Shenandoah Telecommunications Company Q2 FY2025 earnings call

• Ed McKay was promoted to President and CEO, effective September 1, with Chris French stepping into the role of Executive Chairman. - The second quarter was strong for the fiber-first strategy, with 5,700 new Glo Fiber subscribers and over 16,000 new Glo Fiber passings added. Glo Fiber revenues grew 40.5%. - Commercial fiber had over $200,000 in monthly recurring revenue sales bookings. - The integrated broadband network spans over 17,700 route miles across 8 states, with the engineering team setting a new record by constructing over 500 new route miles of fiber in the second quarter. - The sales and marketing team drove Glo Fiber growth, adding 5,700 new customers and seeing a 43% year-over-year growth in the customer base. - A small tuck-in fiber-to-the-home acquisition was closed, adding 1,500 passings and 700 customers in Blacksburg, Virginia, with an implied purchase price multiple of about 8x 2026 pro forma adjusted EBITDA.

Revenue grew 3.2% to $88.6 million. Glo Fiber revenues saw a 40.5% increase over the same period in 2024, reaching $19.8 million. Incumbent broadband markets revenue declined primarily due to a 15% drop in video RGUs as customers switched to streaming. Commercial fiber revenue had a decline, but excluding certain variances, it grew 2.7% year-over-year. Glo Fiber represents about 61% of the approximately 623,000 homes and businesses with broadband services that the company passes.

• 2025 revenues are expected to be between $352 million and $357 million, adjusted EBITDA between $113 million and $118 million, and CapEx net of grant reimbursements between $260 million and $290 million. - The midpoint of the guidance implies an 8.1% year-over-year revenue growth, 21.6% year-over-year adjusted EBITDA growth, and a ~8.3% decline in CapEx. - CapEx was accelerated from 2026 to 2025 due to successful construction of government grant projects, which will help with revenue in 2026 through increased passings in subsidized areas.

• Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from forward-looking statements. - Detailed risk factors are discussed in the company's SEC filings.

Q: Could you just talk about any competitive pressures at all with the adds that you're seeing? Is it becoming more and more difficult in any way?

A: No. As far as competitive pressure, we have seen some of the big cable providers change their rate plans. They're offering 5-year guarantees in some cases. I think it's too soon to really know the impact of that. But I will say that that's -- their price plans are very consistent to our models of having standard straightforward pricing. So we believe we have opportunity to increase speed. We have a lot more speed availability to us than cable competitors. And we think that speed advantage, combined with our local customer service and our network reliability really give us an edge. But for the quarter, we were up 20% on net adds over the second quarter last year. So we're pleased with the growth.

Q: And then on the CapEx side, you talked about accelerating in '26. What drew that decision to do that now versus next year?

A: It was basically success by our construction team in building the government grant projects. We were able to construct more mileage faster than we expected. So instead of spending the money in '26, we pulled it into 2025. That's the primary driver.

Q: Does that help you with the revenue in any way in '26 because now you've already built it out?

A: It helps us. As I mentioned, we're seeing rapid penetration on those government grant projects, 45% after 1 year. So I think pulling the construction forward, having more passings in these government subsidized areas will help us from a subscriber standpoint and therefore, revenue standpoint.

Q: Why the decision to have guidance all of a sudden in the middle of the year?

A: Yes. On that, we just wanted to provide more visibility and transparency over our business. And we thought providing some annual guidance, not just this year, but in future years as well would be a good practice to adopt to allow you and other shareholders and potential shareholders more visibility into our business.