WOW Q1 Earnings Call: Fiber Expansion and Margin Discipline Amid Revenue Pressure

Broadband and telecommunications services provider WideOpenWest (NYSE:WOW) reported Q1 CY2025 results beating Wall Street’s revenue expectations, but sales fell by 7.1% year on year to $150 million. On the other hand, next quarter’s revenue guidance of $142.5 million was less impressive, coming in 0.7% below analysts’ estimates. Its GAAP loss of $0.17 per share was 11.3% above analysts’ consensus estimates.

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StockStory’s Take

WideOpenWest’s first quarter highlighted ongoing momentum in its greenfield fiber expansion markets, with CEO Teresa Elder emphasizing strong penetration rates and customer demand for fiber-to-the-home broadband. The company’s legacy markets continued to deliver low churn and higher average revenue per user, supported by a simplified pricing model and migration to YouTube TV. The quarter’s results, according to management, reflected both the benefits of operational streamlining and the headwinds from ongoing subscriber losses in legacy businesses.

Looking forward, management’s guidance for next quarter reflects continued investment in network builds and a measured view of subscriber additions amid a competitive landscape. CFO John Rego noted capital expenditures would be back-end loaded this year, aiming for $60–70 million in greenfield spending, while Teresa Elder described competition as consistent but manageable. Management acknowledged that elevated churn from recent video rate increases and the ongoing transition away from legacy video would weigh on near-term results, but expressed confidence in the long-term growth potential of the company’s broadband-first strategy.

Key Insights from Management’s Remarks

WideOpenWest’s management attributed the quarter’s results to momentum in new fiber markets and ongoing cost efficiency measures, while also discussing the effects of subscriber losses in legacy segments and the shift to broadband-first services.

• Fiber expansion progress: The company made notable gains in greenfield fiber markets, passing an additional 13,700 homes and achieving penetration rates above 16%. Management pointed to strong consumer interest in higher-speed broadband as a key growth area.
• Legacy segment migration: Subscriber losses in legacy markets were partially offset by growth in greenfield and Edge-out expansion areas. The continued migration of customers from traditional video to YouTube TV contributed to reduced programming and support costs.
• Simplified pricing impact: The adoption of simplified pricing—with no contracts, data caps, or promotional roll-offs—has supported low churn rates and record-high average revenue per user (ARPU), particularly in expansion markets.
• Operational cost control: Adjusted EBITDA margin reached a record 51.1%, which management credited to aggressive restructuring away from the video platform and ongoing alignment with YouTube TV partnerships.
• Capital investment pacing: Weather-related delays led to lower-than-expected first quarter capital spending on greenfields, but management reiterated its commitment to full-year targets, with the majority of spending planned for the remainder of the year.

Drivers of Future Performance

Management’s outlook centers on continued fiber network expansion, disciplined cost management, and navigating the impact of legacy business declines amid a steady competitive environment.

• Greenfield build-out acceleration: The pace of capital investment in new markets is expected to ramp up in the second half of the year, with management aiming to pass more homes and drive higher broadband subscriber growth.
• Churn from video transition: Ongoing migration away from legacy video services and recent video rate increases are anticipated to contribute to near-term subscriber churn, but are also expected to improve long-term profitability as the business shifts to broadband-first offerings.
• Competitive dynamics: Management described the competitive landscape as stable, noting that simplified, non-promotional pricing and the YouTube TV partnership help differentiate WOW’s offerings and support retention, especially in new expansion markets.

Top Analyst Questions

• Brandon Nispel (KeyBanc Capital): Asked about the timing of increased capital spending and its effect on new greenfield homes passed; CFO John Rego explained capital expenditures would be weighted toward later quarters due to earlier weather delays.
• Brandon Nispel (KeyBanc Capital): Inquired about competition and net addition trends; CEO Teresa Elder said competition remains steady and highlighted strong performance in greenfield and Edge-out markets.
• Brandon Nispel (KeyBanc Capital): Requested details on mobile product uptake and its impact on subscriber churn; Elder noted mobile is not a major growth or churn driver, with focus remaining on core broadband and YouTube TV services.
• No further analyst questions: There were no additional analyst questions or significant follow-up topics raised during the call.
• No further analyst questions: There were no additional analyst questions or significant follow-up topics raised during the call.

Catalysts in Upcoming Quarters

In the upcoming quarters, the StockStory team will be monitoring (1) the pace and success of greenfield fiber expansion, especially as capital spending ramps up, (2) the company’s ability to offset legacy subscriber losses with gains in new markets, and (3) trends in ARPU and churn as WOW continues to implement its simplified pricing and transitions more customers to broadband and YouTube TV. Progress in these areas will be critical for assessing the effectiveness of WOW’s broadband-first transformation.

WideOpenWest currently trades at a forward EV-to-EBITDA ratio of 1.3×. Is the company at an inflection point that warrants a buy or sell? See for yourself in our free research report.

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