Financials

Financials — What the Numbers Say

Cable One reports as a single-segment U.S. cable broadband operator (the consumer-facing brand is Sparklight). Revenue is recurring monthly subscription income — primarily residential broadband, with shrinking video and voice contributions and a small business segment. The franchise is small (~$1.5B revenue) but the cost structure is highly fixed: once the HFC/fiber plant is built, incremental subscribers drop almost straight to EBITDA. That same operating leverage runs in reverse when subscribers leave.

The story in three lines:

• Revenue peaked in FY2022 at $1.71B and has slid for three straight years to $1.50B in FY2025, with Q1 FY2026 already running at a $1.41B annualized pace. Subscribers are leaving and average revenue per user (ARPU) is under pressure from retention discounts.
• Reported FY2025 operating income was -$207M because management took roughly $580M of goodwill/intangibles impairments (mostly in Q2). Clean operating economics still print high-20s margins; the impairment is a non-cash recognition that the 2021 Hargray and earlier deals were overpaid.
• The business still generated $274M of free cash flow in FY2025 — an 18% FCF margin — but sits on $3.04B of net debt. The equity (market cap ~$277M) is the residual claim after the lenders, so the same FCF that looks abundant against the equity is a tight number against the debt stack.

1. Financials in One Page

How to read this strip. Free cash flow is cash from operations minus capital expenditures — what is left after running and maintaining the network. EBITDA is earnings before interest, tax, depreciation and amortization, a rough proxy for cash operating earnings used by lenders to size debt capacity. Enterprise Value (EV) is market cap plus net debt; EV/EBITDA shows what the whole capital stack pays for one dollar of cash earnings, which is the right lens for a leveraged business. The TTM EBITDA figure used here is the trailing-twelve-month number excluding the FY2025 impairments — the reported FY2025 EBITDA of $131M is depressed by ~$580M of non-cash writedowns.

2. Revenue, Margins, and Earnings Power

Cable One built a 9-10% revenue CAGR through FY2022 by buying smaller cable systems (NewWave 2017, Fidelity 2019, Hargray 2021) and pushing data ARPU. Since FY2022 the wheels have come off: revenue has declined three years running, and the rate of decline is accelerating — from -1.6% in FY2023 to -5.9% in FY2024 to -4.9% in FY2025, with Q1 FY2026 down -6.8% year-on-year.

The FY2025 operating loss is dominated by non-cash goodwill and intangible-asset impairments. The largest single charge fell in Q2 FY2025, when operating income swung to -$489M from the run-rate ~$95M of adjacent quarters; that single quarter accounts for the entire reported FY2025 operating loss. Strip it out and clean operating income is in the mid-$300M range on $1.5B of revenue, or roughly a 23–25% operating margin.

Two things are visible. First, the gross margin has actually expanded every year for a decade — from 57% in FY2013 to 74% in FY2025 — because the company has shed low-margin linear-video subscribers and shifted mix toward high-margin broadband. Second, both operating and EBITDA margins peaked in FY2020 (the pandemic broadband boom) and have given back ground since. The FY2025 line goes to the floor only because of the impairments; on a clean basis EBITDA margin is closer to ~43% (TTM EBITDA of $643M on $1.50B revenue).

Setting aside the Q2 FY2025 impairment spike, the cleaner pattern is unmistakable: revenue declines roughly $4–$15M per quarter in a tight downward staircase, and clean operating income has gone from ~$120M/quarter to ~$87M/quarter in five quarters. That is operating leverage running in reverse — fixed costs eroding faster than variable costs because subscribers leave but the plant still has to be maintained.

3. Cash Flow and Earnings Quality

This is the single section that separates Cable One from a thesis-killer. The income statement is ugly. The cash flow statement still works. Free cash flow is cash generated from operations after maintaining the network — for a cable operator it is the truest measure of profit because reported earnings get muddied by depreciation of long-lived assets and non-cash impairments.

Observe the gap. In FY2024, net income was just $14M (depressed by an early non-cash goodwill charge and acquisition costs) but the company generated $664M of operating cash flow and $369M of FCF. In FY2025, net income was -$356M but cash flow from operations was still $563M and FCF was $274M. The full $580M of FY2025 impairments and the prior year's mark-downs are accounting recognition that earlier deals were overpaid — they reduce reported book value but do not consume present cash.

