Despite Shrinking Subscriber Base, Cable One Posts Strong Quarter

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Cable One (NYSE: CABO), a provider of video, voice, and data services, reported its third-quarter results after the market closed on Nov. 2. Both revenue and earnings grew, driven by strong growth in the company's residential data and business services segments. Cable One continues to lose voice and video subscribers, but higher revenue per subscriber across all segments is helping to offset a declining subscriber base. Here's what investors need to know about Cable One's third-quarter results.

Cable One: The raw numbers

Q3 2016

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Q3 2015

Growth (YOY)


$205.5 million

$198.2 million


Net income

$20.9 million

$19.4 million


Earnings per share




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    Data source: Cable One Q3 earnings report.

    What happened with Cable One this quarter?

    Revenue growth was driven by residential data and business services.

    What management had to say

    Cable One CEO Tom Might pointed to a significant increase in the company's adjusted EBITDA margin:

    Our strong financial performance generated over the past year continued in the third quarter. Our Adjusted EBITDA margins have increased more than 300 basis points from 39.1% to 42.4% during the last year, fueled by our residential HSD and Business Services revenue growth.

    Cable One also provided trailing-12-month subscriber figures:

    During the twelve months ended September 30, 2016, we had a reduction of 9,297 total customers, or 1.4%, due to a loss of 13,753 residential customers, representing a decline of 2.2%, partially offset by an increase of 4,456 business services customers, or 9.6%.

    Looking forward

    Operating expenses grew by just 1.9% during the third quarter, which allowed Cable One's bottom line to grow faster than revenue. The company's headcount was down 7.6% year over year, which helped to keep costs in check. Operating income surged nearly 30% year over year, with a higher tax rate reducing net income growth.

    The general trends at Cable One remained the same during the third quarter. Video and voice subscribers are in decline, while high-value data and business services subscribers are on the rise. The net result is growing revenue and rising profits.

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