In the second quarter of 2026 Cable One reported total revenue of $348.9 million, down from $381.1 million a year earlier, and adjusted EBITDA of $173.5 million, with the margin slipping to 49.7% from 53.3% as the company absorbed elevated broadband churn and a 17,000 residential broadband customer loss. Residential data revenue fell 7.3% year-over-year on a 6.6% subscriber decline even as ARPU was roughly flat and rose sequentially, helped by promotional roll-offs and AutoPay Plus changes, while connect activity improved sequentially and door-to-door sales more than doubled as a share of connects year-over-year. The company recognized several non-cash impairment charges tied to franchise agreements, goodwill and its MBI investment, and continued deleveraging, reducing debt by $63 million in the quarter (about $130 million year-to-date) while holding $166.2 million of cash and $700 million of undrawn revolver capacity against a 4.2x net leverage ratio. Management emphasized operational execution, the launch of UCaaS in business services, near-ubiquitous gig-capable network coverage and the completed Point Broadband/Clearwave Fiber merger as it works to stabilize subscriber trends.
Good afternoon, welcome to Cable One second quarter 2026 earnings call. We're glad to have you join us as we review our results.
Before we proceed, I would like to remind you that today's discussion contains forward-looking statements relating to future events that involve risks and uncertainties, including statements regarding future revenue, customer growth, connects, churn rates, and ARPU, the future competitive structure of our markets, the long-term penetration opportunity in our markets, the anticipated benefits of our mobile service offering, new product rollouts, future customer retention trends, anticipated cost savings, and other benefits to be derived from our billing system migration and our other investments in growth enablement platforms.
Our plans to expand our multi-gig capabilities in more markets, future cash flow and capital expenditures, potential uses for our cash flow, the MBI transaction, including the purchase price, MBI's future debt levels and other related matters, future tax savings, our expectations for monetizing our remaining equity investments, and our future financial performance, capital allocation policy, leverage ratios and related targets, and our potential financing plans.
You can find factors that could cause Cable One's actual results to differ materially from the forward-looking statements discussed during today's call in today's earnings release and in our SEC filings, including our 2025 annual report on Form 10-K and our forthcoming second quarter 2026 quarterly report on Form 10-Q. Cable One is under no obligation and expressly disclaims any obligation except as required by law to update or alter its forward-looking statements, whether as a result of new information, future events, or otherwise. Today's remarks will include a discussion of certain financial measures that are not presented in conformity with the U.S. generally accepted accounting principles, or GAAP. When we refer to free cash flow during today's call, we mean adjusted EBITDA less capital expenditures as defined in our earnings release.
Reconciliations of non-GAAP financial measures discussed on this call to the most directly comparable GAAP measures can be found in our earnings release or on our website at ir.cableone.net. Joining me on today's call is our CEO, Jim Holanda, and CFO Todd Koetje. With that, I'll turn the call over to Jim.
Thank you, Jordan, and good afternoon, everyone. We appreciate you joining us today. Last quarter, I spoke about taking the time to listen, learn, and develop a clear understanding of where we are performing well and where we need to improve. Three months later, my view remains largely unchanged. This is a business with a strong network, attractive markets, meaningful cash flow generation, and significant potential to improve operating performance. I continue to believe the greatest opportunities in front of us are operational in nature, within our control, and ultimately solvable through consistent execution. Today, I'd like to spend my time discussing what we're seeing in residential broadband, the competitive environment, the investments we're making across the business, and why we remain confident in the long-term outlook. Turning to residential broadband, we reported losses of 17,000 customers during the quarter as elevated churn continued to pressure subscriber results.
These results reinforce our belief that improving customer retention is our most important operational priority. Achieving that requires continued focus on both enhancing the customer experience and strengthening our overall value proposition. To support these efforts, we continue to augment initiatives across the business, including additional speed upgrades, more gradual promotional roll-offs, and a broader portfolio of products and services designed to deepen customer relationships and improve customer lifetime value, supported by enhanced retention tools. On the acquisition side, connect activity improved sequentially from the prior quarter and in each month of the second quarter, providing additional confidence that our customer acquisition initiatives are moving in the right direction. We are making progress toward building a more balanced acquisition approach as investments in our people, platforms, and go-to-market capabilities continue to gain traction.
