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Optimum Communications Q1 Earnings Beat Estimates on Cost Discipline
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Key Takeaways
OPTU posted a narrower Q1 loss as margins improved through cost discipline and efficiencies.
Optimum added 52,000 mobile lines, its strongest quarterly mobile growth in six years.
OPTU broadband losses widened as competition and promotional pricing pressured subscriber trends.
Optimum Communications, Inc. (OPTU - Free Report) reported first-quarter 2026 loss per share of 10 cents, narrower than the Zacks Consensus Estimate of a loss of 16 cents. The reported figure improved from a loss of 16 cents in the year-ago quarter, delivering an earnings surprise of 37.5%.
Quarterly revenues totaled $2.065 billion, down 4% year over year and marginally below the consensus estimate of $2.072 billion by 0.3%. Strong mobile momentum, expanding margins and disciplined cost management partly offset continued broadband subscriber losses.
Optimum Communications, Inc. Price, Consensus and EPS Surprise
Residential revenues were $1.56 billion in the quarter, declining 6.5% year over year as broadband and video subscriber losses continued amid a highly competitive market environment. Residential ARPU slipped 1.2% year over year to $132.32.
Management noted that fiber overbuilders, fixed wireless operators and aggressive promotional pricing continued to weigh on customer trends, particularly in western markets. To address these pressures, Optimum simplified pricing structures and introduced more competitive entry-level broadband offers during the quarter.
Broadband Trends Stay Weak
Broadband net losses totaled 64,000 customers in the quarter, including an 8,000-subscriber adjustment tied to prior periods. This compared unfavorably with losses of 37,000 subscribers in the year-ago quarter. Total broadband subscribers ended the quarter at 4.1 million.
Despite subscriber declines, Optimum continued to improve network quality and customer mix. About 47% of the residential broadband base subscribed to 1 Gig or higher speed tiers at quarter-end, up significantly from 21% three years ago. Management stated that convergence initiatives, bundling broadband and mobile offerings, helped improve customer retention and lifetime value.
Mobile Growth Remains a Bright Spot
Mobile continued to be a standout performer in the quarter. Optimum added 52,000 mobile lines, marking its strongest quarterly mobile performance in six years. Total mobile lines reached 674,000 at quarter-end.
Residential mobile service revenues increased 35% year over year to $50 million. Mobile penetration of the broadband customer base improved to 8.8% from 6.3% a year earlier. Management highlighted that customers taking both broadband and mobile services exhibited lower churn rates and higher long-term value.
Video trends also showed signs of stabilization. The company’s newer tiered offerings — Entertainment TV, Extra TV and Everything TV — accounted for 17% of the residential video base compared with 6% in the prior-year quarter. Annualized video churn improved roughly 690 basis points year over year, while residential video ARPU rose 3.7%.
Margin Expansion Offsets Revenue Declines
Adjusted EBITDA declined 1.3% year over year to $789 million. However, adjusted EBITDA margin expanded 110 basis points to 38.2%, reflecting ongoing cost discipline and operational efficiencies. Gross margin also improved 60 basis points year over year to 69.4%.
Management attributed the margin gains to lower programming expenses, workforce productivity initiatives, reduced truck rolls and greater use of AI-enabled automation tools. Video gross margin expanded nearly 1,000 basis points over the past three years as the company continued migrating customers toward newer video packages.
On a GAAP basis, Optimum reported a net loss attributable to stockholders of $2.88 billion, or $6.10 per share compared with a net loss of $75.7 million, or 16 cents per share, in the prior-year quarter. Results included a non-cash impairment charge of $2.7 billion tied to indefinite-lived cable franchise rights.
Cash Flow and Balance Sheet Position
Net cash provided by operating activities was $170.3 million in the quarter, down 9.2% year over year. Cash capital expenditures declined 13.6% year over year to $307.7 million, resulting in a capital intensity of 14.9%. Free cash flow deficit improved to $137.4 million from a deficit of $168.6 million in the year-ago quarter.
