invested in some of the team that we've continued to invest in, and those go-to-market strategies and that very hyper-local approach in our smaller community is driving some of the new customer acquisition.

You're spot on. Retention is the highest priority, the most accretive customer is the 1 you already have and focusing that on the incremental value into those existing relationships like I talked about with the products like Jim spoke about with the incremental bundling. The third quarter is a seasonally better quarter and Q2 demonstrated that Q2 is usually the seasonally worst quarter in addition to some of the pricing adjustments that I talked about in addition to just a more intense competitive environment that we continue to operate in.

And recall, if you're talking about year-over-year, 2025 was definitely not a great quarter for us as we were coming through a lot of the billing system implementation. We did have a heightened churn as a result of that. So while not giving you guidance with the momentum we're focused on. I would say that that's a fair assessment, I think, as you outlined.

Great. And then just wondering if you have seen any increase in satellite competition in parts of the footprint? .

No. The same as we discussed on the last quarterly call, again, it -- the offers are in the market for short periods of time. And then where it's pre-install and free equipment and a low rate followed by going back to the $300 equipment fee, 150 install and normal RAC rates. And that continues and the OpenSignal data that we continue to get on a very regular basis, again, while it was 0% at the end of '25, shows up this 1% here so far in '26.

So it hasn't had any materiality in regards to competition. Having said that, we are highly focused on keeping track of that across our geographies on a very regular basis as a prudent step to track to see if that changes, and we'll be happy to provide updates on future quarters as well.

Your next question comes from the line of Sam McHugh with BNP.

A couple of related questions, I guess. Optimum, you talked today about walking away from some very low penetration footprint area. I don't know if you have any similar or would consider the same in some of the super rural footprint, part one.

And the second question is you talked about long-term penetration above the current 34%. As we think about your footprint between fiber and nonfiber overbuild market, how should we think about the barbell of market share? Are you like 25% in fiber markets and 45% outside of fiber. Some color there would be too helpful. And then I have a follow-up in a second on starting as well.

Let me just say for now, Sam, that I view low-penetration markets as an opportunity. And so I had not heard that on the optimum remarks. But certainly, in the 6 months I've been here so far, I have not seen anything that would indicate that, that would be a strategy that we would pursue at this time.

In terms of fair share and overall penetration where we're the only gig provider versus where we compete against 1 other gigabit or fiber competitor or 2 plus. Our penetration is very quite differently. I think based on the 5 family of brands and companies over the last 9 years that make up what Sparklight and Cable One are today.

And again, I think there is an opportunity to bring some standardization and some rationalization so that they reflect fair share over the long term, but that had a lot has to do with how those companies performed and how they invested in them prior to our ownership, and so those are the kinds of things that we are working on tackling, executing on and fixing to a large degree.

And so I remain pretty optimistic in terms of our ability to win fair share over the long run based on the investments and the execution that we're putting forth in the business today.

Got it. And then on -- you mentioned it's 1%. I wasn't sure if that was a styling gross ad share or market share in your footprint. I don't know if you could clarify what that 1% was .

That is correct. .

It's an open signal third-party data research estimated market share. sorry, recall on that front, right? That's rural edge, Usually, it doesn't mean that that's an exact overlap of our wired network because they have a product that's right for those rural edges where we don't reach, but some of that has overlapping. But we monitor that, as Jim said, extremely closely. .

Your next question comes from the line of Frank Louthan with Raymond James. Please go ahead. .

You mentioned you were moving to digital. What percentage of gross adds come from digital currently? And what do you think that can get to? And then maybe I missed this, but did you update what's your current overlap with wireless was in your market? And what would that have been a year ago? .

In terms of the digital sales channel, that is now accounting for roughly 25% of sales in Q2 -- my expectation is that, that goes up to 35% to 40% over the next 12 to 18 months if we're following kind of where the rest of the industry and some of my prior experiences would indicate. -- in terms of that. And then the second piece of the question was what was...

Could you give us an update on your overlap of fixed wireless with your market? And where would that have been a year ago? .

Yes. Frank, I can take that one. I mean, it's a little over 80% right now based on our third-party research and the data that we have access to, so is a little harder to identify that on a quarter-to-quarter basis. But to your question on over the last year, it's moved up a little bit, but I mean, it was effectively at those levels this time last year as well. .

And would that be the same in MBI's territory? Or would they be a little more or a little worse? .

A little bit behind us. .

We have reached the end of our Q&A session. I will now turn the call back to Jim for closing remarks.

Thanks, Caleb. And so as we wrap up, I'd just like to thank our Sparklight teammates for their continued commitment to our customers and to 1 another. Over the past few months, I've had the opportunity to get out in the field across our footprint and meet our teammates and those interactions have only reinforced what makes this company really special.

And that's talented people who are deeply committed to serving our customers and our communities and it gives me a lot of confidence in terms of what we're trying to execute on here on the road ahead. So we appreciate your time today and continued interest in Cable One, and we look forward to speaking with you again next quarter. Thank you, everybody.

This concludes today's call. Thank you for attending. You may now disconnect.

Hello, everyone. Thank you for joining us, and welcome to Cable One's First Quarter 2026 Earnings Call. After today's prepared remarks, we will host a question-and-answer session. [Operator Instructions] I will now hand the conference over to Jordan Morkert, Vice President of Investor Relations. Please go ahead.

Good afternoon, and welcome to Cable One's First Quarter 2026 Earnings Call. We're glad to have you join us as we review our results.

Before we proceed, I'd like to remind you that today's discussion contains forward-looking statements relating to future events that involve risks and uncertainties, including statements regarding future revenue, customer growth, connects, churn rates and ARPU, the future competitive structure of our markets, the anticipated benefits of our mobile service offering, new product rollouts, future customer retention trends, anticipated cost savings and other benefits to be derived from our billing system migration and our other investments in growth enablement platforms, our plans to expand our multi-gig capabilities in more markets, future cash flow and capital expenditures, potential uses for our cash flow, the upcoming MBI transaction, including the put purchase price, MBI's future debt levels, integration timing, anticipated cost and tax efficiencies, combined leverage ratios and closing date; the anticipated timing for closing of the merger of Point Broadband with Clearway Fiber and expected benefits from that transaction; future tax savings; and our future financial performance, capital allocation policy, leverage ratios and financing plans.

You can find factors that could cause Cable One's actual results to differ materially from the forward-looking statements discussed during today's call and today's earnings release and in our SEC filings, including our 2025 annual report on Form 10-K and our forthcoming first quarter 2026 quarterly report on Form 10-Q. Cable One is under no obligation and expressly disclaims any obligation, except as required by law, to update or alter its forward-looking statements, whether as a result of new information, future events or otherwise.

Additionally, today's remarks will include a discussion of certain financial measures that are not presented in conformity with U.S. generally accepted accounting principles, or GAAP. When we refer to free cash flow during today's call, we mean adjusted EBITDA less capital expenditures as defined in our earnings release. Reconciliations of non-GAAP financial measures discussed on this call to the most directly comparable GAAP measures can be found in our earnings release or on our website at ir.cableone.net.

Joining me on today's call is our CEO, Jim Holanda; and CFO, Todd Koetje. With that, I'll turn the call over to Jim.

Thanks, Jordan, and good afternoon, everyone. We really appreciate you joining us today. I've now been in the role for a little over 70 days, which has given me the opportunity to spend meaningful time with our teams, get closer to our markets and develop a clear view of where we are performing well and where we need to improve. At a high level, I'd say the work underway across the business is moving in the right direction, but those efforts are not yet showing up consistently in the results.

Today, I want to spend my time on 3 things: what we're seeing in the business; what I've learned since stepping into the role; and our focus and priorities going forward.

Starting with the quarter, we're not yet seeing the full benefit of the changes we were making in the business. Results reflect the broader economic backdrop and continued pressure in our more competitive markets, particularly in customer retention. While we have already begun to make changes in these areas, it remains early, and those efforts are not yet meaningfully reflected in our results. At the same time, first quarter connects improved year-over-year, which we view as an early indication that elements of our strategy are beginning to gain traction. In addition, we are roughly 2 months into our MSO-wide mobile launch. And while it is too early to draw conclusions around retention or lifetime value, initial customer response has been encouraging. We continue to believe mobile can become an important component of the broader relationship over time.

Even with these challenges, the business is generating substantial free cash flow, reinforcing both the durability of the model and our ability to continue to execute on our debt reduction, strengthen the balance sheet and create long-term shareholder value. In the first quarter, we generated approximately $115 million of free cash flow and $500 million over the past 4 quarters providing meaningful flexibility to allocate capital in a disciplined manner.

Turning to residential services. I want to spend a bit more time on what we're seeing in the business. In the first quarter, we reported 12,600 net residential broadband customer losses on a sequential basis. While this reflects continued pressure in certain areas of the business, there are several underlying dynamics to help frame how we are thinking about the trajectory going forward. Over the course of my career, I've seen firsthand what has and has not worked in operating environments like this, and those lessons are shaping how we are approaching the business today.

First, churn was elevated in the quarter but remained primarily concentrated within our more competitive markets, which allow us to concentrate our retention efforts where they can have the greatest impact. At the same time, new connects improved year-over-year, driven in part by value-conscious customer segments. These customers represent an important part of our segmentation strategy and remain focused on adding them in an accretive way. We also saw year-over-year improvement across certain go-to-market channels, including e-commerce and direct sales, reinforcing our focus on meeting customers where they prefer to engage in expanding on our connect opportunities. From a retention standpoint, we are implementing targeted initiatives to better identify and engage at-risk customers. These include speed upgrades, more gradual step promotional roll-offs, AI-driven tools and a new CRM platform expected to go live later this year. We are also deepening multiproduct customer relationships through offerings such as mobile, whole-home WiFi, enhanced online security and comprehensive technical support for the connected home, all while continuing to invest in the network to further strengthen the consistent, reliable experience our customers expect. While still early, these are the types of operational actions we believe can improve retention trends over time.

Looking at ARPU, results in the quarter reflected downward pressure from go-to-market initiatives and targeted retention offers, partially offset by continued sell-in to higher speed tiers and the broader multiproduct offerings just mentioned. While we may see some variability from quarter-to-quarter, we continue to expect ARPU trends to remain broadly stable for the year. Taken together, while retention remains the primary challenge, we believe the underlying trends in connect and multiproduct offerings provide a constructive foundation as we work to improve customer outcomes and drive more consistent performance.

Turning to Business Services. Overall performance showed improvement through the back half of the quarter. Under Ed Butler's leadership since early January of this year, the business services organization has moved quickly from assessment into execution. Targeted investments in sales enablement, go-to-market discipline and a new sales training program drove improved results across our fiber, carrier and enterprise channels. While still early, these trends are encouraging and reinforce our confidence in the actions underway. Todd will address some discrete items in the quarter in more detail.

Clearly, competitive intensity persists. However, we believe our network capacity, reliability and local operating presence position us well, and we continue to invest for improved performance. Today, approximately 53% of our markets are multi-gig capable and we expect to expand that capability to most markets by year-end, reinforcing our ability to meet growing customer demand across the footprint.

Against that backdrop, over the past several weeks, it has become clear that our biggest opportunity is improving the consistency of execution across the footprint. Many of the underlying dynamics are consistent with patterns I've seen in prior operating environments. As a leadership team, we've aligned around a focused set of priorities where disciplined execution can drive the most meaningful improvement. These priorities center on strengthening retention and conversion, simplifying our product set and ensuring greater consistency in how we go to market across the footprint. We've already begun to take action in each of these areas with the objectives of improving the customer experience, the price value equation, and therefore, the customer trends and the financial performance over time. The work we're doing today will still take some time to show up in our results, and we would not expect it to fully translate into the numbers within a single quarter. Our focus right now is on improving overall execution of the array of operating strategies at our disposal and continuing to strengthen the balance sheet.

Stepping back, I remain confident in our long-term opportunity. The durability of our cash flow allows us to continue prioritizing debt reduction while maintaining the flexibility to invest in the business and support long-term shareholder value creation. That confidence is grounded in the strength and the capacity of our network as well as the clear opportunity we see to improve execution within our existing footprint. And with that, I'll turn it over to Todd, who will provide a recap of our financial performance.

Thanks, Jim. Starting with the top line. Total revenues for the first quarter of 2026 were $353 million versus $380.6 million in the first quarter of 2025 with the year-over-year decrease driven primarily by lower residential video and residential data revenues. Residential video accounted for approximately $10 million of the decrease. Residential and data revenues decreased $11.6 million or 5.1% year-over-year due primarily to a 6.1% decline in subscribers. Business Data revenues decreased $1 million or 1.8% year-over-year. Operating expenses of $93.9 million for the first quarter of 2026 decreased 6% compared to the first quarter of last year due primarily to a reduction in programming costs associated with our video business. OpEx was 26.6% and 26.2% of revenues in Q1 of 2026 and Q1 of 2025, respectively.