FCF margin has held in an 18–23% band for nine straight years through both the bull and the bear of the cable cycle. That is exceptional cash conversion and the reason the equity is not at zero despite a wrecked income statement. The FY2024 spike to 23.4% reflects lower capex (capex/revenue dropped from 24% in FY2022 to 19% in FY2024) as management deferred discretionary plant upgrades.

Earnings-quality distortions to know. Each line below is non-cash or one-time and matters for how you read the next quarter:

4. Balance Sheet and Financial Resilience

Cable One did the classic small-cap roll-up: borrow to acquire systems, lever to 3–4x EBITDA, then de-lever with the acquired cash flow. The leverage worked when EBITDA was rising. It is now the central vulnerability.

Debt ballooned with the Hargray transaction in FY2021 (gross debt jumped from $1.7B to $3.8B) and has since been worked down to $3.2B. Cash is just $153M at year-end — barely a quarter of one year's interest, and well below the ~$594M of current-portion long-term debt sitting in current liabilities at FY2025. That is the most important number on the balance sheet today and the reason the current ratio collapsed from 1.31 to 0.40 between FY2024 and FY2025 as a chunk of term loan stepped into the current window.

The red line is reported leverage; the FY2025 spike to 18.7x is an arithmetic artifact of the impairment-depressed EBITDA. The blue dot at 4.7x is the cleaner picture using trailing-twelve-month EBITDA excluding impairments. Either way, leverage has stepped up from a comfortable ~2x in FY2018-FY2020 to ~4.5x today — and that is happening while subscribers are leaving. The covenant headroom is narrowing in two directions at once.

Goodwill plus other intangibles ($2.8B) still exceeds shareholders' equity ($1.4B) — so a further round of impairment is a real possibility if subscriber attrition continues. Tangible book value is negative by roughly $1.4B once goodwill and intangibles are stripped out, which is normal for a cable operator but means the equity has no asset cushion behind it.

5. Returns, Reinvestment, and Capital Allocation

ROIC peaked at 14% in FY2017 when the business was small and the acquired plant earned outsized returns. Since the Hargray deal stuffed $2B of goodwill onto the balance sheet, ROIC compressed structurally to ~6–10% — about the company's cost of capital, no edge. FY2025's negative ROIC simply confirms what the impairment said: management overpaid for the acquired systems. The honest read is that a decade of acquisitions has created scale but not value on a per-share basis; the buying happened at the peak of the cable cycle.

Three messages from the capital-allocation pattern:

• The FY2022 buyback was a mistake. Management bought back $358M of stock when shares were $1,000+; those shares are now worth ~$48. That is roughly $340M of shareholder value destroyed at the buyback alone — and it was financed from the same balance sheet that is now constrained.
• The quarterly dividend was suspended in Q2 2025. Dividends fell from $68M in FY2024 to $17M in FY2025 (only the Q1 2025 payment was made; the quarterly cash dividend has been fully suspended since, freeing about $67M/yr per the 10-K). The reset is a rational stress-posture move that frees cash for debt service.
• Capex is being trimmed but cannot fall further. Capex/revenue went from 24% in FY2022 to 19% in FY2024-2025, mostly by deferring network expansion. The depreciation rate is now running higher than capex (capex/depreciation 0.85x in FY2025), which means the plant is being under-invested relative to its consumption — a familiar late-cycle cable pattern that works for a few years and then has to reverse.

Share count peaked in FY2021 at 6.4M (the Hargray deal was partly stock-funded), then the FY2022-FY2023 buyback retired ~700K shares — about 11% of the float. Stock-based compensation continues at ~$43M per year, which on a $277M market cap is meaningful dilution if not offset by ongoing buybacks. With the dividend cut and debt focus, equity returns will compete with debt service for the next few years.

