Cable One, Inc. (CABO)

ITEM 2.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and accompanying notes included in this Quarterly Report on Form 10-Q and the audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2025 and the related “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” both of which are contained in our 2025 Form 10-K. Our results of operations and financial condition discussed herein may not be indicative of our future results and trends.

Throughout this “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” all totals, percentages and year-over-year changes are calculated using exact numbers. Minor differences may exist due to rounding.

Overview

We are a leading broadband communications provider delivering exceptional service and enabling our customers to thrive and stay connected to what matters most. Through Sparklight, the brand our customers know and trust, we are transforming the future of connectivity with a commitment to innovation, reliability and customer experience. We serve our customers with technologically advanced fiber-based infrastructure that provides for delivery of a full suite of data, video and voice products.

We believe our robust infrastructure and cutting-edge technology keep our customers connected and help drive progress in education, business and everyday life. We believe the services we provide are critical to the development of new businesses and drive economic growth in the non-metropolitan, secondary and tertiary markets that we serve in 24 Western, Midwestern and Southern states. As of June 30, 2026, approximately 76% of our customers were located in seven states: Arizona, Idaho, Mississippi, Missouri, Oklahoma, South Carolina and Texas. We provided services to approximately 1.0 million residential and business customers out of approximately 2.8 million passings as of June 30, 2026. Of these customers, approximately 968,000 subscribed to data services, 78,000 subscribed to video services and 87,000 subscribed to voice services.

We generate substantially all of our revenues through three primary product lines. Ranked by share of our total revenues through the first six months of 2026, they are residential data (60.7%), business data (15.7%) and residential video (11.3%). The profit margins, growth rates and/or capital intensity of these three primary product lines vary significantly due to competition, product maturity and relative costs.

We focus on growing our higher margin businesses, namely residential data and business data services. Our strategy acknowledges the industry-wide trends of declining profitability of video services and declining revenues from residential voice services. The declining profitability of residential video services is due primarily to increasing programming costs and retransmission fees and competition from other streaming content providers, and the declining revenues from residential voice services are due primarily to the increasing use of wireless voice services instead of residential voice services. Separately, we have also historically focused on retaining customers who are likely to produce higher relative value over the life of their service relationships with us, are less attracted by discounting, require less support and churn less, while more recently supplementing our growth by targeting a broader scope of incremental customers, including those who are more value-conscious. This strategy has focused on increasing adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”), driving higher margins and delivering attractive levels of Adjusted EBITDA less capital expenditures over the long-term.

Excluding the effects of acquisitions and divestitures, the trends described above have impacted, and are expected to further impact, our three primary product lines in the following ways:

•Residential data. We focus on growing residential data customers and revenues and expect this product line to grow over the long-term, supplemented by growth in related services, such as intelligent Wi-Fi, technology support and network security solutions. In recent periods, we have experienced subscriber losses as a result of increased competition in our markets but believe the upgrades made in our broadband capacity, our ability to offer higher access speeds than many of our competitors, the reliability and flexibility of our data service offerings, our Wi-Fi offerings and continuously growing data usage by consumers and their demand for higher speeds will enable us to continue to earn a consistent average monthly revenue per unit (“ARPU”) from our existing customers over the long-term and potentially capture additional market share. Our broadband plant generally consists of a fiber-to-the-premises (“fiber”) or hybrid fiber-coaxial (“HFC”) network with ample unused capacity, and we offer our data customers internet products at some of the fastest speeds available in our markets. We believe that the capacity and reliability of our networks is equal to or exceeds that of our competitors in most of our markets and best positions us to meet the continuously increasing consumption demands of customers.

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•Business data. We focus on growing business data customers and revenues over the long term by concentrating our efforts on increasing sales to business customers and attracting enterprise and wholesale business customers. We expect to experience growth in business data revenues over the long-term as we sell-in additional products and services to existing customers and also focus on adding new customers. Margins for products sold to business customers have remained attractive, which we expect will continue.

•Residential video. Residential video service is an increasingly fragmented business, with programming costs and retransmission fees continuing to escalate in the face of a proliferation of streaming content alternatives. We intend to continue our strategy of focusing on the higher-margin businesses of residential data and business data services while de-emphasizing our video business. As a result of our video strategy, we expect that residential video customers and revenues will continue to decline. We offer Sparklight TV, an internet protocol-based (“IPTV”) video service that allows customers with our Sparklight TV app to stream our video channels from the cloud. This IPTV video service optimizes our available bandwidth, maximizing network capacity to increase data speeds and capacity across our network.