Selling, general and administrative expenses totaled $87.2 million or 24.7% of revenues in the first quarter of 2026 compared to $95.4 million or 25.1% in the first quarter last year. The decrease in SG&A was driven by lower labor costs and the reduction in billing system conversion costs. Adjusted EBITDA for Q1 of 2026 was $183.3 million or 51.9% of revenues compared to $202.7 million or 53.3% of revenues in Q1 of 2025. Capital expenditures were $68.4 million in the first quarter, a decrease of 3.8% year-over-year. During the quarter, we invested $5.1 million of CapEx for new market expansion projects. We continue to track towards 2025 levels for full year CapEx.

Adjusted EBITDA less capital expenditures totaled $114.9 million for Q1 of 2026 compared to $131.6 million in Q1 of last year. In March, our $575 million convertible notes matured and were repaid in full with a $575 million revolver draw. Throughout the quarter, we paid down a total of $90.6 million of debt, of which $86.1 million was voluntary. We opportunistically paid down our senior notes by $33.7 million and term loans by $27.4 million at very attractive discounts along with a $25 million repayment under our revolver at quarter end. Such payments demonstrate our continued commitment to debt reduction.

As of March 31, we had $165.6 million of cash and equivalents on hand, and our total debt balance was approximately $3.1 billion, consisting of approximately $1.7 billion of term loans, $550 million of revolver draws, $548 million of unsecured notes, $345 million of convertible notes and $3 million of finance lease liabilities. We also had $700 million of undrawn capacity under our $1.25 billion revolving credit facility at quarter end, providing us additional committed capital. Our net leverage ratio on a last quarter annualized basis was 4x.

As Jim mentioned, we are focused on strengthening our balance sheet while we have the committed capital in place and sufficient excess operating liquidity to affect the MBI acquisition at closing in Q4 2026. As we have stated before, we will remain proactive in our balance sheet management initiatives and continue to evaluate the markets with a focus on optimizing our longer-term capital solutions.

Turning to our investment partnerships. We posted updated information about our unconsolidated investments on our Investor Relations website. For the fourth quarter of 2025, these businesses generated approximately $542 million of LQA revenue and $262 million of LQA adjusted EBITDA, representing year-over-year growth of roughly 17% and 36%, respectively. These businesses also grew broadband customers by approximately 22,900 or 7.9% and added over 80,000 new fiber passings during the year. This summary excludes the financial results of MBI as we provide additional detail within our quarterly filings. Additionally, CTI Towers, Ziply and Metronet are no longer reflected in this table following the monetization of those investments, each of which generated attractive returns. We believe these outcomes, including both the operating performance of these businesses and the monetization of certain investments, reflect the strength of these assets and the value created over time.

And finally, I'll touch on a couple of items related to a recent transaction, along with an update on a pending one. In mid-March, we completed the sale of -- fiber-to-the-tower contract rights for $42 million in cash. We recognized a $26.6 million gain on the sale. Such contracts generated $9 million of business data revenues in 2025 and $2.1 million in Q1, and the sale reduced first quarter business data revenue by approximately $300,000. Results were also modestly impacted by lower revenue from EchoStar as they continue to decommission portions of their 5G network buildout, representing approximately $50,000 in the quarter and roughly $200,000 on an annualized basis, which we believe represents substantially all of our remaining exposure to this activity.

Meanwhile, the merger of our Point Broadband and Clearwave Fiber strategic investments remains on track to close during Q2, subject to customary closing conditions. And we continue to work proactively on our pending acquisition of MBI. The Cable One and MBI teams are preparing for an efficient integration of MBI's operations when the transaction closes, which is expected at the beginning of Q4.

Before we open it up for questions, I'd reiterate that while the current environment remains competitive, the business continues to generate strong cash flow, and we remain focused on disciplined execution and capital allocation. We are continuing to prioritize debt repayment while investing thoughtfully in the business, and we believe the changes underway position us to deliver improved performance over time.

With that, we are ready to take your questions.

We will now begin the question-and-answer session. [Operator Instructions] Your first question comes from the line of Sebastiano Petti with JPMorgan.

And real quick, I guess just trying to think about the connect being up year-over-year. I think, Jim, you talked about contribution from the value-conscious segment. Maybe help us think about how much of that -- I mean, maybe a little bit of a difficult question to answer, but how much of that is from just improved offer strategy or maybe improvements or expansion of your distribution channels?

And then relatedly, as you, I think, talked about defending the base last quarter, help us think about maybe how much ARPU or was there perhaps some dilution in the quarter relative to win back retention efforts that I think some of your peers are also kind of enacting to try to defend the base?

Sebastiano, thank you for the questions. Appreciate it. This is Jim Holland, everyone. And yes, connects, I think it's kind of twofold, both to your point. The expansion of the direct sales channel and the improvement in the e-commerce channel results, I think certainly contributed to that, along with, again, our now very targeted segmented offers across how we've chosen to segment the base and being more aggressive and not afraid to be doing price locks in especially those hypercompetitive markets that we find ourselves in and 15% of the footprint. So I think all of that helped contribute to it. And I think there's still a lot of meaningful room for improvement in regards to executing across all of those channels and all of those strategies.

And yes, certainly, on the ARPU side, along with more aggressive go-to-market offers as certain areas get more competitive, certainly being more aggressive on the retention side where we feel there's competitive pressures has been a focus. Again, I think we're still early on. We saw a little bit of those results then impacting the ARPU numbers in Q1.

Your next question comes from the line of Frank Louthan with Raymond James.

Great. As you're looking for -- to save customers and so forth and that kind of activity, what kind of pressure do you expect on ARPU in your back book? And then can you give us some color on how MBI is tracking from subscribers in a financial perspective? And I assume there's -- that, that might impact the price. Do you expect that to be any materially different from what you are -- what you've kind of signaled is going to be the cost when you closed?

Well, I'll let Todd go ahead and answer the MBI question real quick.

Frank, on MBI, so their first quarter, which we put in the Q, net adds were south of 2,000. So they lost 2,000. But that's a meaningful improvement from the run rate at which they were last year. And there are some timing-related adjustments in the first quarter for MBI. But I think if I understood your question correctly, there are not adjustments in the purchase consideration. That is a locked-in and disclosed number at 4 80 as we talked about last quarter. And so that's currently the plan. We did adjust, just to address it, the anticipated debt that we will assume or be looking to refinance in conjunction with it into a new range of 8 95 to 9 25. So it's slightly higher than what we have had as a range before, just due to the impacts of their performance last year and slightly lower free cash flow between now and closing.

And then on the ARPU pressure piece, Frank, yes, clearly bringing in customers at lower promotional rates and seeing continued kind of elevated churn in the back book continues to put pressure on ARPU. Certainly, my read of the analyst community from our last earnings call is such that, that's a good thing. In terms of that, again, we do have targeted retention offers in our more competitive markets that lower rates, but we're also simultaneously focused as we've talked about on adding a ton of value. In terms of those higher ARPU existing customers, and again, whether that's with Tecsys, whether that's been with Eros, whether that's been with security product, we now have mobile in our arsenal as it relates to that as well as continuing to give people more speed at no incremental cost in terms of the networks capabilities. So those are all things we continue to be very focused on and get out there, quite frankly, as quickly as possible.

How much of your back book do you think you're going to need to adjust and kind of lower the pricing when it's all said and done?

Well, as all said and done is a very wide question. I don't know if you're meaning by the end of this year, the end of a 3- or 5-year cycle.

Well, multiyear side. I mean, ultimately, to get kind of competitive parity, your back book is pretty high. What would you expect that to have to adjust to?

I think overall, in the $2 to $5 range over time and -- I think is realistic and doable given the value adds that we have at our disposal for our existing customer base.

And Frank, Todd, I'll jump in just real quick to keep in mind, if you think about the history of CABO, it was very one-size-fits-all. It wasn't this deeply discounted promo with a high step-up that would result in a wide variation of front book-back book as you're referring to it. So when you think about -- I think you said the back book is really high, which we don't disclose that. It's not a major delta to what we're looking at from new selling.

Your next question comes from the line of Greg Williams with TD Cowen.

First one is just on satellite broadband. We're hearing a couple of big announcements the last few weeks. I'm just curious how you view the satellite competition, particularly in your rural areas.

And second question, Todd, you mentioned a little bit about refis and you just paid down the converts. I'm curious about next steps on the balance sheet and when you'd be looking to the debt markets and eventually turn that out?

Yes. I'll go ahead and take the satellite and then turn it over to Todd. Obviously, we're an avid user of open signal and have pretty accurate and telling data in regards to the competitive landscape of our footprint across the United States. And while satellite shows up in very low circumstances and quantities, it certainly continues to go up. We keep our eye on it very closely. We're not going to let what happens kind of with FWA happen on the satellite front or even going back to MyDISH and DIRECTV days back in the early '90s. I think they are formidable competitors that could flush out over time. Yet to be determined. And there is no consistency from at least the 2.5 months that I've been here in terms of their offers. And their installation costs and their monthly pricing is widely varied territory to territory, market to market, and we have not seen any consistency yet across our footprint in terms of their go-to-market strategy, which I think they will figure out a technological way to overcome at some point in the future should they choose to allocate their resources and bandwidth there. So we'll continue to keep an eye on it. But at the same time, as you're fighting off 1, 2 or 3 FWA carriers and fiber eyes, LECs, and 15% of the footprint fiber overbuilders, we feel we have a good playbook to run in order to defend the base that we have and to figure out how we continue to grow the connect side of our business simultaneously.

And then, Greg, on the balance sheet side, as Jim alluded to and I commented also in my prepared remarks, meaningful repayments have continued as we attack the numerator that was over $400 million in 2025, $90 million here this last quarter. Most of those were voluntary and repurchases at attractive discounts both our term loans and our unsecured notes. And that's an intentional approach as it relates to how we want to think about the balance of the capital structure. As I've mentioned several times, diversity of duration because we are actively evaluating longer-term capital solutions and optimizing the balance sheet to ensure we have the flexibility to continue to reinvest in the business, but also the flexibility to continue to repay debt at attractive levels going forward. But we're also very focused on the diversity of the structure and ensuring that we have both secured that's more attractively prepayable as well as more foundational capital on the unsecured side.

And then as it relates to preparation, I think you've been asked about timing. I've kind of been pretty consistent for the last few quarters. But we do have our contingency plan in place, but that's not a primary plan. And so we actively evaluate the markets. We're looking at it through the lens of ensuring we have the right disclosures in place. We've started putting more disclosures on MBI as that acquisition will be affected in early Q4 of this year. And we are aware of, obviously, the refinancing that we need to do over the course of the next 2 to 3 years and very actively planning around how we address that.

Your next question comes from the line of Brandon Nispel with KeyBanc.

A couple if I could. It seems like a pretty consistent theme we've seen across the space is that there's an inverse correlation between ARPUs and subscriber growth. So I'm curious how you guys are expecting to get better performance on the subscriber side while keeping ARPU flat this year.

And then if I remember right, historically, the -- your guys' footprint tends to perform best seasonally in the first quarter from a connect standpoint. And the third quarter, and if we're looking at trends getting worse in the first quarter here, how should we be thinking about sort of second quarter from a net add standpoint?

I'll start, and I'm new, so I can't speak to historical Q1s. I know my experience in my other locations is nothing historical patterns upheld through the pandemic and going forward in a new competitive environment, generally speaking. So that one's probably harder to gauge. Having said that, I think we're pretty clear on last quarter's earnings call that in the third quarter of 25, we saw the spike associated with some very large work done in the back office and with our systems in terms of a billing system consolidation across the family brands that made up Cable One that really put pressure there. We're not going to have those pressures at all this year. And so I think that becomes an opportunity. And like I say, I think the opportunities in terms of all the go-to-market strategies that we've been talking about on these last 2 calls are really the things that can help start to change what have been otherwise historical trends there.

And as we think about kind of ARPU versus sub growth, the interesting thing about Cable One and one of the reasons I came here is in 40% of our footprint, we're still the only gig provider. And there's not a lot of cable operators out there that can say that. And while we certainly expect that intensity to grow over time and have modeled that out and our thinking in those terms, we also have clear visibility in terms of as ILEC start to fiberize or third-party overbuilders start to come in with a fiber build, we see that coming well in advance. And we think we've built a pretty good playbook in terms of how to defend against that. And so I don't think, as you compare us to others, I think we have just a little bit more flexibility in terms of our timing. And I think we have a little bit more opportunity in terms of, again, getting higher speeds and getting a whole host of value-added services into our customers' kitchens and living room to help us as we go forward across those retention pressures.