Over the past year, the contribution from door-to-door sales has more than doubled as a share of our quarterly connects, and we also continue to see encouraging momentum across our digital acquisition channels. These results reflect our efforts to diversify how we acquire new customers and build a more balanced mix of acquisition channels. Residential broadband ARPU increased sequentially during the quarter, benefiting from promotional roll-offs, the implementation of our AutoPay Plus program changes, and continued adoption of higher value products and services across the customer relationship, partially offset by customer retention initiatives and increased adoption of value-oriented offerings. Going forward, we expect to take an increasingly targeted and segmented approach to pricing and retention initiatives tailored to the competitive dynamics of each market we serve. This approach is designed to balance revenue objectives with long-term customer relationships and lifetime value.
Competitive intensity remains across portions of our footprint, particularly in markets experiencing fiber overbuild activity. Looking ahead, we expect the broadband landscape to consist of a mix of wired, fixed wireless, mobile only, and satellite solutions, with wired broadband continuing to serve the majority of households because of its superior capacity, reliability, and economics. The number of wired gig-capable competitors varies across our footprint, and we increasingly tailor our products, marketing strategies, and competitive responses to the local dynamics of each market. While those competitive responses may differ by market, our commitment to the communities we serve and our local operating presence remain unchanged. Our objective is to deliver an experience that earns long-term customer loyalty and positions us to compete effectively over time.
As we evaluate the competitive environments across our footprint and where we expect them to stabilize over time, we believe our long-term penetration opportunity remains meaningfully above current penetration levels. This analysis reinforces our confidence in the business's long-term growth and value creation potential. Turning to business services, as we noted last quarter, our reported business services results reflect the impact of the previously announced sale of certain fiber-to-the-tower assets, which occurred in late Q1. Within business services, we continue to see encouraging momentum in portions of the business, particularly within our enterprise, wholesale, and carrier offerings, as these higher-value fiber-based offerings benefit from long-term contracts, recurring revenue streams, and attractive customer economics. During the second quarter, our SMB broadband business remained under pressure.
To strengthen our offering, we expanded our product portfolio with the launch of unified communications as a service, or UCaaS, providing customers with a cloud-based communications solution that complements our existing connectivity services. UCaaS broadens the solutions we offer and represents another step in deepening relationships over time. Combined with improvements in sales execution and our go-to-market approach, we believe we are well positioned to build on the momentum we're seeing across these higher-value commercial segments. Underpinning both our residential and commercial businesses is the quality and capabilities of our network. Today, essentially all of our network is capable of delivering gigabit speeds, and by the end of this year, the vast majority of our customers will be served by multi-gig capable infrastructure. This progress is not the result of a major new capital program, but rather years of disciplined, capital-efficient investment in our network architecture and technology platforms.
We believe these upgrades improve the value we deliver to customers while further strengthening our competitive position in the markets we serve. More broadly, we continue to invest in technology, automation, and AI-enabled tools designed to improve the customer experience, enhance employee productivity, and drive greater operational efficiency across the business. Turning to mobile, we are pleased with the early progress of the business. While it remains small relative to our core broadband operations today, customer adoption trends and the pace of growth across the platform are encouraging. As we've said previously, building awareness and changing customer perception takes time. Customers have known us as a broadband provider for many years, and we expect it will take time for customers to view us as a mobile provider. Across the broadband industry, mobile is an increasingly important part of the customer relationship.
While it remains early on in our launch, we believe it is an effective way to improve customer acquisition, deepen customer relationships, and strengthen retention over time. As penetration grows, we expect those benefits to become more meaningful to customer lifetime value and the economics of the business. As we continue to invest across the business, we remain disciplined in how we allocate capital. Our capital allocation priorities remain unchanged. We will invest in opportunities to improve the customer experience and strengthen our competitive position while pursuing balance sheet flexibility and seeking to reduce leverage over time. Todd will provide additional detail on our balance sheet, liquidity position, and capital allocation priorities in his remarks. Before I hand it over to Todd, I'd like to reiterate our confidence in the long-term opportunity ahead.
