Cogeco Communications (CCA) Q3 2025 earnings summary

Executive summary

• Canadian internet subscriber growth and successful wireless launch offset U.S. subscriber losses, with transformation and cost reduction initiatives driving margin expansion and significant free cash flow growth.

• U.S. operations faced subscriber and revenue pressures due to competition and execution gaps, but improvements are anticipated as transformation initiatives take effect.

• Unified management structure and ongoing expansion into wireless and fibre-to-the-home, leveraging government subsidies for network growth.

• Strong history of capital returns, including consistent dividend increases and share repurchases.

• Revenue declined 2.7% in Q3 and 1.2% for the first nine months year-over-year, mainly due to U.S. subscriber losses and lower ARPU in Canada, partially offset by Internet subscriber growth and acquisitions.

Financial highlights

• Q3 revenue declined 2.7% year-over-year to $730.7M (4.1% in constant currency), with LTM consolidated revenue at $2.98B.

• Adjusted EBITDA margin improved to 49.6% in Q3, with LTM margin at 47.6%.

• Free cash flow surged 63.2% in Q3 to $143.9M, driven by lower capex and restructuring costs; LTM free cash flow (excluding network expansions) at $591M.

• Net capital expenditures dropped 25.5% in Q3 to $125.5M; capital intensity reduced to 17.2%.

• Dividend per share increased 8% to $0.922; annualized dividend at $3.69 with a 5.2% yield.

Outlook and guidance

• Fiscal 2025 revenue expected to decline low single digits, with adjusted EBITDA projected to remain stable year-over-year.

• Net capital expenditures guidance lowered to $600–$650M; capital intensity expected at 20.5–22.5%.

• Free cash flow guidance raised to stable versus prior year, reflecting transformation savings and lower capex.

• Q4 consolidated revenue expected to be lower than Q3, with adjusted EBITDA similar or slightly better than Q3.

• Free cash flow and free cash flow excluding network expansions both expected to decrease 0–10% year-over-year.