Got it. Todd, if I could just follow up with one for you. I don't think you provided it or an update here, but with the higher debt that you guys are planning to take on with Mega, the trends there and then the EBITDA trends that you guys are seeing, is there any updated thoughts on your closing leverage target once you do close Mega?

Yes, Brandon. Yes, the range is pretty modest relative to the overall debt stack. So that doesn't move that, that much. But obviously, with the trends from 2025 for both CABO and MBI on a customer basis and how those translate into the effective denominator of that leverage ratio and EBITDA, that will be higher than what we previously stated, which was in and around 4x, but still very manageable in our opinion, as it relates to where we close and how quickly we can get that down relative to the ongoing initiatives to focus on debt repayment as well as, of course, stabilize and change the trajectory of the EBITDA base.

Your next question comes from the line of Sam McHugh with BNP.

Two questions, if I can. One on the gross add connect side. Do you have a sense of how many of your gross adds are coming from DSL? And then as DSL kind of just dissipated in the next few years, kind of what's the plan to make up that gap?

And then secondly, on the Tower divestment, Todd, you've given us a revenue number. I wonder if you could give us an EBITDA number, how much that might just take out EBITDA for this year?

Yes. Thank you for those questions. On the -- in terms of the connect side, how many are coming from DSL. Again, with only 40% of the footprint left that where the ILECs are unupgraded, you'll over-index slightly in terms of that connect performance. So if it's 40% of the potential and 50% of the connects, I think that's pretty consistent rule in terms of the open signal data that helps us kind of support that structure and thought. And having said that, it's interesting you brought that up because I think that is an opportunity for us to exploit that even further. And given these bigger announced acquisitions by the ILECs and the integration work that they have to do and so forth, I think that gives us a window to hopefully potentially take advantage of that in a bigger way going forward.

And Sam, I'll just say, of course, as we've talked about in the past, where the LEC has not upgraded to fiber and especially where that LEC has a fixed wireless access product for home broadband, they've been very aggressive on attempting to keep the customers they already have as their initiatives are not only focused on the customer side, but decommissioning that high-cost copper. So that has moved that DSO population down at a more accelerated pace than what it was naturally because of those fixed wireless states.

As it relates to the fiber-to-the-tower contract sale that we [ effected ] in the first quarter, it was $42 million of gross proceeds; pretty comparable because of the tax efficiencies that we had from a net proceeds perspective. We use those proceeds to accelerate our debt reduction. The revenue, we did disclose, as you alluded to. That's a high single-digit multiple, and margins that are slightly higher than what you see from an enterprise side of the equation. So that should get you to a pretty directionally accurate cash flow number as that rolls through on a GAAP basis throughout this year.

Your final question comes from the line of Julie Zhu with MoffettNathanson.

Last quarter, you had mentioned approaching an equilibrium on fixed wireless competition. I was wondering if you could comment on any updated thoughts there. I know that we saw the rise in fixed wireless net adds sharply slowed, but T-Mobile stopped reporting it, and given they're your largest overlap, I would love any insight into year-to-date activity and view into the future.

And then if I can squeeze a follow-up in about the satellite Leo competitors. Jim, I think you had mentioned that it's sort of a haphazard strategy on go-to-market for them. How does that affect how you and the team think about competing in more rural areas? And do you have an updated point of view in terms of the structural market share of satellite connectivity and fixed wireless across your footprint?

That's a lot for 2 questions, Julia. I wouldn't expect anything less, by the way. Thank you.

On the satellite piece -- and they're somewhat intertwined, given the fact that roughly 80% of our footprint now has one or more FWA competitor, which is the latest and greatest information we have from OpenSignal. So we're already in a mode where we are competing fiercely in terms of retaining customers that we have and going after the low end where those product sets are more appealing. And so even as they might have the capacity to come to a more consistent go-to-market strategy add, at some point, if you're competing against 2 or 3 FWAs and 1 or 2 other wireline competitors, it doesn't matter whether there's 6 or 7, there's a particular market where we're focused on the things that we can control and the value and the customer experience differ [ raters ] that we can bring to market, and the localism that our network and our people bring to communities in the way that we support them day-to-day throughout the year. So we'll continue to try and take advantage of all of those opportunities to the best of our ability and see how that develops and unfolds.

I think your narrative is accurate. I think we haven't seen a quarter to our data a whole a lot of incremental expansion out of the Verizon FWA product, but we do continue to see and expect T-Mobile and AT&T deployment within the market. And I would call their slow and steady, but not -- they're not turning on huge additional [indiscernible] from the information we've gotten so far.

And then, Julie, on the structural market share, we did discuss last quarter, it's an estimate. It's a view. It's a thesis as it relates to what the future looks like. And when you think about wired broadband, we believe that longer term from an equal -- perspective, wired broadband based on the capacity needs, the speed needs and the utilization that you see constantly increasing across our both residential and business customer base, that, that will be in more of that 80% area. And then I would view the 20% is whether it's wireless only, whether it's mobile, fixed wireless access or it's satellite that really comprises that other 20% factor when you think about an adoption being nearly ubiquitous for Internet connectivity.

Got you. I appreciate the fulsome answers. I think maybe just a quick follow-up. Is it fair to characterize the rate of change for T-Mobile and AT&T fixed wireless as slowing when you say slow and steady?

No. Consistent.

That's all we have time for today. I will now turn the call back to Jim for closing remarks.

Thank you, Alexandra. Before we wrap up, I just want to thank all of our associates across the country for welcoming me into the Cable One family and for their continued focus on our customers and each other. And over my first roughly 70 days, I've had the opportunity to meet many of our associates, customers and investors, and I look forward to continuing to engage with our key stakeholders in the quarters ahead. And thank you, everyone, on the call today for your time and your continued interest in Cable One.

This concludes today's call. Thank you for attending. You may now disconnect.

Hello, and thank you for standing by. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Cable One Fourth Quarter and Full Year 2025 Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to Jordan Morkert, Vice President of Investor Relations. Please go ahead.

Good afternoon, and welcome to Cable One's Fourth Quarter and Year-end 2025 Earnings Call. We're glad to have you join us as we review our results. Before we proceed, I would like to remind you that today's discussion contains forward-looking statements relating to future events that involve risks and uncertainties, including statements regarding future revenue, customer growth, connects, churn rates and ARPU, the future competitive structure of our markets, the planned expansion of our mobile service offering, new product rollouts, anticipated cost savings and other benefits to be derived from our billing system migration and our other investments in growth enablement platforms, anticipated benefits from our mobile service offering, future cash flow and capital expenditures, potential uses for our cash flows, our ability and sources of capital to fund the retirement of our 0% convertible notes in Q1 and the upcoming MBI transaction, including the put purchase price, MBI's future debt levels, integration timing, anticipated cost and tax efficiencies, combined leverage ratios and closing date. .

The anticipated timing for closing of certain asset sales as well as the merger of Point Broadband with Clearwave Fiber and expected benefits from those transactions, future tax savings and our future financial performance capital allocation policy, leverage ratios and financing plans. You can find factors that could cause Cable One's actual results to differ materially from the forward-looking statements discussed during today's call in today's earnings release and in our SEC filings, including our forthcoming 2025 annual report on Form 10-K.

Cable One is under no obligation and expressly disclaims any obligation, except as required by law, to update or alter its forward-looking statements, whether as a result of new information, future events or otherwise. Additionally, today's remarks will include a discussion of certain financial measures that are not presented in conformity with U.S. generally accepted accounting principles, or GAAP. When we refer to free cash flow during today's call, we mean adjusted EBITDA less capital expenditures as defined in our earnings release.

Reconciliations of non-GAAP financial measures discussed on this call to the most directly comparable GAAP measures can be found in our earnings release or on our website at ir.cableone.net. Joining me on today's call is our CEO, Jim Holanda; and CFO, Todd Koetje. With that, I'll turn the call over to Todd.

Thanks, Jordan, and good afternoon, everyone. We really appreciate you joining us today. Before I get started, I want to say how pleased we are to have Jim with us at Cable One and joining us for today's call, and I'm honored to introduce him to our stakeholders who may not yet know him. .

I'll begin by covering a few takeaways from our fourth quarter and full year results, then spend some time highlighting the key initiatives we are prioritizing as we look ahead and continue to build upon the transformation we've embarked on over the last couple of years. After my remarks, I'll turn it over to Jim to share his initial thoughts on the business and the operating environment, and then Jordan will walk us through the more detailed financials.

Let's jump in. During the fourth quarter, residential broadband connect activity showed year-over-year growth, while disconnects improved significantly compared to the previous quarter. As a result, net subscriber results in the fourth quarter improved relative to the declining trends we experienced earlier in 2025, though net subscriber figures remained negative. We continue to operate in a challenging macro environment with competitive pressure from fixed wireless and fiber overbuilds.

Against that backdrop, our focus over the last 2 years has been on equipping the business to operate in a more competitive landscape by transforming our leadership, modernizing our growth-enablement platforms and redefining go-to-market playbooks. With a considerable amount of the foundational work largely behind us, our focus is on defending our existing customer base, capitalizing on profitable growth opportunities and executing on key efficiency initiatives.

I'll first review residential broadband customer trends. Residential data customers declined by approximately 10,700 in the fourth quarter. Gross connect activity improved sequentially through the first 3 quarters of 2025 and meaningfully year-over-year in the fourth quarter, while disconnects improved significantly in Q4 versus the third quarter. As a result, the fourth quarter represented a step forward relative to the declining trends of the first 3 quarters of the year.

While this reflects progress, it is by no means a standard we view as acceptable. The team is highly aligned and focused on driving continued improvement. A key driver of this improvement has been the continued refinement of our go-to-market approach, enabled by the completion of our billing platform transformation. We have introduced new products, pricing and offers to better serve value-conscious customers. We're also enhancing the experience for all customers through complementary services that support the in-home customer experience, including premium WiFi powered by WiFi 7, enhanced online security and holistic technical support for anything in the home our network is enabled.

As of the end of the year, over 1/3 of our residential broadband customers were benefiting from the advanced in-home capabilities and experience delivered by our partnership with eero, representing growth of more than 30% year-over-year. [ Selling ] adoption for this service exceeded 80% during the quarter as customers continue to recognize the experience enhancements we've invested in, and we mutually benefit from the improved customer satisfaction and reduced churn.

Simplified pricing and clear product structures are enabling our Sparklight teams to more effectively match customers with the right offerings, delivering more consistent customer experience across our footprint and stay competitive. At the same time, churn reduction remains a key area of focus, competitive pressure and customer sensitivity around promotional roll-offs continue to influence customer behavior, particularly in a heightened value-conscious environment.

That said, we saw meaningful improvement disconnects during the fourth quarter, and we're applying both discipline and urgency to retention improvement measures. Turning to ARPU. Results this quarter were consistent with our expectations and in line with the stability we discussed last quarter, which was remaining within $1 of our second quarter ARPU level. As we've noted previously, some of our go-to-market customer acquisition and retention initiatives will put downward pressure on ARPU.

We expect that pressure to be partially offset by continued adoption of value-enhancing products and services, including higher speed tiers, premium WiFi, eero Plus, TechAssist, our AutoPay program and other offerings that improve the customer experience.

Shifting to competition, I'll start with fixed wireless, which is now essentially ubiquitous across our footprint with multiple providers. Our perspective here remains consistent. Our fiber-based wired network delivers greater reliability, higher speeds, lower latency and substantial, scalable capacity for our broadband customers who continue to demonstrate growing demand for our services.

In addition, our network's excess capacity allows us to offer value-conscious packages to new customers while still protecting our accretive unit economics. Utilization trends continue to demonstrate that our network is well suited to meet growing consumer demand. In the fourth quarter, average monthly data usage reached approximately 835 gigabits per customer, a new high with more than 30% of customers exceeding 1 terabyte per month.

Despite this growth, peak hour downstream and upstream utilization remained at or below 20% demonstrating that network capacity remains well ahead of demand and will not be a barrier to growth. Moving on to wired competition. Nearly 60% of our passing now face gig-capable wired broadband competition. Of that 60%, just over 50% reflects fiber-to-the-home largely from incumbent telco providers while approximately 10% represents markets where we are the fiber-to-the-home provider competing against an upgraded gig-capable MSO. Approximately 15% of our passings we compete against 2 other gig-capable wired broadband providers.