We recently launched a mobile service offering with a mobile virtual network enabler to complement our wired broadband product by delivering added convenience and greater flexibility while strengthening our long-term customer relationships with the ultimate goals of enhancing customer lifetime value, improving retention and supporting packaging opportunities to reinforce our core broadband business.

We continue to experience increased competition, particularly from telephone companies; fiber, municipal and cooperative overbuilders; fixed wireless data providers; and over-the-top video providers. Because of the levels of competition we face, we believe it is important to make investments in our infrastructure. In addition, a key objective of our capital allocation process is to invest in initiatives designed to drive revenue and Adjusted EBITDA expansion. We continue to invest capital to, among other things, increase fiber density and coverage, expand our footprint, increase plant and data capacity, enhance network reliability and improve the customer experience. We have rolled out multi-Gigabit download data service to over half of our markets and currently offer Gigabit download data service to all of our passings. We are currently deploying DOCSIS 4.0 capabilities, which, together with Sparklight TV, further increases our network capacity and enables future growth in our residential data and business data product lines. As a result of multi-year investments in our plant and network, we increased broadband capacity and reliability, which has enabled and will continue to enable us to offer even higher download speeds and to support the continually increasing data usage by customers. We believe these investments will reinforce our competitive strength in this area.

We expect to continue to devote financial resources to infrastructure improvements in existing and acquired markets as well as to expand high-speed data service in areas adjacent to our existing network. We believe these investments are necessary to continually meet our customers’ needs and remain competitive. The capital enhancements associated with acquisitions include rebuilding low-capacity markets; reclaiming bandwidth from traditional QAM-based video services; implementing multi-Gigabit download speeds; deploying DOCSIS 4.0 capabilities; consolidating back-office functions such as billing, accounting and service provisioning; migrating products to Cable One platforms; and expanding our high-capacity fiber network.

Our primary financial goals are to grow residential data and business data customers and revenues, to increase profit margins and to deliver strong Adjusted EBITDA and Adjusted EBITDA less capital expenditures over the long-term. To achieve these goals, we intend to continue our disciplined cost management approach, remain focused on customers with expected higher relative value and supplement our growth by targeting a broader scope of incremental customers, including those who are more value-conscious. We combat competitive threats in our markets through targeted pricing and product offerings and further planned investments in broadband plant upgrades, including the continued deployment of DOCSIS 4.0 capabilities and new data service offerings for residential and business customers. Given our strategic focus on our higher margin residential data and business data product lines, we assess our level of capital expenditures relative to Adjusted EBITDA, unlike others in our industry who may compare their capital expenditures to revenues due to their much larger residential video customer bases.

We also evaluate opportunistic broadband-related acquisition and strategic investment opportunities in rural markets in addition to the pursuit of organic growth through market expansion projects. In recent years, we have made investments in several broadband-centric providers serving non-urban markets that follow various strategies similar to our own. Such strategic investments were intended to capitalize on opportunities that may not have existed under a full ownership model, in order to allow us to participate more aggressively in the fiber expansion business and potentially provide future monetization, acquisition or investment opportunities, while allowing our management team to focus on our core business and without burdening our cash flow.

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Results of Operations

Key Performance Measures Summary

The following tables summarize certain key measures of our results of operations (dollars in thousands):

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Overview

We are a leading broadband communications provider delivering exceptional service and enabling our customers to thrive and stay connected to what matters most. Through Sparklight, the brand our customers know and trust, we are transforming the future of connectivity with a commitment to innovation, reliability and customer experience. We serve our customers with technologically advanced fiber-based infrastructure that provides for delivery of a full suite of data, video and voice products.

We believe our robust infrastructure and cutting-edge technology keep our customers connected and help drive progress in education, business and everyday life. We believe the services we provide are critical to the development of new businesses and drive economic growth in the non-metropolitan, secondary and tertiary markets that we serve in 24 Western, Midwestern and Southern states. As of December 31, 2025, approximately 75% of our customers were located in seven states: Arizona, Idaho, Mississippi, Missouri, Oklahoma, South Carolina and Texas. We provided services to approximately 1.0 million residential and business customers out of approximately 2.9 million passings as of December 31, 2025. Of these customers, approximately 999,000 subscribed to data services, 88,000 subscribed to video services and 94,000 subscribed to voice services as of December 31, 2025.

We generate substantially all of our revenues through three primary product lines. Ranked by share of our total revenues during 2025, they are residential data (60.1%), business data (15.3%) and residential video (12.5%). The profit margins, growth rates and/or capital intensity of these three primary product lines vary significantly due to competition, product maturity and relative costs.

