LBRDK Q1 Earnings Call: GCI Connectivity Drives Results, Spin-off and Strategic Shifts Ahead

Telecommunications and cable service provider Liberty Broadband (NASDAQ:LBRDK) reported Q1 CY2025 results exceeding the market’s revenue expectations, with sales up 8.6% year on year to $266 million. Its GAAP profit of $1.87 per share increased from $1.69 in the same quarter last year.

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StockStory’s Take

Liberty Broadband’s first quarter performance was shaped primarily by continued momentum at its GCI subsidiary, which saw revenue growth from enterprise services—especially healthcare and educational customers in rural Alaska. CEO Ron Duncan explained that the latest upgrade cycle in these sectors, launched in the third quarter of last year, helped fuel the segment’s performance. GCI also benefited from a one-time revenue boost tied to a favorable appeal of historical service rates for certain healthcare clients. However, management noted that the consumer side of the business saw shrinking wireless and cable modem subscribers, which they attributed to the end of the federal Affordable Connectivity Program and ongoing competition at the market’s margins.

Looking forward, Liberty Broadband’s outlook is influenced by the upcoming spin-off of GCI and broader trends in infrastructure investment and regulatory uncertainty. Management is preparing for elevated capital expenditures this year and next, as GCI completes mandated network build-outs under the Alaska Plan. CEO Ron Duncan cautioned that the Supreme Court’s pending ruling on the Universal Service Fund could materially affect funding for rural broadband, stating, “We are preparing contingency plans to enable GCI to react to a range of potential Supreme Court rulings.” The company also highlighted the importance of bringing high-speed fiber and 5G wireless services to remote communities, expecting these upgrades to drive future customer adoption and support long-term growth.

Key Insights from Management’s Remarks

Management attributed the quarter’s results to enterprise-driven revenue growth at GCI, one-time benefits, and successful refinancing, while highlighting competitive and regulatory challenges.

• Enterprise upgrades fueled growth: The main driver of quarterly performance was GCI’s enterprise segment, with strong demand from healthcare and educational clients in rural Alaska benefiting from ongoing upgrade cycles and expanded network capacity.
• One-time revenue benefit: GCI recorded a $4 million increase from a successful appeal regarding rates for healthcare services provided in prior years, boosting results for the quarter.
• Consumer segment pressures: The consumer side saw declines in wireless and cable modem subscribers, driven by the conclusion of the federal Affordable Connectivity Program and slight competitive losses to satellite-based providers like Starlink.
• Network disruption and recovery: Service interruptions due to a fiber break in the Beaufort Sea affected some customers, with partial restoration achieved through satellite and rerouted connections. Full restoration is not expected until later this summer.
• Refinancing and liquidity actions: GCI refinanced its senior credit facility, extending maturities and enhancing liquidity, while Liberty Broadband used proceeds from Charter share sales to reduce debt, positioning the company for the pending GCI spin-off and transaction with Charter.

Drivers of Future Performance

Liberty Broadband’s outlook is shaped by regulatory developments, elevated capital investment, and ongoing network upgrades, which will influence revenue growth and profitability.

• Alaska Plan build-out requirements: Management expects capital expenditures to remain high in 2025 and 2026 as GCI fulfills network build-out obligations across rural Alaska, with planned investments in both middle-mile and last-mile connectivity. This is anticipated to support future revenue once regulatory requirements are met and capital intensity normalizes.
• Regulatory and legal risks: The Supreme Court’s impending decision on the Universal Service Fund introduces significant uncertainty for rural broadband funding. Management has prepared contingency plans for various outcomes, which could impact GCI’s long-term revenue streams.
• Competitive landscape and product bundling: Management is monitoring increased competition from satellite-based providers and is evaluating new bundling and pricing strategies to strengthen consumer retention. GCI aims to expand integrated offerings and leverage its owned wireless network to differentiate in the Alaskan market.

Catalysts in Upcoming Quarters

Looking ahead, the StockStory team will monitor (1) the completion and impact of GCI’s rural network investments under the Alaska Plan, (2) any Supreme Court decision affecting the Universal Service Fund and its implications for broadband funding, and (3) GCI’s execution of new product bundling strategies and competitive response to satellite providers. The pending spin-off and Charter transaction will also be critical milestones.

Liberty Broadband currently trades at a forward EV-to-EBITDA ratio of 55×. In the wake of earnings, is it a buy or sell? Find out in our full research report (it’s free).

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