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Liberty Broadband Srs A reported its Q2 2025 earnings, revealing a significant miss on earnings per share (EPS) but a beat on revenue. The company’s EPS came in at $0.94, falling short of the forecasted $1.37, marking a 31.39% negative surprise. Despite this, revenue reached $261 million, surpassing projections by 4.27%. According to InvestingPro analysis, the stock appears undervalued based on its Fair Value metrics, while technical indicators suggest oversold conditions. The stock reacted with a 1.28% decline during the market session, closing at $59.34, and showed a slight recovery of 0.1% in aftermarket trading.
Key Takeaways
- Liberty Broadband’s EPS missed expectations by 31.39%, while revenue exceeded forecasts.
- The stock price declined by 1.28% following the earnings release.
- Business revenue grew by 14%, indicating strong demand.
- The company reduced its net debt by $86 million, improving financial stability.
- Competitive pressures and a decline in consumer revenue present challenges.
Company Performance
Liberty Broadband Srs A demonstrated mixed performance in Q2 2025. While EPS fell short of expectations, the company achieved a 6% growth in total revenue to $261 million, maintaining its impressive 75.6% gross profit margin. Business revenue surged by 14%, highlighting strong market demand. However, consumer revenue declined by 2%, reflecting potential market challenges. InvestingPro subscribers can access 11 additional key insights about Liberty Broadband’s financial health and growth prospects through exclusive ProTips.
Financial Highlights
- Revenue: $261 million, up 6% year-over-year
- Earnings per share: $0.94, below the forecast of $1.37
- Adjusted OIBDA: $108 million, a 26% increase
- Free cash flow (TTM): $153 million
- Net debt reduced by $86 million
Earnings vs. Forecast
Liberty Broadband’s actual EPS of $0.94 fell short of the forecasted $1.37, resulting in a significant negative surprise of 31.39%. However, revenue of $261 million exceeded expectations, outperforming the forecast by 4.27%.
Market Reaction
The stock price dropped by 1.28% to $59.34 during the market session, reflecting investor concerns over the EPS miss. In aftermarket trading, the stock showed a modest recovery, rising by 0.1% to $59.4. The stock is trading near its 52-week low of $57.34, with a beta of 0.96 indicating moderate market correlation. InvestingPro data reveals the stock has declined 17.64% over the past six months, while analysts maintain a consensus hold rating with a $95 price target.
Outlook & Guidance
Looking ahead, Liberty Broadband anticipates a slowdown in OIBDA growth in the latter half of 2025. The company plans to invest approximately $250 million in capital expenditures for the year and is exploring out-of-state acquisition opportunities. With a current ratio of 1.39 and liquid assets exceeding short-term obligations, the company appears well-positioned to fund its strategic initiatives, which include network upgrades and rural expansion efforts. For detailed analysis of Liberty Broadband’s growth potential and comprehensive financial metrics, investors can access the full Pro Research Report available on InvestingPro.
Executive Commentary
CEO Ron Duncan expressed confidence in the company’s service quality in Alaska and highlighted the potential of adding cheap energy to make Alaska appealing for AI economy participants. Duncan also emphasized the company’s strong cash flow and tax assets, which can be leveraged for strategic growth.
Risks and Challenges
- Competitive pressures from fiber networks and Starlink could impact market share.
- The decline in consumer revenue suggests potential market challenges.
- The elimination of the ACP program may affect customer acquisition.
- Economic conditions in Alaska, such as a flat economy and declining workforce, pose challenges.
- The company’s reliance on the Alaskan market may limit growth opportunities.
Q&A
During the earnings call, analysts inquired about the company’s acquisition strategy. Management indicated openness to out-of-state acquisitions but did not identify specific targets. The potential to leverage financial resources and tax assets for strategic growth was highlighted.
Full transcript - Liberty Broadband Srs A (LBRDA) Q2 2025:
Conference Operator: Welcome to the GCI Liberty twenty twenty five Q2 Earnings Call. As a reminder, this conference will be recorded as of today, 08/07/2025. I would now like to turn the call over to Shane Kleinstein, Senior Vice President of Investor Relations. Please go ahead.