We are aware of the broader industry consolidation occurring across the broadband landscape. Following Verizon's acquisition of Frontier, our overlap with Frontier remains less than 10% of our footprint, and a meaningful portion of that overlap has already been upgraded to fiber over the past several years. Similarly, AT&T's acquisition of Lumen's mass markets fiber business has minimal direct overlap with our smaller towns and communities and only a small contingent of passings that our markets were included in that transaction to our knowledge.

Looking ahead, we expect many markets to settle into a structure with 2 wired multi-gig broadband providers alongside wireless options both fixed and mobile only as well as satellite adoption on the rural edge. Over time, we anticipate seeing an environment in which roughly 80% of households are served by wired providers with the remaining 20% served by wireless or satellite solutions. Relative to our current penetration, that structure provides a continued opportunity to grow share over the long term and generate attractive shareholder returns.

We continue to make progress on our mobile initiative moving from the concept to live pilot over the last several months. Importantly, we view this as a complementary product that strengthens our overall value proposition, increases customer lifetime value and supports both retention and acquisition within residential broadband. During the fourth quarter, we launched a mobile pilot in 6 markets and the service is live today with a small number of customers.

Our focus has been on operational readiness, ensuring provisioning, billing, customer care and field processes are fully integrated before scaling more broadly. Early feedback has been constructive, and the team is preparing for a broader launch across the footprint expected in late Q1. With the pilot complete and the necessary platforms in place, we are positioned to scale mobile in a disciplined and financially responsible manner.

Turning to Business Services. We continue to broaden our commercial reach and sharpen our sales execution. During the quarter, we launched a broker and agent sales channel, expanding our go-to-market efforts into underpenetrated customer segments. Early engagement has been encouraging, and we believe this channel can drive incremental revenue and deepen our presence in targeted commercial verticals over time.

Performance in our carrier, wholesale and enterprise segment strengthened. Average monthly installs during the final 3 months of 2025 increased compared to the prior year period, reflecting improved execution and growing demand across these solutions. In markets where network density and responsiveness matter most, our dark fiber and direct Internet access offerings remain strong differentiators. We're also pleased to welcome Ed Butler as Senior Vice President of Business Services, effective January 2.

Ed joins Cable One from Mega Broadband, one of our long-standing investments where he most recently served as Chief Commercial Officer. Under Ed's leadership, we plan to accelerate new product launches designed to expand wallet share within our existing customer base while strengthening our value proposition to acquire new customers. This proven sales leadership will play an important role in advancing our business services strategy.

Turning to MBI and integration planning. As we've disclosed, the put option has been exercised. We expect the transaction to close in October. Given that timing, we've been deliberate about using the lead time we have today to plan thoughtfully with a target towards core integration and under a year from close. MBI serves rural America with a reliable high-speed network in geographies that are complementary to our existing footprint and their local first operated model is closely aligned with our own philosophy.

That strategic and cultural alignment gives us confidence in the combination ahead. To support that, we've emphasized early planning, tight prioritization and an agile approach that allows teams to move quickly once the transaction closes. We continue to believe MBI as a strong fit for our company and expect cost and tax efficiencies over time. And we believe the preparation underway today positions us well to deliver on those expectations.

To close, we have made changes on growth-enablement investments that better position us to execute in this competitive operating environment as we pursue the opportunities ahead. High-speed connectivity is a critical service. Demand continues to grow, and we operate a highly capable wired network with substantial available capacity. Across much of our footprint, broadband penetration remains in the low 30% range, indicating we're still under-indexed relative to what we believe is achievable over the long term.

We don't inherit customers, we have to earn them. That requires a relentless focus on delivering value, experience and reliability every day. The combination of our network, our product suite and our outstanding associates supported by our local neighborly operating model positions us to compete effectively in our markets. The work over the past several years, modernizing systems, refining go-to-market strategies and investing in our people have built a solid foundation.

With that foundation in place, our focus is clear, defend our base, grow where we see opportunity and operate with discipline. We remain confident in our long-term outlook and excited about the path ahead. With that, I'll turn it over to Jim to share his thoughts on the business.

Thanks, Todd. I'm pleased to join today's call and to share a few thoughts on the business. I'm excited to be here at Cable One and have hit the ground running, spending time with the team, listening, learning and staying focused on execution. We've got a great foundation in a business, I believe in, operating in markets where reliable connectivity is critical and a strong network that can scale to meet the needs of residential and commercial customers alike. .

This is a competitive environment, but it's also one with meaningful opportunity. We serve customers who care deeply about value, experience and reliability, and our focus is on earning their loyalty every day by differentiating our products and local service. As someone who has many years of competitive experience in the industry, I am excited to dig in and drive improvements.

Importantly, we are pursuing these opportunities from a position of financial strength. We have a strong balance sheet, substantial liquidity and a business model that generates significant and durable free cash flow. That financial flexibility gives us the ability to invest in growth, reduce debt and navigate competitive cycles.

I'd like to briefly highlight a few priority areas. First, deepening customer relationships. Retention is a powerful driver of long-term value and we see opportunity to strengthen it through consistent service quality, clear communication and offerings that provide an enhanced value proposition; second, thoughtful expansion of our converged offerings. That includes exploring complementary services that enhance the core broadband relationship, investing in advanced in-home technologies and partnering where it improves both the customer experience and the economics.

Third, how we reach and serve new customers. We'll continue to evolve our sales and service model using digital tools, data and AI in practical ways to improve efficiency, responsiveness and overall experience while maintaining the local approach that differentiates us. Across both residential and business services, we see opportunity to compete for share, deepen penetration with higher-value products and grow where the economics make sense.

All of this is supported by continued investment in our network which remains special to delivering the performance and highest reliability standards our customers expect and by ongoing commitment to disciplined debt repayment and a conservative balance sheet management philosophy. To close, I'm encouraged by what I've seen so far. The priorities are clear. The foundation is strong, and I am confident in the team's ability to execute with discipline as we look ahead.

With that, I'll turn it over to Jordan, who will provide a recap of our fourth quarter and full year financial performance.

Now turning to our financial results, touching on key Q4 metrics before discussing full year 2025. For the fourth quarter of 2025, total revenues were $363.7 million compared to $387.2 million for the fourth quarter of 2024, a decrease of 6.1% year-over-year. Residential Data and Business data revenues decreased by 4.2% and 1.3%, respectively. Operating expenses were $93.9 million in the fourth quarter of 2025 compared to $99.9 million in the fourth quarter of last year. The $6 million or 6% decrease was driven primarily by a reduction in programming costs as a result of decreased video subscribers. .

OpEx was 25.8% of revenues for both Q4 of '25 and Q4 of '24. Selling, general and administrative expenses were $92.9 million and $96.4 million in the fourth quarters of 2025 and 2024, respectively. The $3.5 million or 3.6% decrease was due primarily lower rebranding and labor costs. SG&A expense represented 25.5% and 24.9% of revenues for Q4 2025 and Q4 2024, respectively. Adjusted EBITDA of $193.9 million decreased 8.1% year-over-year, while adjusted EBITDA margin contracted 120 basis points to 53.3%.

Capital expenditures for the fourth quarter of 2025 were $74 million, a 2.9% increase from the prior year quarter and included $12.7 million for new market expansion projects and $1.6 million for integration activities. Adjusted EBITDA less capital expenditures totaled $119.9 million in Q4 2025 and compared to $139.1 million in the same quarter last year.

Shifting to our full year results. Total revenues for 2025 were $1.5 billion compared to $1.58 billion in 2024, with $35 million of the decrease attributable to residential video. Residential data revenues decreased $24.2 million or 2.6% year-over-year due to a 5.8% decline in subscribers, partially offset by a 0.6% increase in ARPU. On the business data side, revenues grew 0.35% year-over-year as growth in our fiber and carrier segments was partially offset by modest subscriber declines and pricing pressure in our SMB business.

Operating expenses were $392.1 million or 26.1% of revenues for 2025 versus $416.8 million or 26.4% of revenues in 2024, with the decrease driven largely by a reduction in programming costs. Selling, general and administrative expenses were $381.1 million or 25.4% of revenues in 2025 compared to $366 million or 23.2% last year. The increase in SG&A was due primarily to investments in growth-enablement platforms that are expected to generate meaningful operating and SG&A cost savings over time. Adjusted EBITDA for 2025 was $801.7 million or 53.4% of revenues compared to $854 million or 54.1% of revenues in 2024.

Capital expenditures were $285.3 million in 2025, a decrease of 0.4% year-over-year and in line with our previously discussed estimate. During 2025, we invested $32.8 million of CapEx for new market expansion projects and $10.3 million for integration activities. For 2026, we expect capital expenditures to remain substantially consistent with 2025 levels. We generated $516.5 million of adjusted EBITDA less capital expenditures or free cash flow during 2025.

In 2024, free cash flow was $567.6 million. Utilizing our substantial operating cash flows supplemented by over $130 million of pretax proceeds from the monetization of certain equity investments, we prudently and opportunistically paid down a significant amount of our debt during 2025. In addition to $18 million of scheduled term loan amortization payments, we also voluntarily paid down the entire $313 million outstanding balance under our revolving credit facility and repurchased $72.4 million of our senior notes and term loans at very attractive discounts, bringing our total debt pay down to $403.4 million during the year.

As you've heard us say and more importantly, you've seen us do, we will continue to target paying down debt with the focus on deleveraging the balance sheet. As of year-end, we had $152.8 million of cash and equivalents on hand, and our total debt balance was approximately $3.2 billion, consisting of approximately $1.7 billion in term loans, $920 million in convertible notes, $582 million in unsecured notes and $3 million of finance lease liabilities.

In addition, our $1.25 billion revolving credit was fully undrawn as of year-end, providing us with a significant source of committed debt financing. Our net leverage ratio on a last quarter annualized basis was 3.9x. Approximately 85% of our debt contains fixed or synthetically fixed base interest rates that are substantially below current market rates.

Although we have ample capacity under our revolver, to retire our convertible notes that mature in March, and we have the ability and the capacity to effect the MBI transaction without meeting additional external financing, we continue to actively monitor and evaluate the capital markets for opportunities to proactively affect longer-term capital solutions.

Touching on 2026 for a moment. We currently expect our cash income taxes to be between approximately $40 million and $50 million as we continue to track towards cash tax savings of approximately $120 million through 2027 as a result of the tax legislation passed in 2025. And finally, I want to say a few words on our recently announced transactions.

In early January, the MBI put option was exercised and we entered into a purchase agreement to acquire the remaining 55% of MDI that we don't already own. In 2025, MBI generated $308.9 million of revenue and had approximately 206,000 residential and business data customers across a network spanning approximately 674,000 passings as of year-end. Assuming the acquisition closes on October 1, we estimate that the MBI purchase price will be approximately $480 million and that the amount of MBI's total net indebtedness at closing will be between $845 million and $895 million resulting in a pro forma combined leverage a little above 4x.

In anticipation of the closing of this transaction, our teams have been mobilizing for months to proactively prepare for a swift and efficient integration. And as also previously announced earlier this year, we were part of an agreement whereby 2 of our remaining nonconsolidated strategic investments, Point Broadband and Clearwave Fiber will be coming together in a scaled fiber-to-the-home platform. In conjunction with this transaction, we have agreed to roll over our existing equity investment in both Point and Clearwave and remain a meaningful shareholder in the scaled and growing platform.

The combination of these 2 businesses affords Cable One with greater visibility to investment value maximization opportunities to drive best practices and greater operational efficiencies as well as bring greater alignment across the shareholder base as we continue to expand broadband access to rural and underserved communities across the U.S. This transaction, which is subject to customary closing conditions is expected to close during the second quarter of this year.

Before we open it up for questions, I want to reiterate that while the current environment remains competitive and dynamic, we are confident in the strategy we're executing in the direction of the business. Over the past several quarters, we've made deliberate investments in our people, our platforms and our go-to-market approach. With much of that foundational work now in place, our focus is squarely on execution, driving more consistent customer outcomes, operating efficiently and reinforcing the durability of our business model.

With that, we are ready to take your questions.

[Operator Instructions] Our first question comes from the line of Greg Williams with TD Cowen.

Great. And welcome, Jim. I guess, in the first question is for you, you laid out your priorities about deepening the customer relationship and converged offerings, which is helpful. But curious to hear your earning learnings about the company. As you've been there for the past few weeks, [indiscernible] what have you learned about Cable One, you can help us with. And my second question is just on the broadband trajectory.

Todd, you got -- you gave us a lot of puts and takes as we think about 2026, you're going to go after value customers, which is pressure, but then you're going to go focus on speed uptakes, things like premium WiFi, TechAssist. So I want to put that all together, I'm just trying to understand the broadband ARPU trajectory for 2026.

