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WideOpenWest Earnings Call: Mixed Outlook Amid Growth and Challenges

WideOpenWest Earnings Call: Mixed Outlook Amid Growth and Challenges

Wideopenwest ((WOW)) has held its Q4 earnings call. Read on for the main highlights of the call.

The recent earnings call for WideOpenWest presented a mixed outlook for the company. While there were notable advancements in greenfield expansion and adjusted EBITDA growth, challenges persist in subscriber retention and revenue declines, particularly in high-speed data and video services. The company’s strategic initiatives and improvements in Average Revenue Per User (ARPU) offer some positive momentum, yet the ongoing subscriber and revenue losses remain a concern.

Greenfield Expansion Success

WideOpenWest has made significant strides in its greenfield expansion, doubling its all-fiber footprint in 2024 by adding 31,500 new homes. This expansion saw penetration rates increase from under 10% at the end of 2023 to 16.6% by the end of 2024, highlighting the company’s commitment to broadening its reach and enhancing service delivery.

Adjusted EBITDA Growth

The company reported a 3.5% year-over-year increase in adjusted EBITDA for Q4, reaching $73.7 million with a margin of 48.3%. For the full year, adjusted EBITDA rose by 4.7% to $288.4 million, maintaining a margin of 45.7%. This growth underscores WideOpenWest’s operational efficiency and financial health despite market challenges.

ARPU Increase

Despite sequential decreases due to hurricane impacts, WideOpenWest managed to increase its Average Revenue Per User (ARPU) by around 1% year-over-year to $73.50. This improvement reflects the company’s ability to enhance customer value and optimize revenue streams.

Strong Performance in Edge-Out Markets

The company’s edge-out markets have shown robust performance, with the 2024 vintage passing 2,300 new homes and achieving a penetration rate close to 40%. The 2023 vintage also saw an increase in penetration rate to 30.8%, indicating successful market expansion strategies.

High-Speed Data Revenue Decline

High-speed data revenue faced a decline, decreasing 3.5% year-over-year to $104.9 million in Q4. For the full year, it dropped by 1.6% to $423.6 million, impacted by $2.5 million in hurricane credits. This decline signals a need for strategic adjustments to counteract revenue losses in this segment.

Subscriber Losses

The company experienced a loss of 10,200 high-speed data subscribers in Q4, with approximately 5,400 losses attributed to hurricanes. However, gains in greenfield and edge-out markets partially offset these losses, showcasing the potential for recovery and growth.

Decline in Video Subscribers

WideOpenWest’s traditional video business saw a significant decline, with subscribers dropping by 33% from the same period last year, down to 60,600. This trend highlights the ongoing challenges faced by traditional video services in the evolving digital landscape.

Revenue Decline

Total revenue for Q4 decreased by 9.6% to $152.6 million, with video and telephony revenues dropping 26.9% and 16.9%, respectively. These declines emphasize the need for strategic pivots to stabilize and grow revenue streams.

Forward-Looking Guidance

Looking ahead, WideOpenWest provided guidance for the upcoming fiscal period, projecting high-speed data revenue between $102 million and $104 million for Q1 2025. Total revenue is expected to range between $147 million and $149 million, with adjusted EBITDA anticipated between $72 million and $74 million. The company also plans significant capital expenditure for fiber expansion, aiming to pass 400,000 new homes, supported by a $200 million super priority term loan.

In summary, WideOpenWest’s earnings call reflects a company navigating through a challenging landscape with a mix of successes and hurdles. While greenfield expansion and adjusted EBITDA growth are promising, subscriber and revenue declines pose ongoing challenges. The company’s forward-looking guidance suggests a strategic focus on expansion and financial stability, aiming to enhance its market position and operational efficiency.

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