Shane Kleinstein, Senior Vice President of Investor Relations, GCI Liberty: Thank you, and good morning. Before we begin, we’d like to remind everyone that this call includes certain forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual events or results could differ materially due to a number of risks and uncertainties, including those mentioned in the prospectus forming part of GCI Liberty’s registration statement and the most recent Forms 10 Q filed by GCI Liberty and Liberty Broadband with the SEC. These forward looking statements speak only as of the date of this call, and GCI Liberty and Liberty Broadband expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward looking statement contained herein to reflect any change in GCI Liberty or Liberty Broadband’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. On today’s call, we will discuss certain non GAAP financial measures for GCI Liberty, including adjusted OIBDA, adjusted OIBDA margin and free cash flow.
Information regarding the required definitions along with comparable GAAP metrics and reconciliations, including Schedule one, can be found in the earnings press release issued today, which is available on GCI Liberty’s website. Today speaking on the call, have Ron Duncan, CEO of GCI Liberty Brian Wendling, GCI Liberty’s Chief Accounting and Principal Financial Officer. And also during Q and A, we will answer questions related to Liberty Broadband. Members of both GCI and Liberty Broadband management will be available to answer questions during the Q and A portion. With that, I will turn the call over to Ron.
Ron Duncan, CEO, GCI Liberty: Good morning. We were pleased to complete the spin off of GCI Liberty from Liberty Broadband last month, allowing me to speak to you today on our first quarterly call as a once again public company. 2025 is off to a great start. GCI continues to lead in the provision of statewide service to all of our customers. This has been a particular value to our rural health and education customers.
In the last twelve months, we have achieved significant upsells in this segment as rural schools and clinics have purchased additional bandwidth. We grew consumer wireless subscribers 1% year over year ending the quarter with 207,000 subscribers. During the quarter, we added 4,700 consumer wireless lines. On the data side, we saw a 3% decline year over year ending the quarter with 154,500 cable modem subscribers. During the quarter, we lost 1,300 data subscribers.
The decline of data subs over the past year is largely due to the elimination of the ACP program in 2024, the fiber break on a third party network in which GCI uses capacity, Starlink competition and wireless substitution. Financially, these results have translated into a record last twelve months OIBDA of $4.00 $5,000,000 as of the second quarter. The USF challenge at the Supreme Court, which had been an overhang on our business and led to a negative credit watch earlier in the year has been definitively and favorably resolved. Looking at several other financial highlights, in March, we successfully refinanced our senior credit facility and pushed out maturities to 2,030 and 02/1931. In the second quarter, we were able to reduce our net debt by $86,000,000 bringing our total leverage down to 2.3 times as defined by our credit agreement.
The combination of these events led S and P to eliminate the negative credit watch and raise our credit rating in July. We’re proud of the progress both financially and operationally over the first half of the year. While we’re now a standalone public company, it’s business as usual for our team in Alaska. We remain focused on improving our infrastructure to deliver high quality service to our customers, furthering our rural expansion to bridge the digital divide and increasing the efficiency of our business. I’ll go into a bit more detail in several areas.
Starting with our network infrastructure, we are offering 2.5 gigabit broadband connectivity in areas that have fiber middle mile, which cover an overwhelming majority of our customers. Material progress is being made in improving the broadband network in Anchorage as we are in the process of upgrading the core, reducing node sizes and upgrading the plant to 1.8 gigahertz. All of the work that we are doing is DOCSIS four point zero or four point zero capable, enabling speeds that are multiple times what we have today. We will be rolling this out to other markets in the coming years allowing us to get to five gigabits and ultimately beyond. We believe these changes will not only lead to higher speeds, but also a network that has fewer maintenance requirements.
The strength of this offering positions us well against competitors today and into the future. On wireless, we are encouraged by early signs that our wireless postpaid business is growing again. We launched our unlimited test drive promotion in April. This offers our broadband customers a discounted price to gain access to unlimited broadband and add a wireless line. This promotion is driving growth for both our GCI plus converged product and postpaid wireless lines with sequential growth in postpaid lines of 3,400 in the second quarter.
We expect to roll out other new pricing and packaging offers later this year to drive further growth in our wireless products. We plan to provide five gs wireless service to all Alaskans over the coming years. We continue to bridge the digital divide in Alaska with rural expansion. As I mentioned, we are happy to have the Universal Service Fund ruling behind us. This was an enormous win for the Universal Service Fund, the State of Alaska and all of the providers in Alaska, including GCI.