We're seeing encouraging progress across a number of the initiatives we've discussed today while continuing to invest in our network, our products, and the capabilities that we believe will strengthen our competitive position. Combined with the positive cash flow-generating characteristics of the business and a disciplined approach to capital allocation, we continue to pursue long-term value creation for our stakeholders. Now Todd will provide a recap of our second quarter financial performance.
Thanks, Jim. Beginning with the top line, total revenues were $348.9 million for the second quarter of 2026, compared to $381.1 million in the second quarter of 2025, with Residential Video responsible for $9.7 million of the decrease. Residential data revenues decreased $16.7 million, or 7.3% year-over-year, driven by a 6.6% decrease in subscribers while ARPU remained relatively flat. On a sequential basis, Residential Data revenues declined by $1 million, or 0.5%. Data revenues on the business side declined by $3.8 million year-over-year, or 6.6%. However, $2.2 million of this decline was attributable to the revenues associated with the tower contracts divested during the first quarter of 2026. Operating expenses declined by $3.6 million, or 3.5%, compared to the second quarter of 2025, driven by lower programming costs, offset by ongoing investments in customer experience.
OpEx was 28.3% of revenues in Q2 of 2026 versus 26.9% in the prior year quarter. SG&A expenses for the second quarter of 2026 fell by $4.3 million, or 4.7% year-over-year, due to lower labor expense and reduced billing system conversion costs. This was offset by continued investment in customer acquisition channels and related marketing. SG&A represented 25.1% of total revenues in the current quarter, compared to 24.1% in the second quarter of last year. Adjusted EBITDA for the second quarter of 2026 was $173.5 million, representing 49.7% of revenues, versus $203.2 million, or 53.3% of revenues in Q2 of 2025. Capital expenditures of $74 million were 42.7% of adjusted EBITDA and increased $5.6 million year-over-year. This was primarily attributable to our investments in the latest in-home advanced Wi-Fi technologies and security solutions to drive increased customer satisfaction and related loyalty.
We reaffirm our previous guidance that full year CapEx is expected to remain consistent with the prior year, and we will continue to remain disciplined and balanced on capital allocation priorities that are centered around the highest network reliability standards and debt reduction. Adjusted EBITDA less CapEx was $99.5 million in the second quarter of 2026 versus $134.8 million in the second quarter of 2025. During the quarter, we recognized several non-cash impairment charges and fair value adjustments related to our franchise agreements, goodwill, and our investment in MBI. These accounting charges do not impact our cash flow, liquidity, operating strategy, or long-term growth initiatives. Additional details are included in our earnings release and Form 10-Q. During the quarter, we reduced our debt balances by $63 million, including nearly $60 million of reduction via voluntary repurchases at attractive discounts.
Through the first two quarters of the year, we have reduced our total debt balances by nearly $130 million. At the end of the second quarter, we had $166.2 million of cash and equivalents on hand, while our gross debt balance was $3.06 billion, consisting of approximately $1.66 billion of term loans, $550 million of revolver draws, $503 million of unsecured notes, $345 million of convertible notes, and $3 million of finance lease liabilities. We also had $700 million of undrawn capacity under our $1.25 billion revolving credit facility at quarter end. Our net leverage ratio on a last quarter annualized basis was 4.2x. Our balance sheet continues to be supported by committed sources of capital and strong operating liquidity. We remain focused on strengthening it and continue to actively evaluate a range of financing alternatives with the objective of maintaining financial flexibility over the long term.
With respect to MBI, we continue to evaluate the appropriate next steps and do not have any additional updates to announce today. As previously announced, during the quarter, two of our unconsolidated equity joint ventures, Point Broadband and Clearwave Fiber, merged. Our existing interest in Clearwave Fiber was exchanged for additional equity interest in the surviving Point Broadband entity. Our investment had a $135 million carrying value at June 30th and is now classified as an equity method investment with a one-quarter reporting lag. We continue to assess potential monetization opportunities for our remaining unconsolidated equity investments, whose proceeds could be allocated towards accelerated debt reduction as we have in the past. With that, I'll turn it over for questions.