Optimum ended the quarter with approximately $1.3 billion in liquidity. Consolidated net debt stood at $25.49 billion, representing net leverage of 7.5x in the last two quarters’ annualized adjusted EBITDA. During the quarter, the company refinanced Lightpath debt through an asset-backed securitization transaction and completed incremental term loan financing to refinance existing obligations.
Network Expansion and Strategic Focus
The company added nearly 38,000 new passings during the quarter, bringing total passings to more than 10 million. Approximately 96% of the footprint now supports speeds of 1 Gig or higher.
Management reiterated its priorities for 2026, including improving broadband trends, maintaining financial discipline and investing selectively in fiber expansion, network upgrades and automation capabilities. While competitive pressures are expected to persist, the company remains focused on stabilizing subscriber trends and improving long-term profitability.
Keysight Technologies, Inc. (KEYS - Free Report) is scheduled to release second-quarter fiscal 2026 earnings on May 19. The Zacks Consensus Estimate for earnings is pegged at $2.33 per share, suggesting growth of 37.06% from the year-ago reported figure.
Keysight has a long-term earnings growth expectation of 17.45%. The company delivered an average earnings surprise of 4.58% in the last four reported quarters.
Workday, Inc. (WDAY - Free Report) is set to release first-quarter fiscal 2027 earnings on May 21. The Zacks Consensus Estimate for earnings is pegged at $2.49 per share, implying growth of 11.7% from the year-ago reported figure.
Workday has a long-term earnings growth expectation of 20.16%. The company delivered an average earnings surprise of 8.53% in the last four reported quarters.
Analog Devices, Inc. (ADI - Free Report) is set to release second-quarter fiscal 2026 earnings on May 20. The Zacks Consensus Estimate for earnings is pegged at $2.88 per share, implying growth of 55.7% from the year-ago reported figure.
Analog Devices has a long-term earnings growth expectation of 21.89%. The company delivered an average earnings surprise of 6.11% in the last four reported quarters.
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Optimum Communications Q1 Earnings Beat Estimates on Cost Discipline
Key Takeaways
Optimum Communications, Inc. (OPTU - Free Report) reported first-quarter 2026 loss per share of 10 cents, narrower than the Zacks Consensus Estimate of a loss of 16 cents. The reported figure improved from a loss of 16 cents in the year-ago quarter, delivering an earnings surprise of 37.5%.
Quarterly revenues totaled $2.065 billion, down 4% year over year and marginally below the consensus estimate of $2.072 billion by 0.3%. Strong mobile momentum, expanding margins and disciplined cost management partly offset continued broadband subscriber losses.
Optimum Communications, Inc. Price, Consensus and EPS Surprise
Optimum Communications, Inc. price-consensus-eps-surprise-chart | Optimum Communications, Inc. Quote
Residential Revenue Remains Under Pressure
Residential revenues were $1.56 billion in the quarter, declining 6.5% year over year as broadband and video subscriber losses continued amid a highly competitive market environment. Residential ARPU slipped 1.2% year over year to $132.32.
Management noted that fiber overbuilders, fixed wireless operators and aggressive promotional pricing continued to weigh on customer trends, particularly in western markets. To address these pressures, Optimum simplified pricing structures and introduced more competitive entry-level broadband offers during the quarter.
Broadband Trends Stay Weak
Broadband net losses totaled 64,000 customers in the quarter, including an 8,000-subscriber adjustment tied to prior periods. This compared unfavorably with losses of 37,000 subscribers in the year-ago quarter. Total broadband subscribers ended the quarter at 4.1 million.
Despite subscriber declines, Optimum continued to improve network quality and customer mix. About 47% of the residential broadband base subscribed to 1 Gig or higher speed tiers at quarter-end, up significantly from 21% three years ago. Management stated that convergence initiatives, bundling broadband and mobile offerings, helped improve customer retention and lifetime value.