The Supreme Court’s decision clearly affirms the legal foundation of this important program. On the Alaska plan, we expect to complete the first phase and meet our build out requirements in 2026. This will increase wireless speeds in the communities we’re serving. The FCC’s new Alaska Connect Fund will extend the Alaska plan and increase the amount of support. This will aid in the deployment of five gs wireless throughout Alaska.
On Bead, the state of Alaska was allocated up to $992,000,000 in funding for infrastructure projects to connect unserved and underserved locations. Recent changes to the program make it unlikely that the state will be able to award the full amount of its allocation. GCI submitted several applications to participate in the Alaska Bead Program. Any monies that GCI has awarded will defray our capital costs as we expand in uncertain locations, but this funding is not currently factored into our CapEx budgeting. Finally, on our effort to increase efficiency in our business.
For the past year and a half, we’ve been engaged in efforts to proactively manage our cost structure. In 2024, we reorganized our tech organization and early this year hired our first ever Chief Technology Officer, Troy Goldie, who has been leading the efforts to make sure that our technology team is both effective and efficient. I’m very pleased with the early results in the CTO Group. We are continuing our efforts to streamline the business and increase efficiency by implementing new systems and applying the lessons learned in the CTO reorganization to other elements of the company. We expect these efforts will help maintain better discipline across our entire cost structure.
Before closing, I should comment briefly on the Alaska economy. The market has been flat up here with a slowly declining workforce for over a decade. The state government is challenged by the lack of a credible fiscal plan. The drop in oil prices has contributed to the malaise. There hasn’t been much good news to talk about.
However, the new administration’s change in resource policy with respect to both oil and mineral exploration make me cautiously optimistic about Alaska’s economic future. More importantly, there could be a ray of hope on the horizon. For fifty years, Alaskans have dreamed about the construction of a natural gas pipeline from Prudhoe Bay to Tidewater. This has always seemed to be a pipe dream, if you will, that was just out of reach. While details are still emerging, the inclusion of significant purchases of Alaska Gas and the promise of investment by Japan in the President’s recently announced trade deal could change the game.
Adding cheap energy to an environment where average temperatures are cooler and there is an abundant land abundance of land and water could make Alaska a very appealing location for participants in the AI economy. There’s still a lot of skepticism and some genuine doubt, but we hope to know more over the next few months. The construction of the gas line and the export of material amounts of natural gas would clearly be cause for optimism. In the meantime, we welcome anyone else to join us here in Alaska where we would remind you the water flows well, the climate stays cool and the environment is wonderfully conducive to the demands of the ever growing data center industry. To our listening audience of telco analysts, please spread the word.
In summary, we remain confident in our ability to deliver high quality service to the state of Alaska with both the breadth and caliber of our network and service. We believe the quality of our infrastructure and durability of our financial results will drive value for customers, partners and shareholders. With that, I’ll turn to Brian to discuss the financials in more detail.
Brian Wendling, Chief Accounting and Principal Financial Officer, GCI Liberty: Thank you, Ron, and good morning, everyone. As Ron said, the GCI Liberty spin off from Liberty Broadband was completed on July 14. Holders of Liberty Broadband common stock received 0.2 shares of the corresponding series of GCI Liberty common stock per share of the corresponding series of Liberty Broadband common stock held on record as of that date or on the record date. At quarter end, GCI Liberty had consolidated cash, cash equivalents and restricted cash of $117,000,000 and total principal amount of debt of approximately $1,000,000,000 As a reminder, GCI refinanced its senior credit facility in March with a four fifty million dollars revolver that matures in 2030 and a $300,000,000 Term Loan A that matures in 02/1931. At quarter end, GCI’s leverage as defined by its credit agreement was 2.3 times and GCI’s credit facility had three seventy seven million dollars of undrawn capacity net of letters of credit.
Prior to the spin off and subsequent to quarter end, dollars 10,000,000 of non voting preferred stock of GCI Liberty was issued to Liberty Broadband and then sold by Liberty Broadband to third party buyers. The GCI Liberty non voting preferred stock pays a 12% dividend with a redemption date in 02/1932. Now looking at GCI’s results. GCI generated total revenue of $261,000,000 representing 6% growth in the second quarter. Adjusted OIBDA of $108,000,000 increased 26%.