Thanks, Greg. Jim Holanda here. Day 10 on the job, so take everything with a slight grain of salt, but kind of early impressions and where I see opportunities Cable One, great people, great teams, very focused on the competition, execution on the plan for this year, strong brand awareness of Sparklight in our markets, coupled with some really new creative marketing and an improving digital presence.

They certainly have a sound go-to-market strategy with good segmentation and strong offers in place now that all the platforms have been standardized and the hard work the teams did last year, a very good underlying HFC network, almost 10% of the homes passed now actually being served with fiber to the home. On the cusp of launching the mobile product to 100% of the footprint here very shortly, the teams are actively involved and engaged with MDI in terms of integration planning.

Todd, Jordan, the Board and the whole team made the right strategic decisions and have done a very good job on balance sheet management, ample capacity to deal with the convertible notes as well as the MBI close at a very reasonable cost of capital, so kind of executing from that position of financial strength, as I mentioned earlier.

And where I kind of see opportunities here in the short time that I've been here, again, additional product sets to continue to add value to our existing broadband base, obviously, mobile is a great example of that and have done that in my prior life. The AI tools that are available to the industry to help on ARPUs, operational efficiencies, customer satisfaction, sales productivity, other areas.

Again, the good news is the team has already engaged those. They've already stood up some testing and trials on that. I think that's going to help. I think there's places to enhance certain of the sales channel based on my lived competitive experience, continue to monitor and evaluate the capital markets to proactively affect a longer-term capital solution. In terms of the balance sheet, is certainly on our radar screen as we go forward. and continue to invest in the network to make sure that we're meeting the needs of our customers and that we remain very, very competitive. So those are my initial thoughts on the business, Greg, and Todd, I'll turn it over to you on the ARPU trajectory question.

Yes. Thanks, Jim. Great outline. Greg, I think what you were asking for was around ARPU. Is that correct?

Yes, broadband ARPU specifically.

Yes. So as we talked about in Q3, we saw a little bit of elevated ARPU in Q3 that we discussed attributable to some of the changes as we are harmonizing a lot of the billing platform migrations. But when we released in Q3, we managed expectations around anchoring to that Q2 ARPU, which was [ $81 ] in a quarter and kind of plus or minus $1 of that, which we were within that about $0.50 below that. .

I guess, the headwinds in that were some of the ongoing focus on selling into all customers, that value-conscious customer cohort that we've discussed extensively but also being much more aggressive in head-to-head competition, not only with fixed wireless, but also with fiber. We've taken some additional adjustments on certain pricing strategies, whether that be price locks, whether that be certain packages that have some free months but really bringing about that customer acquisition that we knew would bring some of that down as well as an intense focus on retention, as you heard Jim say, and some of the initiatives of beating back some of the fiber competitors, especially the smaller, less-scaled regional over builders who we can track by the neighborhood, and we can stay well ahead of the time that they're even able to offer services.

So it's both the customer acquisition side as well as the retention side. But supporting that, as you alluded to in your question, gig sell-in remains in the 50% area. I believe we have continued opportunity there given our existing composite of gig customers is less than that. The premium in-home experience with eero WiFi 7 being launched, the security solutions, the TechAssist that we've talked about, those adoption rates continue to improve. And those are products that customers are self-selecting into with a willingness to pay and also demonstrating even a more preponderance to stay, which is improving churn and retention, and that helps support that ARPU.

We also have AutoPay Plus. We rolled that out 2 years ago. We have opportunities to make minor adjustments on that that can support ARPU as well. So we continue to think around that stability factor of where we are in kind of our current enterprise ARPU, but there's going to be puts and takes, and there's going to be some movement quarter to quarter.

Our next question comes from the line of Sebastiano Petti with JPMorgan.

Jim, congratulations. I look forward to working together. Just maybe kind of thinking about mobile. So I think, Todd, in your prepared remarks, talked about, I guess, a late 1Q launch or Jim, I'm not sure who is in your prepared remarks. Just help us think about that. Is convergence maybe something, Jim, you see given the level of competition that I guess you have faced in your prior roles.

Do you see convergence as more core to the Cable One strategy as you kind of think out to the next couple of years, particularly in the context of the fiber overlap roadmap that you guys have talked about as well as getting to 80% over time. Is this more integral? And I guess, how do you see that evolving? And I mean what kind of take rates you're seeing, even though it's kind of early days.

So just more color on mobile and convergence and how it all fits together. And then I guess just, Todd, follow-up question. You talked about, I think, 15% of your footprint faces 2 gig competition. Any kind of color on the trend on how that has evolved, perhaps, over the last several years that's been relatively steady.

Sebastiano, It will be good to do some conversations going forward. Yes, look, mobile is integral. I think Comcast and Charter have proven that since their launch is, what, 6 and 7 years now, respectively. What I will say is it does take time for the customer base to get used to the idea of the cable company offering mobile. And that has been my lived experience. And I know some of the other midsized companies kind of face that same challenge. So it's not gangbusters necessarily right out the door. But again, I think we've seen a lot of what works and what attracts customers in terms of the others who have gone before us.

It's pivotal in terms of how we think about the business and adding value to our higher-ARPU existing broadband customers and being able to give them a great value and actually save them money on a month-to-month basis in regards to that. But it does take some time for people to get comfortable with that. And we'll -- we're very focused on it. And it's part of an overall broader strategy in terms of kind of digital transformation of the customer experience, not only mobile as an added product, but as Todd mentioned, the TechAssist stuff that we're doing, the eero WiFi 7, all the things to deal with the needs of our customers, broadband needs and household communication needs are the things we're going to try to remain focused on to add value, reduce churn and stabilize the business.

And Sebastiano, on a little bit more on that, you mentioned the Q1, that is the target. The pilot, as you know, was really getting us operationally ready, making sure the enablement platform that we're partnering with had the capability sets around the billing, around the provisioning, around the customer experience, the field process. We feel really good about that with the pilot. Recall that we set the pilot up in really 3 months.

And we've been operating now for about 3 months in 6 markets. And as Jim mentioned, that's something that we intend to go company-wide with here yet this quarter. As it relates to your question around the multi -- or I think you said the 2-gig wired operators, it's a number we actually haven't disclosed in the past that 15%. But effectively, that's where there was an overbuilder against DSL and our multi-gig capable broadband service and then ultimately or subsequently, I guess, better appropriately termed as the [ LAC ] upgraded that DSL. And that then results in 3 wire gig-capable providers, us being 1 of the 3.

That number a couple of years ago was in the high single digits, so it hasn't moved much. but it's moved a little bit. Typically, what you'll find is when there's already 2 highly capable providers, most disciplined capital allocation platforms are not going to go and beat that third. But if the LAC has upgraded after somebody is already built, you do see that move a little bit higher over time.

Our next question will come from the line of Craig Moffett with MoffettNathanson.

Jim, congratulations, and I look forward to working with you again. Let me just continue with some of the questions about -- I know you haven't been there long enough maybe to have all that many specific action plan items fully fleshed out yet. .

But you surely come with some preconceived notions about what might be possible. Is video part of the strategic tool set that you would say maybe we want to take another look at video now that the rest of the industry seems to be gaining some traction? Or is it that the programming costs that are available to you just aren't attractive enough to really make it a viable sort of turn of events, I guess, to reinvest in the video product.

Good to talk to you again, Craig. I think everything is on the table in terms of potential toolkits on how we retain customers and add value and attract new ones. We do not have access to the same programming arrangements that would put us in the same bucket as a Comcast or Charter, obviously. But what we do have access to is a lot of fast channel integrated options at our disposal to enhance value for broadband customers.

The NCTC has launched their streaming package which is roughly a 40 channel, very, very low-cost streaming option. And while I think Cable One kind of leading the pack on the video decisions, almost a decade ago now was the right decision at the right time, and we'll continue to provide our IPTV streaming service for those customers that would still like to consume in that fashion. I think there are some interesting options to add value for the broadband-only universe that we have at little to no cost that we can take advantage of and putting our toolkit as well.

Our next question will come from the line of Frank Louthan with Raymond James.

So I guess more a broader question, looking at how you guys have divided up the space, clearly, there's obviously upside with the broadband subs. So what is the plan to get back to the positive adds. How long do you think that will take? And what's sort of the key factor that you see coming to Cable One that that you think can get you there?

And then one quick clarification. I think you mentioned you made the comment that FWA is ubiquitous across the footprint. Is that -- does that mean it's available widely across the footprint or fully across the footprint? Or just where it is available, it's got all 3 of the providers?

Let me address kind of the broadband question, and I kind of rattled through some of that in terms of my kind of thoughts and impressions and some of the opportunities. There is simply no quick fix on the broadband side. The entire industry is facing these kinds of headwinds. But I think when you add up all of these little things and are executing flawlessly on behalf of customers that's what it's going to take.

But there will also be a point where competition kind of has reached it, and then you're really battling on a connect by connect basis once it hits an equilibrium. And that -- I think that equilibrium has begun based on some of the WA numbers that we've seen and the OpenSignal data that we have access to. And sitting here, trying to gauge day 10 into it when it's going to happen, really not in a position to do that. But obviously, we should have -- I should have probably some more color and feelings about that in future quarterly earnings calls. And then, Todd, if you want to handle the other question.

Yes. And Frank, I'll just add a couple of other things on that, right? As you know, for the last 18 to 24 months, we've been talking about transforming the business and investing in growth enablement platforms, right? Jim alluded to the unification of those platforms and what that allows us or affords us in the capabilities and the capacity to really start executing on those growth initiatives.

We've talked about customer acquisition engine and actually developing that go-to-market playbook that was not really the the Cable One of the past. And that customer acquisition being developed and now being executed on is seeing results. We had sequential connect improvement every quarter in 2025. Q4 -- in the first 3 quarters of 2025. Q4 was better on a year-over-year basis in Connect and January continued that trend. So you had to start with adding new customers and having the playbooks, having the products, having the services to actually drive that new customer side and then maniacally focused on defending our base. The retention initiatives that we've launched are starting to also show signs of improvement.

Obviously, Q3 last year, we had a heightened churn that we all talked about. We saw a meaningful improvement in those disconnects in Q4, and that has continued into 2026, with January that has improved year-over-year and sequential. We're going to continue to drive those types of trends and focus on expanding our penetration over the long term. But as Jim said, it's not a quick fix, and we're very focused on executing on that, bringing a more competitive mindset every day, not inherently characteristic of Cable One of the past or even a lot of cable companies for that matter, but bringing that kind of focus on the customer, focus on our communities in a much more competitive mindset.

As it relates to FWA that you asked about. It is near ubiquitous from a single provider, and there's markets where we have multiple providers. So when we say that, we mean that in almost every market, there's at least one. But in many markets, you have multiple TMOs, our largest overlap from a fixed wireless perspective and Verizon and AT&T are close second. As you recall, AT&T was a little bit of a lagger in launching that, but they've been very aggressive in markets where they have not upgraded their copper DSL to fiber.

And we're putting in place the packaging and services to compete head to head with that.

Our next question comes from the line of Brandon Nispel with KeyBanc Capital Markets.

Tom, you might have just answered it or you're probably going to allude to this, but you obviously gave a lot of helpful color on the growth connect trajectory, the churn trajectory. I think just broadly speaking, like what do you want us to -- how do you want us to think about the HSD net add trajectory for next year? Is it an improving trend, I guess, every quarter throughout the year, but still obviously negative throughout the year.

And then I think more minutia here, but I saw a promotion more recently that was specifically targeted for customers in a small little market of yours in Emporia, Kansas, where you guys offered symmetrical speeds, 6 gigabit service, a 3-year price lock and WiFi included. I'm curious how many -- what percentage of the markets can you provide that type of service? And in those markets, do you see a big difference in terms of -- [ in that terms ] because that would sort of indicate where you are from a network standpoint.

Yes. Brandon, I appreciate the question on the HSD for this year. We are not providing guidance on the subscriber outlook for 2026. But I did give you how we're seeing at least some of the early trends in 2026, which I hope was helpful. As it relates to the network, the network is in great shape.

As we alluded to in some of the prepared remarks, we have highly upgraded HFC, over 50% of that is now multi-gig capable in our markets. We plan to be substantially complete on the multi-gig upgrade by the end of this year on our DOCSIS network. And in approximately 10% of the markets, we're fiber to the home. We are fiber-to-the-premise provider in Emporia. And your example is one of those. We have a smaller regional overbuilder that was looking at that and bringing our symmetrical 6 gig speeds with price locks, we believe, will be a very strong approach to the retentive nature of the customers that trust us in that market.

