Cable One (CABO) Q4 2025 earnings review
Customer Bleed Slows, But Financial Erosion Accelerates
Cable One managed to arrest its severe subscriber hemorrhage in Q4, but the financial toll is mounting. While management praised a 'significant improvement in disconnects,' total revenue decline is Accelerating, hitting a cycle-worst -6.1% YoY. Adjusted EBITDA fell 8.1%, and margins compressed to 53.3%. Most alarmingly, the historically reliable Business Data segment reversed into contraction. The company continues to aggressively pay down debt ($403M in FY25), but they are trading yield for volume in an increasingly tough competitive landscape.
🐂 Bull Case
The operational bleeding is slowing. Residential data customer connects improved year-over-year, and disconnects fell sharply compared to the catastrophic 21.6K loss in Q3. The core customer base is showing signs of stabilization.
Management executed its balance sheet strategy flawlessly, paying down $90.2M of debt in Q4 and $403.4M for the full year. This structural de-risking provides crucial breathing room ahead of the 2026 MBI put option.
🐻 Bear Case
Business Data revenue reversed to a 1.3% decline after years of steady growth. If the commercial segment joins residential in a structural decline, the company lacks a credible top-line growth driver.
Residential Data ARPU fell sequentially from $82.17 to $80.71. The stabilization in subscriber volume appears to have been bought with heavy discounting and lower-tier product mix, crushing margins.
⚖️ Verdict: 🔴
Bearish. Management successfully stopped the subscriber free-fall, but the data clearly shows this required sacrificing pricing power. With Business Data growth reversing into negative territory and overall margins compressing, the fundamental growth narrative remains broken.
Key Themes
Business Data Reversing to Contraction
A major red flag emerged as Business Data revenue declined 1.3% YoY to $56.8M. This segment had been Cable One's reliable anchor, posting +1.2% growth in H1 2025. This reversal signifies that competitive pressures or macroeconomic softness are now penetrating the enterprise and commercial base.
The Price of Stabilization: ARPU Pressure
Residential Data subscriber losses are Decelerating. Q4 saw a drop of roughly 10.4K units—less than half of Q3's painful 21.6K decline. However, this came at a steep cost. Residential Data ARPU sequentially dropped from $82.17 to $80.71. The rollout of lower-priced 'Flex' and 'Lift' tiers is stemming the bleeding against Fixed Wireless (FWA) competitors, but it is diluting the yield profile.
Relentless Deleveraging
Capital allocation remains disciplined and defensive. The company paid down another $90.2M in Q4, bringing the 2025 total to $403.4M. With the $1.25 billion revolver fully undrawn, the balance sheet is being systematically fortified to handle the upcoming MBI put obligations and 2026 convertible notes.
Video Decline Dragging the Top Line
The legacy video product continues its rapid descent, with revenues falling 15.2% YoY. While management intentionally de-emphasizes this low-margin product, it still represented a $7.7M revenue headwind in Q4, making it mathematically difficult for the core broadband segments to pull total revenue into positive territory.
Other KPIs
Decelerating. Down 13.8% YoY from $139.1M in Q4 2024. While the absolute dollar amount remains robust and easily funds the aggressive debt paydown strategy, the shrinkage in pure cash generation reflects the combined weight of lower revenues and margin compression.
Stable. CapEx was up slightly (+2.9% YoY) and represented 38.2% of Adjusted EBITDA (up from 34.1% a year ago). Despite top-line pressures, management is maintaining network investment levels to defend against fiber overbuilders and FWA.
Key Questions
Yield Dilution vs Volume Growth
Residential Data ARPU declined sequentially from $82.17 to $80.71 while connect activity improved. How much of this connect growth is driven by lower-tier 'Flex' and 'Lift' products, and what is the expected floor for ARPU in 2026?
Business Data Contraction
Business Data revenues slipped into negative YoY growth (-1.3%) for the first time in recent memory. Was this driven by SMB churn, enterprise pricing pressure, or timing of contracts? How do you return this segment to growth?
Margin Floor
Adjusted EBITDA margins compressed to 53.3% as you combat intense competition. Given the anticipated OpEx and SG&A savings from the unified billing system discussed in Q3, when will we see margins trough and begin to expand?