Broadband and telecommunications services provider WideOpenWest (NYSE: WOW) reported revenue ahead of Wall Street’s expectations in Q1 CY2025, 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 1.6% below analysts’ estimates. Its GAAP loss of $0.17 per share was 11.3% above analysts’ consensus estimates.
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WideOpenWest (WOW) Q1 CY2025 Highlights:
- Revenue: $150 million vs analyst estimates of $148 million (7.1% year-on-year decline, 1.3% beat)
- EPS (GAAP): -$0.17 vs analyst estimates of -$0.19 (11.3% beat)
- Adjusted EBITDA: $76.7 million vs analyst estimates of $72.7 million (51.1% margin, 5.5% beat)
- Revenue Guidance for Q2 CY2025 is $142.5 million at the midpoint, below analyst estimates of $144.8 million
- EBITDA guidance for Q2 CY2025 is $66.5 million at the midpoint, below analyst estimates of $69.21 million
- Operating Margin: 5.8%, up from 3.2% in the same quarter last year
- Free Cash Flow was -$22.2 million compared to -$39.3 million in the same quarter last year
- Subscribers: 473,800, down 26,900 year on year
- Market Capitalization: $368.4 million
"Our first quarter results build on the momentum in our Greenfield markets that we carried forward from last year. We have now passed 75,600 homes across our new markets in Hernando Beach, Florida, Central Florida, Brighton, Michigan and Greenville County, South Carolina," said Teresa Elder, WOW!'s CEO.
Company Overview
Initially started in Denver as a cable television provider, WideOpenWest (NYSE: WOW) provides high-speed internet, cable, and telephone services to the Midwest and Southeast regions of the U.S.
Sales Growth
Examining a company’s long-term performance can provide clues about its quality. Any business can have short-term success, but a top-tier one grows for years. WideOpenWest’s demand was weak over the last five years as its sales fell at a 11.5% annual rate. This was below our standards and is a sign of poor business quality.
Long-term growth is the most important, but within consumer discretionary, product cycles are short and revenue can be hit-driven due to rapidly changing trends and consumer preferences. WideOpenWest’s annualized revenue declines of 6.1% over the last two years suggest its demand continued shrinking. 
We can better understand the company’s revenue dynamics by analyzing its number of subscribers, which reached 473,800 in the latest quarter. Over the last two years, WideOpenWest’s subscribers averaged 4.7% year-on-year declines. Because this number aligns with its revenue growth during the same period, we can see the company’s monetization was fairly consistent. 
This quarter, WideOpenWest’s revenue fell by 7.1% year on year to $150 million but beat Wall Street’s estimates by 1.3%. Company management is currently guiding for a 10.3% year-on-year decline in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to decline by 8.7% over the next 12 months, a slight deceleration versus the last two years. This projection is underwhelming and implies its products and services will see some demand headwinds.
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Operating Margin
Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.
WideOpenWest’s operating margin has risen over the last 12 months, but it still averaged negative 20.3% over the last two years. This is due to its large expense base and inefficient cost structure.
This quarter, WideOpenWest generated an operating profit margin of 5.8%, up 2.6 percentage points year on year. This increase was a welcome development, especially since its revenue fell, showing it was more efficient because it scaled down its expenses.
Earnings Per Share
We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.
Sadly for WideOpenWest, its EPS declined by 51.5% annually over the last five years, more than its revenue. This tells us the company struggled because its fixed cost base made it difficult to adjust to shrinking demand.
In Q1, WideOpenWest reported EPS at negative $0.17, up from negative $0.18 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects WideOpenWest to perform poorly. Analysts forecast its full-year EPS of negative $0.70 will tumble to negative $0.73.
Key Takeaways from WideOpenWest’s Q1 Results
It was encouraging to see WideOpenWest beat analysts’ revenue, EPS, and EBITDA expectations this quarter. On the other hand, its revenue and EBITDA guidance for next quarter fell short of Wall Street’s estimates. Zooming out, we think this was a mixed quarter. The stock traded up 10.3% to $4.80 immediately after reporting.
Is WideOpenWest an attractive investment opportunity right now? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free.