Our next question comes from the line of Steven Cahall with Wells Fargo.

So Todd, just wanted to talk to you a little more about the growth connect and disconnect commentary. So on Growth Connect, is that kind of driven by efforts you've made in subscriber acquisition and marketing response to efforts that you've made? I'm just trying to figure out whether kind of the market for growth connects have improved or if you've gotten more aggressive on go-to-market, and that's what's driving it, and you can maybe help us frame kind of how the market is for gross connects.

And then on disconnects, I know you had the billing migration kind of disruption in the third quarter. Have you seen churn improved kind of normalized levels? Or just kind of better on a quarter-over-quarter basis since I think losses were still a little bit elevated in Q4.

Yes. Thanks, Steve. I think it's a couple of the things that you outlined and very complementary, right? We've made a transformation in our team, and we reinvented our go-to-market strategies. We simplified our approach to the customer with pricing and packaging. We did become more intense on the branding, the sales and marketing strategies that wasn't the front foot that we had in the past.

But we also had to make those changes to the team and then we had to make those changes to platforms that allowed us to be more agile in executing on those playbooks because you've heard us talk a lot about the people, the platforms and the playbooks and that is really one of the key complementary things in terms of those new strategies that we believe is showing early results for our connects. As it relates to the disconnect side, what we talked about in the third quarter is that October had returned to the preplatform migration levels, and that remained consistent throughout the fourth quarter and into January at those levels while not to what we had seen in '23 and '24, which were some of the record levels of churn that we've had ever had in terms of high retention. We're still focused on moving that down, but we are back to pre-migration levels that really impacted us in Q2 and Q3 of '25.

And then just on share, thanks for laying out that kind of view of the world and the headroom that you think you have on share. I mean, you certainly do versus your bigger peers in residential. What do you think needs to happen for that to inflect? I feel like we've been talking about your penetration of passings for the last several years kind of being sub 40%. It seems like there's a lot of room for that to grow. What do you think sort of kicks it off into something a little bit higher?

Well, I mean maybe alluding to what the answer I just gave is there's a lot of things we haven't changed, right? We had to change mindset. We had to change team. We had to change the platforms and invest in those platforms, which I know we all wish it would happen in a quarter's time frame, but it doesn't. It was over the course of a couple of years. And we're building on that to focus on the long term of our fair share of the market.

We believe we're underindexed. But as Jim said and I would echo it's going to take time, and it's going to take the right amount of patience and the approach and the local service in these markets, even while the competitive environment remains right now very intense.

Our next question will come from the line of Sam McHugh with BNP Paribas.

Nice to having you, Jim. Welcome. In the last 2 calls, you talked about AT&T slowing down a bit of build activity. I wonder how worried you are that they were just waiting for the Lumen deal to close to come up with a bigger, more comprehensive fiber build plan in the combined footprint. I think if you could address that first? And then secondly, in your disclosure, you added now reduced stock price is a risk factor. I wonder if you could just give us a bit of detail on why you added that into the forward-looking statement disclosure.

Sam, on the AT&T front, I would say, pretty consistent with what we've said in the past, they are upgrading their DSL copper. I think there's a lot of prioritization around decommissioning that old copper plant, and we expect to see that continue. However, when they launched the fixed wireless product, they were able to also achieve some of the, I'll call it, decommissioning initiatives because you're moving customers you already have onto a different network and some of the smaller, more rural towns where it's more expensive to build less dense in terms of the overall returns for that.

We've seen them accelerate the fixed wireless side. So I think it's going to be a complement of both of those that we need to be prepared for in terms of how we compete on both of those technologies. As it relates to the disclosure, we're always going to put everything very fulsome manner in terms of what we believe are things that could create risk for the business. As Jordan's mouthful that kicks off these calls says we're going to have that quite comprehensive. And so we're always thinking about things just to make sure we're very transparent and our communication is very clear.

Yes. And can I ask a quick follow-up on the fiber overbuild. I guess we're all wondering what the terminal state of fiber overbuild is. I don't know if you guys have any updated views on how far it will go in your footprint.

Yes, I know it's a great question. It's definitely the, I'll call it, broader industry debate. I think you published on that even here recently. And the element of that is, I think, disciplined capital allocation, cost in smaller markets, density in smaller markets, the related returns of those, the demographics of some of those markets. I believe we'll have an impact on that as it relates to the specific Cable One markets.

But undoubtedly, we will expect to continue to see that move up from where it is now. and that's why we treat every single market even if we're the only gig provider in that market, like it's hypercompetitive [indiscernible] our customers' trust, driving the right product services and experience there because I believe this environment is all about the experience and the relationships and as Jim said, deepening those relationships with our customers across product portfolio.

This concludes our question-and-answer session. I'll hand the call back over to Todd for any closing comments.

Thank you, Regina. Before we wrap up, I want to thank our associates across the company for their continued focus, their grit and their determination to deliver on the critical commitments. Your commitment to our customers and communities, your commitment to bringing a competitive mindset every day and your commitment to authentically showing up for each other are collectively a very powerful recipe driving our long-term success. Thanks again for joining us today. Thank you to our stakeholders for your ongoing support of Cable One. Thanks, Regina. .

Thank you. And this does conclude today's call. Thank you all for joining. You may now disconnect.

Hello, and thank you for standing by. My name is Tiffany, and I will be your conference operator today. At this time, I would like to welcome everyone to the Cable One's Third Quarter 2025 Earnings Call. [Operator Instructions]

I would now like to turn the call over to Jordan Morkert, Vice President of Investor Relations. Jordan. Please go ahead.

Good afternoon, and welcome to Cable One's Third Quarter 2025 Earnings Call. We're glad to have you join us as we review our results.

Before we proceed, I would like to remind you that today's discussion contains forward-looking statements relating to future events that involve risks and uncertainties, including statements regarding future broadband revenue, customer growth, connects and churn rates, new product rollouts, anticipated cost savings and other benefits to be derived from our billing system migration and our other investments in growth enablement platforms, anticipated benefits from our mobile service pilot program, future cash flow, ARPU and capital expenditures, future levels of competition, potential uses for our cash flows, our ability and sources of capital to fund the retirement of our 0% convertible notes in 2026, the estimated MBI purchase price, MBI's future debt levels, our CEO succession process, the anticipated timing for closing of certain asset sales, and our future financial performance, capital allocation policy, leverage ratios and financing plans.

You can find factors that could cause Cable One's actual results to differ materially from the forward-looking statements discussed during today's call and today's earnings release and in our SEC filings, including our annual report on Form 10-K and our forthcoming third quarter 2025 quarterly report on Form 10-Q.

Cable One is under no obligation and expressly disclaims any obligation, except as required by law, to update or alter its forward-looking statements, whether as a result of new information, future events or otherwise.

Additionally, today's remarks will include a discussion of certain financial measures that are not presented in conformity with U.S. generally accepted accounting principles or GAAP. When we refer to free cash flow during today's call, we mean adjusted EBITDA less capital expenditures as defined in our earnings release. Reconciliations of non-GAAP financial measures discussed on this call to the most directly comparable GAAP measures can be found in our earnings release or on our website at ir.cableone.net.

Joining me on today's call is our President and CEO, Julie Laulis; and Todd Koetje, our CFO.

With that, let me turn the call over to Julie.

Thank you, Jordan, and good afternoon, everyone. We appreciate you joining us for today's call. Our subscriber results in the third quarter were weaker than expected, reflecting higher churn from the combined impact of macroeconomic factors, competitive pressures, promotional roll-offs and billing migration activities. While overall customer losses were disappointing, we saw modest improvements in third quarter connects as compared to the prior year period, a trend that carried into October.

ARPU performance along with disciplined execution allowed us to deliver financial results largely consistent with the second quarter. We anticipate ARPU to remain stable for the remainder of the year.

We believe our focus on simplified pricing, segmented marketing campaigns and value-enhancing product and service offerings is laying the groundwork for improved financial performance over time. However, we continue to navigate a challenging macro environment, which is why our focus remains on execution, retaining existing customers, retooling our go-to-market approaches, and working to position Cable One for durable long-term growth.

I'll first review residential broadband customer trends. Residential data customers declined by 21,600 in the third quarter, driven by the factors I noted. As I mentioned, momentum and Connect have continued with year-over-year growth for the quarter and sequential gains each quarter of this year, and that momentum has carried into October. Positive signs that our initiatives are resonating even in a complex and competitive landscape.

One major initiative enabled by our billing platform transformation is the launch of a new go-to-market pricing structure across our MSO footprint. By significantly simplifying our pricing Sparklight representatives can now more easily match products and price points to individual needs and are doing so faster, thereby improving overall customer experience.

At the same time, during the third quarter, we experienced increased churn. Given the economic and competitive pressures in the market, we believe some customers were particularly sensitive to promotional roll-offs and to touch points tied to our billing platform transformation. Similar to our systematic efforts to drive new connects, we are taking an equally aggressive approach to addressing churn.

We saw churn improve in October in line with October 2024 results following this period of significant customer impacting activity. As we continue aligning our products with customer needs, we are advancing our customer segmentation strategy.

Our Lift product positioned as value by need resonates with cost-conscious customers, providing a sustainable path to reach incremental households and expand penetration. We are also seeing strong sell-in among our premium tiers, with about half of new customers choosing gig or faster speeds, including our expanding multi-gig offerings, up from roughly 40% sell-in last year.

Average monthly usage is now around 775 gigabits per customer, underscoring sustained demand for high-capacity service while peak utilization remains below 20%. Through these and other initiatives, we are extending our reach across a diverse range of customer segments.

Turning to ARPU. The increase this quarter was primarily driven by realizing a full quarter of the segmented pricing changes implemented during Q2 as well as a higher-than-usual level of promotional expiration. Looking ahead, we expect some of our retention initiatives will put downward pressure on ARPU, partially offset by the continued adoption of value-enhancing products and services, resulting in stable ARPU through the balance of the year.

As part of our segmentation strategy, we have been expanding our value proposition beyond the core broadband service. A key example is Tech Assist our $10 per month support service that offers customers expert support for a wide range of Wi-Fi connected products from PCs and smart TVs to tablets, security cameras, thermostats and more. Tech Assist helps customers keep their technology running smoothly and strengthens our role as the trusted neighbor in their homes. While we initially view Tech Assist as a modest contributor in the near term, adoption has exceeded our expectations to date, and we are optimistic about the long-term opportunity it represents. We are building on the success of this initial launch with our recent introduction of 2 new Tech Assist products, one covering home entertainment and connected portable devices and another that adds device protection to the tech support assistance included in the original offering.

Turning to our mobile initiative. I'm especially proud of the speed at which our team has worked to bring this product to market. We announced our plans to pilot this product on our August earnings call, began associate testing in October and plan to launch unlimited plans starting at $25 per line in select markets later this month. We believe mobile will help reduce churn, deepen the adoption of our services and increase customer lifetime value.

As we launch, we'll continue to learn through targeted pilots and refine how mobile fits within our broader strategy with plans to share additional details on our go-to-market strategy once the pilot phase is complete.

Before closing, I want to briefly address our leadership transition. As we've previously shared, I will be retiring from Cable One, but will remain as a senior adviser through 2026 to support a seamless transition. The Board has retained a leading executive search firm and has made significant progress in the comprehensive search process for the next CEO of Cable One. The goal is to achieve a smooth transition and facilitate the continued execution of our long-term growth strategy.

We remain focused on executing our strategy, and I am confident that our talented leadership team and dedicated associates will continue to move the company forward.

To close, we're encouraged by the continued progress, stronger connect trends through the quarter and in October, year-over-year connect growth paired with another month of sequential churn improvement. We remain focused on executing initiatives that both strengthen connects and reduce churn, and we are looking forward to the results of our upcoming mobile pilot, which we believe could further enhance the customer experience and support growth over time.

And now, Todd, who will provide a recap of our third quarter financial performance.

Thanks, Julie. Starting with the top line. Total revenues for the third quarter of 2025 were $376 million compared to $393.6 million in the third quarter of 2024. Residential video continued to account for the majority of the year-over-year decline, down $8.7 million or 16.2% due to video subscriber churn. Residential data revenues decreased $2.8 million or 1.2% year-over-year, driven by a 5.1% decline in subscribers, partially offset by a 3.2% increase in ARPU.

On a sequential quarterly basis, residential data revenues declined by 0.8%.

Third quarter business data revenues grew 0.4% year-over-year. This growth was driven primarily by our fiber and carrier segments, offset by some continued subscriber and pricing softness in the SMB segment. The Fiber & Carrier segment benefited from strong sales momentum, higher connection volumes and our ability to capitalize on new market opportunities. Compared to the second quarter business data revenues increased 0.2% sequentially.