Mobile Growth Remains a Bright Spot
Mobile continued to be a standout performer in the quarter. Optimum added 52,000 mobile lines, marking its strongest quarterly mobile performance in six years. Total mobile lines reached 674,000 at quarter-end.
Residential mobile service revenues increased 35% year over year to $50 million. Mobile penetration of the broadband customer base improved to 8.8% from 6.3% a year earlier. Management highlighted that customers taking both broadband and mobile services exhibited lower churn rates and higher long-term value.
Video trends also showed signs of stabilization. The company’s newer tiered offerings — Entertainment TV, Extra TV and Everything TV — accounted for 17% of the residential video base compared with 6% in the prior-year quarter. Annualized video churn improved roughly 690 basis points year over year, while residential video ARPU rose 3.7%.
Margin Expansion Offsets Revenue Declines
Adjusted EBITDA declined 1.3% year over year to $789 million. However, adjusted EBITDA margin expanded 110 basis points to 38.2%, reflecting ongoing cost discipline and operational efficiencies. Gross margin also improved 60 basis points year over year to 69.4%.
Management attributed the margin gains to lower programming expenses, workforce productivity initiatives, reduced truck rolls and greater use of AI-enabled automation tools. Video gross margin expanded nearly 1,000 basis points over the past three years as the company continued migrating customers toward newer video packages.
On a GAAP basis, Optimum reported a net loss attributable to stockholders of $2.88 billion, or $6.10 per share compared with a net loss of $75.7 million, or 16 cents per share, in the prior-year quarter. Results included a non-cash impairment charge of $2.7 billion tied to indefinite-lived cable franchise rights.
Cash Flow and Balance Sheet Position
Net cash provided by operating activities was $170.3 million in the quarter, down 9.2% year over year. Cash capital expenditures declined 13.6% year over year to $307.7 million, resulting in a capital intensity of 14.9%. Free cash flow deficit improved to $137.4 million from a deficit of $168.6 million in the year-ago quarter.
Optimum ended the quarter with approximately $1.3 billion in liquidity. Consolidated net debt stood at $25.49 billion, representing net leverage of 7.5x in the last two quarters’ annualized adjusted EBITDA. During the quarter, the company refinanced Lightpath debt through an asset-backed securitization transaction and completed incremental term loan financing to refinance existing obligations.
Network Expansion and Strategic Focus
The company added nearly 38,000 new passings during the quarter, bringing total passings to more than 10 million. Approximately 96% of the footprint now supports speeds of 1 Gig or higher.
Management reiterated its priorities for 2026, including improving broadband trends, maintaining financial discipline and investing selectively in fiber expansion, network upgrades and automation capabilities. While competitive pressures are expected to persist, the company remains focused on stabilizing subscriber trends and improving long-term profitability.
Zacks Rank
OPTU currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Upcoming Releases
Keysight Technologies, Inc. (KEYS - Free Report) is scheduled to release second-quarter fiscal 2026 earnings on May 19. The Zacks Consensus Estimate for earnings is pegged at $2.33 per share, suggesting growth of 37.06% from the year-ago reported figure.
Keysight has a long-term earnings growth expectation of 17.45%. The company delivered an average earnings surprise of 4.58% in the last four reported quarters.
Workday, Inc. (WDAY - Free Report) is set to release first-quarter fiscal 2027 earnings on May 21. The Zacks Consensus Estimate for earnings is pegged at $2.49 per share, implying growth of 11.7% from the year-ago reported figure.
Workday has a long-term earnings growth expectation of 20.16%. The company delivered an average earnings surprise of 8.53% in the last four reported quarters.
Analog Devices, Inc. (ADI - Free Report) is set to release second-quarter fiscal 2026 earnings on May 20. The Zacks Consensus Estimate for earnings is pegged at $2.88 per share, implying growth of 55.7% from the year-ago reported figure.
Analog Devices has a long-term earnings growth expectation of 21.89%. The company delivered an average earnings surprise of 6.11% in the last four reported quarters.