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WideOpenWest Inc (WOW) (Q1 2024) Earnings Call Transcript Highlights: Navigating Challenges and ...

GuruFocus Research
·3 min read

Release Date: May 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • WideOpenWest Inc reported a 1% year-over-year increase in high-speed data revenue, reaching $106.2 million.

  • Adjusted EBITDA rose by 3.4% year-over-year to $67.4 million, with an improved EBITDA margin of 41.7%.

  • The company successfully passed 18,100 new homes in greenfield and edge-out markets, showing strong expansion efforts.

  • Penetration rates in greenfield markets increased to 12.5%, demonstrating effective market entry and customer acquisition strategies.

  • WideOpenWest Inc is transitioning to YouTube TV, aiming to capitalize on the shift to video streaming and potentially enhancing content delivery and value.

Negative Points

  • Total revenue declined by 6.2% from the previous year to $161.5 million, due to significant drops in video and telephony revenue.

  • The company reported a net loss of 400 high-speed data (HSD) subscribers, indicating challenges in subscriber retention.

  • Unlevered adjusted free cash flow was negative $5.1 million, primarily due to higher expansion expenditures.

  • The ending of the ACP program introduces uncertainty, affecting subscriber net adds guidance for the upcoming quarter.

  • WideOpenWest Inc faces ongoing cost pressures, necessitating further headcount reductions primarily in corporate and administrative areas.

Q & A Highlights

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Q: Can you provide an update on the acquisition proposal from DigitalBridge and Crestview Partners? A: Teresa Elder, CEO - We have no updates to share today regarding the unsolicited nonbinding preliminary acquisition proposal. A special committee of independent directors is evaluating the proposal, and stockholders do not need to take any action at this time.

Q: How did the greenfield expansions perform in the first quarter? A: Teresa Elder, CEO - In the first quarter, we passed an additional 15,100 new homes in our greenfield markets, bringing the total to 45,500. The penetration rates in these markets remained strong at 12.5% at quarter end, up from just under 10% last quarter.

Q: What were the financial highlights for this quarter? A: John Rego, CFO - We reported $106.2 million in high-speed data revenue, up 1% year over year. Adjusted EBITDA was $67.4 million, a 3.4% increase from last year, with an adjusted EBITDA margin of 41.7%.

Q: How is the company addressing the decline in traditional video business? A: Teresa Elder, CEO - We are transitioning to YouTube TV to provide more content at a better value and capitalize on the shift to video streaming. This partnership is expected to contribute to our strong results this year.

Q: What are the expectations for the second quarter in terms of financials and subscriber numbers? A: John Rego, CFO - We expect HSD net adds to be between negative 20 and negative 500. We anticipate HSD revenue to be between $104 million and $107 million, with total revenue projected between $158 million and $161 million, and adjusted EBITDA between $63 million and $66 million.

Q: What steps are being taken to improve subscriber numbers in legacy markets? A: Teresa Elder, CEO - We have increased our minimum speeds for existing customers and launched a simplified pricing plan that includes an optional price lock, modem included, no data caps, and no contracts. These measures have started to show positive results in stabilizing subscriber numbers.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.