Operating expenses for the third quarter of 2025 were $96 million or 25.5% of revenues PAUSE compared to $104.6 million or 26.6% of revenues in the third quarter of last year, with the decrease driven largely by a reduction in programming costs.

Selling, general and administrative expenses were $100.8 million for the third quarter of 2025 compared to $88.4 million in the prior year quarter. SG&A as a percentage of revenues was 26.8% for Q3 of 2025 compared to 22.5% for Q3 of 2024 with the increase driven largely by noncash stock-based compensation, other labor costs and investments in growth enablement platforms.

As discussed last quarter, the implementation of these platforms is expected to generate meaningful OpEx and SG&A savings over time as we realize greater automation and operating efficiency.

Adjusted EBITDA for Q3 of 2025 was $201.9 million, representing 53.7% of revenues compared to $213.6 million or 54.3% of revenues in Q3 of last year and $203.2 million or 53.3% of revenues in the second quarter of 2025. Capital expenditures totaled $71.8 million in the third quarter, a decrease of $5.2 million or 6.8% year-over-year. During the quarter, we invested $4 million of CapEx and new market expansion projects and $2.7 million in integration activities. We now expect full year CapEx to come in at the high $200 million range versus our previously articulated $300 million area estimate.

Adjusted EBITDA less capital expenditures or free cash flow, was $130.1 million in the third quarter of 2025, equating to a conversion ratio of 64.4% of adjusted EBITDA. In the third quarter of 2024, free cash flow was $136.6 million and 64% of adjusted EBITDA.

Our business generates a significant level of cash flow and we continue to assess the optimal use of those funds in order to maximize long-term shareholder value with our current primary focus on disciplined debt repayment.

Supplemental to our operating cash flows. During the third quarter, we monetized our equity investments in Ziply and Metronet. These divestitures generated $124 million of combined pretax proceeds and resulted in the recognition of $67 million of gains on the initial invested amounts. Utilizing our operating cash flows and investment proceeds, we paid down nearly $200 million of debt during the third quarter.

On top of the approximately $5 million of scheduled term loan amortization payments, we voluntarily paid down $173 million of revolver borrowings and opportunistically retired over $20 million of our senior notes at a favorable discount.

Through September 30, we now retired over $313 million of our outstanding debt in 2025.

Additionally, after the quarter closed, we repaid an additional $25 million of outstanding borrowings under our committed $1.25 billion revolver.

As of September 30, we had approximately $167 million of cash and equivalents on hand, and our total debt balance was approximately $3.3 billion consisting of approximately $1.7 billion in term loans, $920 million in convertible notes, $613 million in unsecured notes, $55 million of revolver borrowings and $3 million of finance lease liabilities.

We ended the quarter with approximately $1.2 billion of the $1.25 billion committed liquidity available under our revolving credit facility. Our net leverage ratio on a last quarter annualized basis was 3.9x. Over $2.7 billion of our $3.3 billion of debt contained fixed or swap fixed base interest rates that are substantially below current market rates. Although we expect to be able to retire our convertible notes with churn in March 2026 without needing additional external financing we continue to monitor the capital markets for attractive opportunities.

Assuming the MBI put option is exercised and using an October 1, 2026 closing date, we now estimate that the MBI purchase price would be approximately $475 million to $495 million. We continue to estimate that the amount of MBI's total net indebtedness at closing will be between $845 million and $895 million.

And one final note, subsequent to quarter end, we entered into an agreement to sell certain fiber-to-the-tower contract rights to a third-party for approximately $42 million. Concurrently, our Clearwave fiber joint venture agreed to sell a meaningful share of their assets to the same third party. These transactions are expected to close by the end of first quarter of 2026.

With that, we're ready to take your questions.

[Operator Instructions] Your first question comes from the line of Craig Moffett with MoffettNathanson.

Todd, thank you for the update on the balance sheet and the debt you've paid off. Can you just update a little bit more about where you would like to target your leverage and how low you think you might take it? And then a more kind of general strategic question, which is -- just what might a more dramatic approach to try to address the -- particularly the broadband ARPU issue in my mind, but the broadband net add problem in general I'm sure you talk internally about sort of what are some potentially more dramatic approaches to try to right the ship, if you will. What might those look like?

Craig, thanks for the question. I'll kick that one off on the balance sheet, inquiry. Specific to leverage as we articulated in our prepared remarks, we've already paid off over $300 million in debt this year, and that will continue to be one of our primary capital allocation priorities. The business generates a meaningful amount of free cash flow, leverage, free cash flow we benefited from some of the congressional tax payments -- tax legislation recently passed as you've seen this quarter, where that was a really miniscule amount of cash taxes. So we'll get the benefit of that going forward as we've discussed in the past.

We do have to continue to focus on deleveraging. We've operated this business in the past between kind of 2.5x and 4.5x. But that being said, you have to be conscious of what the cost of capital environment looks like when we were willing to take it up to higher levels. It was for strategic transactions. It was in a much lower cost of capital environment. It was in a much less competitive environment, to be honest with you. And so we think about all those things when you think about targeting or philosophical approach to balance sheet management which I would say is much more in the high 2%, low 3x overall leverage ratio that we're going to continue to focus on driving towards with disciplined debt repayment.

And I'll hop in on the second one that you feel free to join as well. I mean I don't think we'll specifically outline details of what we would be doing to grow our customer base, given the competitive environment and understanding who listens to calls. But what I can say is that work has been done and progress is absolutely being made now that we can move past some of these very large platform installations and migrations. Those are behind us. And I think that it might actually be instructive to understand what happened in the third quarter and what things have looked like since the third quarter.

There's no doubt that the third quarter customer loss was disappointing. But thankfully, October seems to be different in some significant ways. But first, let's go to the third quarter. In the third quarter, Connect showed modest improvement over the last third quarter. And actually, August, September and October all outperformed last year's connect. So that's half of the net add equation, right?

And that is why we made the comment that we feel like our initiatives seem to be resonating to bring more customers in the door. However, in the third quarter, disconnects were elevated. And we had a confluence of activities in a compressed time frame from the overall macroeconomic environment, competitive pressures continuing, of course, higher-than-ordinary promotional roll-offs, so they're going to higher rates and a billing migration that touched 3 quarters, 3/4 of all of our customers.

Our churn did spike with all of that happening at the same time. And regarding the billing migration, I mean, we are super pleased with the increased capabilities and the efficiencies of this platform, and we can even talk about how we've used it already. It's Agility much better than our previous one. We have been able to isolate that this was also a factor in our increased churn. So in a world where there are multiple choices for broadband, a touch in the form of a new name on the bill that they've never seen before.

A new build date, a bill date gets moved. Normalized rates as acquisitions come into Sparklight. All of those things with the billing migration give customers an opportunity to review who their provider is. Now the good news is we believe that any heightened churn associated with the billing migration is now behind us because churn has continued to improve in October. We saw connect at higher levels than last year, same period October and Connect grew sequentially month-over-month in October as well.

So that was the third quarter. Going into October, again, October Connect continue to be higher month-over-month and year-over-year and disconnects in October fell back to pre-third quarter levels. So that's not enough. I mean, that's fairly good news, we think, but that's not enough. We're continuing to drive initiatives to bring connect levels higher lots of work in the segmentation area, multi-gig launches, 2 and 6 gig web sales, a lot of work being done on our online platform now that we have a centralized billing platform. That's the same for all the companies.

And we're also working on loyalty and retention that side of the business as well. A lot of work going on with high LTV love, if you will, segmentation and targeted save offers as well as uses of AI and our turn models. So hopefully, that gives a little more flavor, a little bit of PAUSE story behind the numbers of the third quarter and what we see going into the fourth quarter.

Your next question comes from the line of Greg Williams with TD Cowen.

Great. Just maybe Julie dovetailing off the last topic. Any way to quantify between the competition and the promo roll-offs and the billing migration friction. Is there one more to blame than the other? Or is it just sort of a equal perfect storm of events here because some of them are onetime in nature, it will go away, but things like competition will remain, if not get worse.

Second question is just on the broadband strength. You gave great color on the fourth quarter with puts and takes. As we think ahead in 2026, obviously, not asking for guidance today, but just generally in 2016, if you can help us with sort of puts and takes or price hikes on the table? Are there more promo roll-offs? And maybe as an all said, are you attacking more value segments? Any color would help.

Okay. I'll try to tackle that one. There's a lot there, Greg. It was -- when I said a confluence of a lot of activities in a compressed time, all of those things affected third quarter churn, which was unusual for us, right? We have had historic lows, and this was definitely a spike. Part of it, the billing migration touching 750,000 people with different things on their bills was part of it. But when you go through a billing migration, for those of you who've done it, you have to put a freeze on your current customers as you move everything over.

And what that means is that there's a section of customers that don't get their bill and they don't go through their normal cycle for a period of time. Those get delayed for about 2 weeks and some a little bit longer, 3 weeks. What that means is customers have larger bills by the time they actually have to pay, which does cause a spike in nonpay. So it really was a confluence of a lot of things.

And we have torn apart the pieces and parts and no one piece bigger than the other. On the competition side, do we get disconnects because of competition. Of course, we do. But by and large, our problem related to competition has been primarily related to cell phone Internet and not getting connects. And that is an area that we've made a lot of inroads on. So all of the things that I mentioned were part of the reason for our increased churn, which we've now seen come back down to pre-migration levels.

In terms of 2026, CABO has not had a cadence of annual rate adjustments for our high-speed data customers. We do do that for video customers due to programmer increases. So we do not have a planned rate adjustment for our HSD service for HSD customers at this time. But we do continue to explore other avenues to increase revenue. For example, we are currently exploring our AutoPay Plus program and seeing how it aligns with others in the broadband telecom space as an example. I hope that answers your question.

Yes. And Greg, just one thing to jump in on that I think would be helpful for the audience and for you, hopefully, as Julie was talking about that nonpay cycle, we have and we're obviously talking quite a bit about October because when you go through a migration like that, there's quite a bit of noise and it was the confluence of events. But the non-pays in October, as we've seen from an attrition rate are approximately half of what we saw in those spikes in August and September.

And so that is something that I would say is also maybe like you said, an anomaly that's behind us and not something that would be recurring. The competitive intensity it is recurring. We have to be on our toes, reach price and the packaging of continuous state of rivalry how we think about every single day going to market is what we've done to build the team that we have now, why we made the critical investments in those platforms and now really starting to see the agility of executing on those playbooks as we've talked before.

Your next question comes from the line of Sebastiano Petti with JPMorgan.

And I guess just kind of following up on the theme of questions thus far this evening, but related to broadband competition, I think your larger cable peers have kind of called out low end kind of pressure. And I don't know if that is just FWA as AT&T may be Internet AirScale, but -- can you maybe perhaps comment from a competitive standpoint as you kind of think about your subscriber base, the churn that you saw on a nonpay basis, but maybe voluntary churn, is there any low-end pressure there, to speak of.

And then I think, Phil, I think you did talk about the Lift products in your prepared remarks, but where are we with the FlexConnect rollout? Is that still in the early stages as you guys think about the improvements in connect volumes in the fourth quarter and beyond as you look to stabilize things? And then lastly, I guess, Todd, I mean, following up on the leverage kind of question or balance sheet. Are you still confident in remaining below 4x net leverage as you kind of bring MBI in over the next 12 months?

Great. I'll go ahead and start. Low-end pressure I would say, yes, as it relates to cell phone Internet increased marketing, there affecting connect. However, again, August, September, October, all higher connect months. We seem to have found some go-to-market strategies that are resonating with our customers. And listen, the onus is on us, to provide services at levels and price points that customers want and Lift and Flex go directly to that lift accounted for a modest but growing share of our gross adds this quarter, and the product is allowing us to reach that value by need customer segment.

And we have been tracking them and the retention of these customers, tracks meaningfully better than our overall base. It, of course, requires customers to demonstrate financial need in order to qualify for that service, which naturally limits broad cannibalization and helps preserve the integrity of our core broadband tiers.

We expect Lift to be net accretive supporting incremental growth and strong retention amongst these price-sensitive segments, the slow in that you referred to. Flex is a product that can help the value by choice versus value by need customer, someone who can't qualify for Lift PAUSE -- but once something in that same price range, which you could imagine, would be the same sort of people who might be interested in cellphone Internet, but with more reliability and unlimited data, higher speeds, et cetera, et cetera, in many cases.

