Shenandoah (SHEN) Q2 EBITDA Up 21%

Shenandoah Telecommunications (SHEN -9.78%), a regional telecommunications provider focused on fiber broadband and related services, reported earnings results for Q2 2025 on July 31, 2025. The company posted GAAP revenue of $88.6 million, slightly below the analyst estimate of $89.94 million. Earnings per share (GAAP) came in at a net loss of $0.19, but both GAAP measures missed broader Wall Street expectations. Margins, however, improved significantly, with adjusted EBITDA margin climbing to 32% from 27% compared to Q2 2024. Overall, the quarter reflected strong progress in expanding Glo Fiber markets and operational discipline, though high capital investment and ongoing net losses underscore continued investment-phase pressures on the bottom line.

Source: Analyst estimates for the quarter provided by FactSet.

Company Overview and Strategic Focus

Shenandoah Telecommunications is a telecommunications company providing broadband internet, voice, and video services mainly in rural and suburban communities in the Mid-Atlantic and outside major urban markets. Its core focus in recent years has been shifting from traditional cable and telephone offerings toward high-speed fiber-optic broadband, recognizing changing customer demand and industry trends.

The company’s recent operations have centered on expanding its Glo Fiber broadband product, which delivers high-speed fiber internet to households and businesses. Management has also emphasized key acquisitions, like the purchase of Horizon Acquisition Parent LLC, and divestitures, such as the sale of their tower business, to sharpen its focus on fiber broadband growth. Critical success factors include effective capital deployment in new markets, quality of customer service, competitive pricing, and securing government grants to support broadband build-out in underserved regions.

Financial and Operational Highlights for the Quarter

During the quarter, the Glo Fiber Expansion Markets continued to serve as the main growth engine. Subscriber numbers rose to about 76,000, an increase of 43.1% compared to Q2 2024. Glo Fiber’s revenue reached $19.8 million, climbing 40.5% compared to Q2 2024. The company now passes approximately 379,000 homes in expansion markets, up from approximately 298,000 in Q2 2024, and overall broadband passings reached approximately 623,000. Market penetration for Glo Fiber hit 20.1%, up from 17.9% a year earlier, meaning a growing share of households in reached areas have signed on.

Average revenue per user (ARPU) in Glo Fiber expansion markets remained steady at $76.72, only slightly below $77.56 in Q2 2024, reflecting stable pricing in new areas but not significant upward momentum. This indicates customers are adopting service, but price competition or cautious spending is keeping ARPU gains in check. The company now counts 17,740 fiber route miles, reflecting continued investment in physical network assets. These buildouts are capital intensive, requiring both efficient project execution and access to external funding sources.

Other segments offered a mixed picture. The Incumbent Broadband business posted a GAAP revenue decline of 3.2% to $42.8 million. This drop was driven primarily by cord-cutting in traditional video service, with residential video user counts falling 14.5% year-over-year. Broadband data customers in the Incumbent Broadband business increased to about 112,000, up 2.7% year-over-year due to the acquisition of approximately 3,000 broadband data customers from Horizon, and penetration fell as total passings outpaced new signups. The Commercial Fiber segment booked a 6.0% decline in GAAP revenue to $19.5 million. This drop was due to timing issues around contract changes and one-off prior-year benefits, rather than shrinking demand for core network services.

The company’s profitability metrics improved. Adjusted EBITDA, which excludes certain non-cash and one-time items to gauge recurring cash profit, rose 21.9% year-over-year. Adjusted EBITDA margin increased to 32% in the second quarter, supported by realized cost synergies from the Horizon acquisition—management cited full recognition of about $13.8 million in run-rate savings from this deal. Net loss from continuing operations (GAAP) narrowed from $12.8 million in Q2 2024 to $9.0 million, reflecting operational improvements and lower restructuring expenses. Depreciation and amortization expenses, however, grew significantly as new network assets were activated. These non-cash charges weigh on near-term reported earnings, even as underlying cash generation improves.

Capital expenditure (GAAP) for the first half of 2025 was $169.4 million, up from $150.9 million in the first half of 2024, reflecting the cost of extensive network builds. Shenandoah Telecommunications received $17.3 million in government grant reimbursements to help fund network expansion, up sharply from $7.7 million in the first half of 2024. The company’s liquidity position, which combines cash, available lines of credit, and government support, totaled $266.7 million. However, total debt rose to $513.1 million as of June 30, 2025, compared to $417 million as of December 31, 2024. Management noted plans to refinance borrowings using asset-backed securitization, aiming to lower future interest expense.

Regarding products, Glo Fiber is a high-speed, state-of-the-art fiber-optic broadband service. The company’s legacy offerings include broadband internet, voice, and video delivered over older copper and hybrid networks. Legacy segments—particularly traditional cable TV and standard voice—continue to lose customers as the industry transitions to all-fiber and streaming-based services.

Forward Outlook and What to Watch

Management provided an initial fiscal 2025 outlook. It projected total revenue of $352 to $357 million, up from $328 million in 2024. Adjusted EBITDA (non-GAAP) guidance is $113 to $118 million, significantly above the $95 million reported for 2024. Capital expenditures, net of government grant reimbursements, are expected to come down modestly to between $260 and $290 million, compared to $300 million in 2024. This signals that Shenandoah Telecommunications expects the most intense phase of network buildout to begin tapering after 2025. No guidance was offered for future GAAP earnings per share.

Looking ahead, continued growth in Glo Fiber Expansion Markets, management of rising capital intensity, and realization of synergies will be crucial for performance. Investors will want to closely monitor trends in customer uptake, average revenue per user, and the pace of grant funding. The ongoing reduction in legacy segment revenues—especially video subscriber declines—and elevated capital expenditure levels remain important risk factors.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.