6. Segment and Unit Economics

Cable One does not report segment financial breakdowns. The company operates as a single integrated cable broadband business under the Sparklight brand; revenue is disclosed by product (data, video, voice, business services) in the 10-K but a full segment profit-and-loss view is not published. Geographically, the footprint spans 24 states in suburban and rural markets, with no individual state material to the consolidated results.

What management does disclose at the product/customer level (from the Q1 FY2026 release and FY2025 10-K narrative) is the unit-economics shift behind the headline numbers:

The economics are simple: broadband is the cash cow, video is melting, business services are the consolation prize. When fiber overbuilders enter a market, Cable One first defends with retention pricing (cuts ARPU), then with speed upgrades (lifts capex). The combination compresses unit margin in the contested footprint while the company tries to slow churn enough to keep cash flow intact.

7. Valuation and Market Expectations

The valuation chart explains why this section is the most consequential on the page. The stock has lost 97% from its FY2020 peak ($2,294) and 85% since the 2015 IPO, with the worst of it in the last twelve months (-70%). The market is no longer pricing modest deceleration — it is pricing terminal decline or balance-sheet impairment.

The chart and table together tell you what the market thinks: on EV/EBITDA the business is priced in line with the large-cap peers (Charter ~5.8x, Comcast ~5.2x), so the impairment is already discounted. The cheapness sits in the equity tranche — Price/FCF of ~1x is what you get when the market believes either (a) FCF will collapse, or (b) the equity will be diluted/wiped by a debt restructuring. Six sell-side analysts publish a 12-month price target around $101, implying ~100% upside if the business merely stabilizes; that is the bull case.

The asymmetry is real but is not free — it is leveraged optionality. A 30% decline in clean EBITDA (to ~$450M) with the same debt load would lift net debt/EBITDA above 6.5x and likely trip covenants. The same 30% decline in EBITDA paired with a re-rate to 4x would put EV at $1.8B against $3.0B of net debt — equity worth roughly zero. Valuation is "cheap on cash flow, expensive on resilience."

8. Peer Financial Comparison

The peer set spans the structural distribution of cable economics: two large-cap cash machines (CHTR, CMCSA), one distressed mid-cap mirror (ATUS), one small overbuilder in fiber-investment mode (SHEN), and one private-equity exit candidate (WOW).

The peer table says four things. First, CABO's clean EBITDA margin (~43%) is the highest in the cable peer set — higher than Charter, higher than Comcast — because of the rural/suburban broadband mix. Second, leverage is in the upper-middle of the pack, not the worst (ATUS is the cautionary tale at 19x). Third, EV/EBITDA is priced almost identically to CHTR and CMCSA, so the cap-stack discount versus the majors has disappeared. Fourth, revenue growth is structurally negative across the entire cable peer group — this is industry, not company; the only positive grower is SHEN (Glo Fiber overbuilder), and SHEN is burning cash to get there.

The peer gap that matters: CABO trades like a large-cap on EV/EBITDA but its equity is priced like a small-cap distressed name. That dislocation only resolves if the subscriber bleed stops. If it does, the small market cap creates outsized equity returns on a modest EV move. If it does not, the small market cap is the giveaway about who gets the residual.

9. What to Watch in the Financials

What the financials confirm. The cash-generating engine is still intact — FCF margin of 18% has held for nine straight years through pandemics, acquisition noise, and now a subscriber decline. The cost structure is highly fixed but the business has demonstrated it can shed video and trim capex without breaking. EBITDA margin (clean) of ~43% is best-in-cable.

What the financials contradict. The narrative of "underpenetrated rural broadband with structural moat" has been refuted by three consecutive years of revenue decline. The 2021 Hargray transaction has been formally written down by the auditors, validating the bear thesis that prior-cycle deals were overpaid. Leverage has not de-levered fast enough to insulate the equity from the next downcycle.

The first financial metric to watch is residential broadband net adds. If quarterly net subscriber losses narrow from -19K toward zero through FY2026, the EBITDA base stabilizes, the leverage ratio fixes itself, and the cash-earnings discount in the equity could compress sharply from $48. If net losses widen instead, EBITDA falls, leverage climbs through 5x, the 2027 maturity wall hardens, and the equity is the wrong end of the cap stack. Everything else on this page is downstream of that one quarterly number.