Flex relaunched late in Q3 and only one channel in our sales center, and it's expanding to multiple channels all channels in the fourth quarter. So we will be able to report out on it on our next call. The good news is our connects are trending nicely even without the benefit of Flex in Q3. So there's the silver lining.

And Sebastian, on the leverage and the balance sheet question, we're going to continue to tackle that numerator, as I already talked about in terms of the debt repayments, whether that be through our organic cash flow or monetization of strategic investments as we were able to benefit from this quarter with Ziply and Metronet. Of course, we're focused on driving the improvement in the denominator over time as well in that ratio. But inevitably, when you do have a customer attrition rate like we had this quarter, it has financial implications. And as we look at that, we can address an offset to that with additional cost savings initiatives, which we're leaning into, and we've talked about in the past, and we'll continue to be very focused on, especially as we get through these platform migrations where you gain a lot of those efficiencies from the new platforms.

But I would anticipate that we're still in and around that 4x area in conjunction with the MBI transaction in late 24 -- late '26.

Got it. And then anyone to maybe quantify the proceeds from the tower fiber to the tower sales for yourselves and clearly.

So $42 million is the agreement, no proceeds yet. We just entered into the agreement on a direct basis, and that is effectively some contracts that we still owned that were in the Clearwave fiber market.

The agreement that Clearwave Fiber, our joint venture entered into with the same third-party is for all of the network assets in that specific region, and that is an undisclosed amount. But effectively, our direct proceeds will ultimately be in that $42 million area.

Your next question comes from the line of Steven Cahall with Wells Fargo.

Maybe first, just wanted to ask about move activity in this context of a lot of competition for subscribers. I think historically, when activity picked up, it was a tailwind I know it's been muted the last few years. But if we do see lower rates and more activity, given all the products that are out there, do you see that as a headwind or a tailwind to your Connect activity?

And then relatedly, as we kind of get to churn from here, do you think it's similar to where it was in the first half of the year? Or is it still a little bit of headwind and then last one, Todd, just wondering if SG&A slows in Q4, if it remains at levels where it was in Q3?

To move activity is still low. And so this is a game of jump balls. So it's, again, incumbent upon us to win any opportunity to have folks look at Sparkle. It's interesting, one of our go-to-market strategies is to have a very particular claim for each market place that is verified by a third party. So it's not just us talking about ourselves. So it might be a a claim on speed, for example, from Ookla, maybe open source. But one of the claims that several of our markets use is customers who come to Sparklight, stay with Sparklight. And that is based on Kagan, the Media Research Group of S&P Global Market Intelligence, who declared Sparklight #1 in customer loyalty among major U.S. broadband providers in their Q1 2025 media census survey and that was due to our lower churn. So it's -- whenever there is a chance for Connect in town, it's incumbent upon us to get that win I mean I think, again, with Connect trending up, we're finding some things that work. I think your second question was about churn in the fourth quarter. Am I right?

That's right. Yes.

Okay. Yes. As Todd said, October was half of what August and September were in terms of nonpay, right? And overall churn is back to pre-migration levels. So we would consider us back to normal.

Yes. I would say, Stephen, that we definitely feel like there's still an opportunity for us to improve on that. To your question around like pre even some of the migration levels. And we recall, we started this migration in Q4 of '24, and it was a phased approach. So it's been an important and critical process that the team did well on in navigating, but it's also been putting us in a little bit of a hand strong situation relative to not only the Connect side of the equation, but a lot of the new retention initiatives that we have.

So we're going to really focus on that execution of retaining customers driving into that loyalty factor that Julie just alluded to, retooling a lot of the go-to-market strategies to even capture more of those moves. I don't think we or maybe even the industry did great on those in the past, but we all know that there are additional alternatives and there's different tactics to drive that awareness from a branding perspective and from a connect perspective and then just really reignite the growth mindset in terms of how we bring that element of winning strategies to bear each and every day with our associates and in our communities.

You asked about SG&A, I think, as well, it is heightened this quarter. I talked about it in the prepared remarks, a little bit of the noncash stock comp that I talked about last quarter, that will still be in Q4 of '25 here. But when you're going through these migrations, you have incremental labor expense, both internal labor as well as contract labor. And then, of course, we talked about last quarter, we will start to see the benefits, some of these cost savings coming into the financials in both OpEx and SG&A at the tail end of this year, but really more on the run rate basis for 2026.

So I would anticipate that you see that come back in line.

Related to retention as well. I mean, we talked about some of the things that like we were somewhat pleased at how things are proceeding since the billing migration but that we will be leaning into even more to drive even more connects and really working on the retention side as well, even as churn comes down.

So working on retention overall, but also a lot of tests going on. We talked about promo roll-off. And when someone goes from a promotional to a full price or higher rate, that certainly can elevate churn in the short run, but we have done deep analysis on these cohorts and how they roll off in their first month and subsequent months, and it proves that the overall retention of these customers as we track them versus the control of the business as usual customers is a good ROI. Obviously, that's because of increasing ARPU. Well, we are working on tests for retention for our promo roll-offs because those promo activity will continue at those elevated levels through the end of the year. And so we are doing test against those segments to see what we can do to help keep more longer. So working retention on all sides of the business.

Your next question comes from the line of Brandon Nispel with KeyBanc Capital Markets.

Two quick, I think, on the competitive environment. One, could you just update us on where you think you are from a fiber overlap standpoint within your footprint? And then two, you talked about fixed wireless sort of being the main competitive factor. AT&T has talked about rolling out AT&T Air more broadly, really starting this month. How are you thinking about the competitive impact of that product starting to roll out more broadly going forward?

Brandon, it's Todd. The fiber overlap that we talked about last quarter being in kind of that low to mid-50s is pretty consistent this quarter. As you do recall, and we've talked about before, one of the most ambitious kind of movement in that was AT&T's upgrade PAUSE from DSL to fiber. And we did see that slow a little bit undoubtedly because of where they're putting more emphasis in some of the markets that are smaller, more rural where we do have a considerable model overlap with them on the AT&T Air product. So kind of answering both of your questions, one is fiber overlap, pretty consistent. You'll see it in select areas, but from the primary drivers of it being lack upgrades, that hasn't accelerated in any way.

And then the FWA, we've got meaningful overlap in our markets from what we see from ground truth as well as third-party research with T-Mo. We have basically nearly all of our markets that have it from 1 of the 3 providers and AT&T was, I would call it, the lagger in launching that. But as here in the last, really, 3 to 4 quarters has been the most aggressive of rolling it out in areas where they are still copper only, and we would anticipate that, that will continue.

Yes. And I mean I think that's where Flex finally getting out has a good chance. So it will be interesting to see how it performs. And don't forget, we're launching mobile in November, which is amazing given that we just sign the deal in August. But at any rate, we're going to be able to market to our customers just like they market to theirs. So it's going to be a more level playing field.

Your next question comes from the line of Sam McHugh with BNP Pariba.

Two questions, I guess. One is a follow-up on gross add and churn. You're talking about gross ads being up. I think I heard you say churn was down year-over-year in October. So maybe you could clarify. So I guess with that in mind, could we see broadband losses actually stabilize in the fourth quarter? Like how confident are we in that momentum continuing? And the second one on the sale proceeds, kind of multipart, Todd, the $123 million you booked, that's a pretax number. That was the question one.

And then on the fiber proceeds, the same question, is that -- and is that only your direct sales? Like could there be some pass-through from Clearwave as well? And I guess lastly, like how much do you think you have left to divest now? Are we looking at similar amounts to left?

I'll start with the churn question. October, yes, down year-over-year. That is correct. You mentioned something about gross connects, Sam, but I'm sorry, I did not catch it. Go ahead.

Just saying that you're talking about, they were up in October again and through, I think, August, September too. So if we flow that through for the rest of the quarter, if gross adds are up and churn is down and that would suggest a pretty decent improvement in Q4.

You said it, not me.

Yes. I would maybe one anecdotal thing, Sam, just to add is the month of October, it's a month, right? But both from a connect improvement year-over-year and a disconnect improvement year-over-year. That's the first month that's happened in 17 months PAUSE -- so it's definitely a good indicator in our mind, but definitely something that we have to continue to execute upon.

And I think then moving into the other question on the sale proceeds. Yes, those are pretax but as I'd previously articulated, we've got some pretty good tax or kind of tax insulation there relative to some of the other previous losses that we had taken on strategic investments. And so a very meaningful amount of that flows through in terms of what we paid off in debt for this quarter. And then with the announced agreement with the fiber-to-the-tower contracts

Again, that's not a sale of fiber. That's just a contract. The actual infrastructure was owned by Clearway Fiber that will also have a pretty high tax efficient flow-through as it relates to proceeds to be allocated under our capital allocation philosophy right now. What's left is very speculative. I would say that we've talked about what the path has been and a disciplined focus on monetizing these strategic investments and using those proceeds to pay down debt, starting even in 2023, we do expect to continue to see interest and likely ongoing consolidation just from a broader sector perspective.

But beyond that, from a policy perspective, we don't speculate on M&A.

Your next question comes from the line of Frank Louthan with Raymond James.

This is Rob on for Frank. So you kind of you kind of touched on this a bit earlier, but what are some of the products you're having particular success with. Are there any offerings you're seeing an especially strong take rate for? And then switching gears slightly, how would you assess the trajectory of your video declines right now relative to your internal expectations? And what can we sort of expect for the pace of those declines going forward?

When I think about what we see resonating. I think it is not one thing. It is a lot of things put together to tell you the truth. We talked about our go-to-market strategy that Tony and team have been working on and using third-party and AI data to deeply segment customers and bring to them the things that they most want and need seems to be those sorts of messages in an environment where we are seeing as trusted neighbors to our customers in terms of how we deliver service, again, seems to be resonating.

What else can I tell you about what's working? Well, wallet share, our prices for HSD, our ARPU is driven by people are high LTV based, and then we sell in multi-gig, whether that's 2, even up to 6 gig symmetrical in some cases. But also, we've had just tremendous success with products that customers get to choose for themselves. In other words, they see a need and they pick and choose whether they want it or not.

So Secure plus part of securing their WiFi environment in their home, very important to a lot of customers. Our tech assist program service really is doing so well. That's $10 a month that we're launching a $15 a month and a $25 a month service that is similar to those that cover certain different devices and services but very much similar to that original tech assist. So we've been successful in wallet share. And it's not just wallet share for us. It's helping customers with the need that they have. They get very frustrated with having a doorbell connect to WiFi or thermostats, for example, or -- and then the newer products will be handling things like home electronics like TVs and laptops and headphones and gaming systems, things like that. So things that actually help make their life easier. That gives a bit of flavor.

Yes, Rob, I'll just jump in there as well. You heard Julie talk about euro, but our adoptions continue to see really good increasing momentum there. we actually had our strongest quarterly sell-in to date with that product. And we also look at that as what are multi-device options for that, really, all of it about solving problems in home given we have such a high reliability standard to the home, we were also now in an -- in a position to benefit from the opportunity of really having a much better insight inside the home with that partnership.

And then the multi-gig sell that Julie was alluding to, that was also meaningfully higher than any other category as it relates to growth for this quarter. So you see those driving good support for the stability of our ARPU. And I say stability, as I've said numerous times, even though you saw it move up a little bit this quarter. But I would anchor investors and our analysts to some of the previous comments that we've made in Q2 around stability being plus or minus $1 because it's going to move from time to time and quarter-to-quarter. But about $1 plus or minus off of that 81-ish Q2 reported ARPU.

And then on the video side, sorry, you asked that. Yes, we're continuing our strategy around converting the video customers to IP, those that want to remain a video customer of ours. Obviously, the number of video customers that we have left is quite small and getting smaller and has been a philosophical approach from over 10 years ago that, that wasn't really going to be what was driving the power of the bundle as much as that was the data product. And so they even mentioned to it, that's a product we're going to focus on keeping profitable through passing on price increases. That isn't the greatest experience for customers so that attrition rate has continued to be pretty consistent.

I wouldn't expect that to be much different and we're going to be very focused on getting that IP conversion complete, which then allows us to reallocate that QAM spectrum to the data upload the data upload capacity and capabilities.

We have reached our allotted time for the question-and-answer portion of today's call. I will now turn the call back over to Julie Laulis for closing remarks.

Thank you, Tiffany. Before wrapping up, I want to thank our associates for navigating a tremendous amount of change in driving meaningful progress over the past year. As our major platform initiatives become fully embedded into our daily operations, we're leveraging these tools to serve our customers with greater efficiency and effectiveness than ever. Thanks again for your time and interest in Cable One.

Ladies and gentlemen, this concludes today's call. Thank you all for joining. You may now disconnect.