Cable One Q1 revenue surges 28% on NewWave integration, brisk business services sales

Cable One installer
Cable One once again declared validation for its 2012 decision to pivot away from residential video. (Cable One)

Declaring itself once again as a “contrarian success story” for its decision to pivot away from residential video six years ago, Cable One reported a 28.1% surge in first-quarter revenue to $265.8 million. 

Discounting the $48.6 million generated by the recently integrated NewWave Communications, revenue was still up an impressive 4.7%. (New Wave was acquired later in 2017, and not part of last year’s 2017 financials. Also, Cable One changed its accounting methods recently, but retroactively applies those new standards to the comparable Q1 2017 time period.)

The Phoenix, Arizona-based midsized operator reported a 31.4% spike in revenue from residential data, and a 39.8% increase in revenue from business services. Those contributions increased 10.7% and 12.3%, respectively, with New Wave factored out. 

Legacy Cable One finished the first quarter with 260,686 pay TV customers, down over 9,000 from the end of 2017 and a 11.2% from the end of the first quarter of 2017. Factoring in New Wave, Cable One has 334,035 video subscribers, up 13.7% over the first quarter of 2016.

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Cable One’s video base has declined 54% since 2012. 

During this morning’s call with investment analysts, Cable One CEO Julie Laulis declared the continued pivot toward residential broadband and business services validation for a 2012 decision in which “we stopped counting video units and instead started counting cash flows.” 

Cable One ended the first quarter with 592,062 residential internet users, a 24% year over year bump. Notably, however, Legacy Cable One was up only 1% in HSI customers. This will undoubtedly lend credence to investment analysts’ concerns that Cable One will not be able to sustain revenue growth without price increases on residential broadband. 

Cable One, for example, raises cable modem leasing fees by $2.50 a month during the first quarter. Discounts on HSI services were also ended during the period. 

Asked by MoffettNathanson analyst Craig Moffett if she has a “North Star” to tell her where the limit is in regard to price elasticity for Cable One’s largely rural and not-that-rich user base, Laulis responded, “I don’t know that i have a North Star. I have a direction… We’re learning what we need to do to push levers to drive growth. “And as we drive growth, it will necessarily mean that ARPU will come down.””

Cable One stock perked up slightly on today's news. Like very other publicly traded U.S. cable company, Cable One has been hit hard by the so-called "cable flu" on Wall Street, with investors skittish about the future of the cable business amid saturating wireline broadband opportunities and 5G threats from wireless.