Cable company Cable One (NYSE: CABO) reported its first-quarter results before the market opened on May 4. Revenue grew slowly as strength in data and business services counteracted weakness in video and voice, and net income surged due to various one-time items. The acquisition of NewWave Communications closed after the end of the quarter, so revenue will see a boost in the second quarter and beyond. Here's what investors need to know about Cable One's first-quarter results.
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Cable One: The raw numbers
Data source: Cable One.
Image source: Getty Images.
What happened with Cable One this quarter?
Growth was driven by residential data and business services, with all other segments posting sales declines.
- Residential data revenue grew 8.1% year over year to $90.2 million.
- Business services revenue grew 13.2% year over year to $27.0 million.
- Residential video revenue slumped 3.2% to $72.5 million, residential voice revenue was down 12.8% to $9.9 million, and advertising sales fell 19.7% to $5.6 million.
- The number of homes passed rose 1.6% to 1.675 million, while the total number of customers dropped by 0.7% to 661 thousand.
- The number of non-video customers surged 13.7% to 353.2 thousand, while the number of business customers jumped 8.5% to 52.5 thousand.
- Average revenue per user increased 6% for residential data, 10.7% for residential video, and 4.2% for business services. ARPU declined 1% for residential voice.
- The number of employees declined by 3.4% year over year.
- Adjusted EBITDA increased 14.6% year over year to $97.9 million. Adjusted EBITDA less capital expenditures rose 6.8% to $61.9 million.
- Cable One's acquisition of NewWave Communications closed on May 1.
What management had to say
Cable One President and CEO Julie Laulis commented on the first quarter and on the acquisition of NewWave: "Our strong results over the past two years continued in the first quarter of 2017. We believe our acquisition of NewWave Communications, which closed on May 1, 2017, will provide an opportunity for additional growth in the future."
With the first quarter ending in March, the NewWave acquisition didn't have an impact on the company's results. Net income surged during the quarter, but the increase was boosted by a change in an accounting estimate related to capitalized labor costs. Net income would have increased by just 9.1% absent this item. Cable One also recognized a net gain of $6.1 million on the disposal of assets, which further boosted the bottom line.
Overall, the story remained the same at Cable One. Growth in data and business services offset declines elsewhere, leading to slow revenue growth. The NewWave acquisition will add more than 200,000 residential primary service units and 31,000 business PSUs, giving Cable One a major subscriber boost that will drive revenue higher.
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