Image source: Cable One.

Cable One (NYSE:CABO), a provider of video, Internet, and voice services to residential and business customers in 19 states, reported its fourth quarter earnings after the market close on March 2. The company's residential data and business services segments grew rapidly, offsetting fairly substantial declines in the number of customers paying for voice and video services. Here's what investors need to know about the results.

The raw numbers


Q4 2015

Q4 2014

YOY Growth


$203.4 million

$201.5 million


Net Income

$26.1 million

$26.9 million


Earnings Per Share




Data source: Cable One Q4 earnings report.

What happened with Cable One this quarter?
Here's how Cable One fared during the period:

  • Business services revenue rose 13.5% year over year to $23.3 million.
  • Residential data revenue rose 14.2% year over year to $77.9 million.
  • Business services and residential data now account for 49.7% of the top line.
  • Total residential customers declined 4.1% year-over-year to 617,220, while business customers rose 10.9% year over year to 47,384.
  • Residential video, still the largest source of revenue for Cable One, slumped 8.2% year over year to $77.95 million.
  • Cable One generated free cash flow of $35.3 million during the quarter, up 11% year over year.
  • Adjusted EBITDA rose 12.7% year over year to $88 million. Excluding the positive impact of certain insurance-related benefits, adjusted EBITDA increased by 9.7%.

What management had to say
In Cable One's earnings press release, CEO Tom Might stated: "We are very pleased with our financial results for the fourth quarter and full year, which were primarily driven by higher HSD and business services revenues, combined with continued cash flow and margin expansion." Residential data and business services are the only portions of Cable One that are growing, and their strong performance helped counteract weakness in other areas. HSD stands for high speed data.

Might continued:

The capital investments we have made over the past several years place us in a position to take advantage of the growth of our HSD product and to utilize our superior broadband technology to bring the fastest speeds to customers in our markets. We believe that these investments and the 2016 launch of our Gigabit service, GigaONE, to the majority of our markets will allow us to continue to improve the customer experience and build value for our shareholders.

Looking forward
Cable One continued its transition away from video and voice services toward high-speed data and business services during the fourth quarter. This year, it is rolling out its gigabit service, GigaONE, to its residential customers, a move that could help the company continue to grow its residential data segment going forward. Cable One investors should also expect continued growth from business services in the coming quarters.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.