Results in the quarter continued to benefit from a strong upgrade cycle in schools and healthcare corporations that began in the 2024, as well as growth in consumer wireless and cost efficiencies. Note, we expect a slowdown in adjusted OIBDA growth in the back half of this year, partially driven by fully lapping the upsell cycle in schools that began in the 2024. Additionally, we have benefited from several other one time items in the first half of the year, including lower employee benefit costs. GCI remains on track to fully exit the video business by the end of this calendar year. This will allow us to focus the business on the products and services that our customers need and want, but will not have a significant impact on revenue or COGS and the impact of free cash flow and OIBDA will be immaterial.
Consumer revenue declined 2% to $119,000,000 The majority of the decline was driven by a decline in data revenue as well as the video segment, which we are exiting, slightly offset by growth in consumer wireless. Consumer wireless revenue increased 6% to $51,000,000 benefiting from wireless subscriber growth and an increase in federal wireless subsidies. Consumer gross margin of 70.6% was relatively flat compared to the same period last year. Business revenue grew 14% to 142,000,000 Most of the increase was driven by data revenue, which continued to benefit from the strong upgrade cycle noted above, which began in the 2024. Wireless revenue declined $2,000,000 or 17%, largely driven by a decline in roaming revenue.
Business gross margin increased to 81.7%, primarily due to temporary cost savings from the quintillion fiber break combined with the data revenue growth. Capital expenditures net of grant proceeds totaled $51,000,000 during the quarter. Year to date, GCI had approximately 100,000,000 in net CapEx investment and expects full year net CapEx to be around $250,000,000 GCI generated $153,000,000 in free cash flow on a trailing twelve month basis through the end of the second quarter. We believe presenting free cash flow on a trailing twelve month basis more accurately demonstrates our cash generation and liquidity profile by minimizing seasonal fluctuations, particularly around the timing of USF cash receipts. Typically, have a delay in cash payments from our USF supported revenue at the start of the new funding year, which begins in the third quarter of each year.
Last year, we didn’t start to receive meaningful amounts of cash until the beginning of Q1 of the following year. However, the outlook for the rest of 2025 is favorable as we have received USAC approval for a significant amount of services already. We should start to collect cash over the next few months and meaningfully accelerate the timing of our cash flows versus the prior year. Lastly, based on recent stock prices, we currently expect the GCI Liberty spin off will result in a basis step up of approximately 1,000,000,000 Our combined federal and state tax rate is just under 30%, so that gives you an idea of the value of the tax asset, but we’re not providing a timeline for its utilization as that may depend will depend on a variety of factors. And with that, I’ll turn the call back over to Ron.
Ron Duncan, CEO, GCI Liberty: Thank you, Brian. We appreciate your interest in GCI Liberty and look forward to continuing to update you on our progress. With that, we’ll open the call up for Q and A.
Conference Operator: Thank you. And we have a question from Barry Sine with Richfield Hills Research, which will be our last on the call. Please proceed, Barry.
Barry Sine, Analyst, Richfield Hills Research: Hey, good morning. I wanted to ask about your acquisition strategy. On the June 3 call you guys did, you spoke about acquisitions likely being a key part of your strategy. And if I think about the Alaska telecom environment, you’ve tried buying a TV station, Quintillion has high scour issues, MTA is a co op, you could always buy the Iditarod, Liberty has created a lot of value at Formula One. Would you go out of Alaska?
Would you go out of your industry? What are your criteria for acquisitions? Thank you.
Ron Duncan, CEO, GCI Liberty: Thank you, Barry. Yes, I think buying Iditarod would be great and we’ll turn that into international sports and infuriate Peter beyond all belief. Obviously, there’s not a lot of attractive acquisitions of scale in Alaska. So any acquisition strategy would largely be directed out of state. It wouldn’t necessarily be within the business we’re currently in today.
I don’t think we’re looking at leveraging the operating resources of GCI in any future acquisition strategy rather than the financial resources and the tax assets. That said, GCI as a public company is not quite four weeks old. We haven’t had our first full quarterly Board meeting yet and we don’t have a developed list of acquisition targets or even necessarily a list of priorities and strategy for that. You’ll have to give us a little more time to develop that, But obviously, we have a lot of cash flow to deploy and we have a lot of tax assets that can be accelerated. With that, I think we are done for this quarter.
And we appreciate your interest in GCI. We look forward to getting back to you at the end of the next quarter. Thank you.
Conference Operator: Thank you. This concludes today’s conference. You may disconnect your lines at this time. Enjoy the rest of your day.
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