In 2025, our Adjusted EBITDA margins for residential data and business data are estimated to be approximately three and four times greater, respectively, than for residential video. We define Adjusted EBITDA margin for a product line as Adjusted EBITDA attributable to that product line divided by revenue attributable to that product line (see “Use of Adjusted EBITDA” below for the definition of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to net income (loss), which is the most directly comparable GAAP measure). This margin disparity is largely the result of significant programming costs and retransmission fees incurred to deliver residential video services, which in each of the last three years represented between 59% and 63% of total residential video revenues. Neither of our other primary product lines has direct costs representing as substantial a portion of revenues as programming costs and retransmission fees represent for residential video, and indirect costs are generally allocated on a per PSU basis.

We focus on growing our higher margin businesses, namely residential data and business data services. Our strategy acknowledges the industry-wide trends of declining profitability of video services and declining revenues from residential voice services. The declining profitability of residential video services is due primarily to increasing programming costs and retransmission fees and competition from other streaming content providers, and the declining revenues from residential voice services are due primarily to the increasing use of wireless voice services instead of residential voice services. Separately, we have also historically focused on retaining customers who are likely to produce higher relative value over the life of their service relationships with us, are less attracted by discounting, require less support and churn less, while more recently supplementing our growth by targeting a broader scope of incremental customers, including those who are more value-conscious. This strategy has focused on increasing Adjusted EBITDA, driving higher margins and delivering attractive levels of Adjusted EBITDA less capital expenditures over the long term.

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Excluding the effects of acquisitions and divestitures, the trends described above have impacted, and are expected to further impact, our three primary product lines in the following ways:

•Residential data. We focus on growing residential data customers and revenues and expect this product line to grow over the long term, supplemented by growth in related services, such as intelligent Wi-Fi, technology support and network security solutions. In recent periods, we have experienced subscriber losses as a result of increased competition in our markets but believe the upgrades made in our broadband capacity, our ability to offer higher access speeds than many of our competitors, the reliability and flexibility of our data service offerings, our Wi-Fi offerings and continuously growing data usage by consumers and their demand for higher speeds will enable us to continue to earn a consistent ARPU from our existing customers over the long term and potentially capture additional market share. Our broadband plant generally consists of a fiber or HFC network with ample unused capacity, and we offer our data customers internet products at some of the fastest speeds available in our markets. During the fourth quarter of 2025, our average residential data customer used 835 Gigabytes of data per month, with more than 30% of our customers using over 1 Terabyte of data per month, while peak bandwidth utilization remained at or below 20%. We believe that the capacity and reliability of our networks is equal to or exceeds that of our competitors in most of our markets and best positions us to meet the continuously increasing consumption demands of customers.

•Business data. We focus on growing business data customers and revenues over the long term by concentrating our efforts on increasing sales to business customers and attracting enterprise and wholesale business customers. We expect to experience growth in business data revenues over the long term as we sell-in additional products and services to existing customers and also focus on adding new customers. Margins for products sold to business customers have remained attractive, which we expect will continue.

•Residential video. Residential video service is an increasingly fragmented business, with programming costs and retransmission fees continuing to escalate in the face of a proliferation of streaming content alternatives. We intend to continue our strategy of focusing on the higher-margin businesses of residential data and business data services while de-emphasizing our video business. As a result of our video strategy, we expect that residential video customers and revenues will continue to decline. We offer Sparklight TV, an IPTV video service that allows customers with our Sparklight TV app to stream our video channels from the cloud. This IPTV video service optimizes our available bandwidth, maximizing network capacity to increase data speeds and capacity across our network.

During the fourth quarter of 2025, we launched a pilot mobile service offering with a mobile virtual network enabler in several of our markets. Through this focused initiative, we are exploring whether a mobile offering can complement our wired broadband product by delivering added convenience and greater flexibility while strengthening our long-term customer relationships with the ultimate goals of enhancing customer lifetime value, improving retention and supporting packaging opportunities to reinforce our core broadband business.

We serve our customers through a plant and network with capacity generally measuring 750 megahertz or higher and have DOCSIS 3.1 capabilities throughout our systems. Our broadband plant generally consists of a fiber or HFC network with ample unused capacity, and all of our passings have access to Gigabit download speeds, which we believe meaningfully distinguishes our offerings from certain competitors in our markets.

We continue to experience increased competition, particularly from telephone companies; fiber, municipal and cooperative overbuilders; cell phone internet providers; and OTT video providers. Because of the levels of competition we face, we believe it is important to make investments in our infrastructure. In addition, a key objective of our capital allocation process is to invest in initiatives designed to drive revenue and Adjusted EBITDA expansion. Approximately 71% of our total capital expenditures since 2017 focused on infrastructure improvements intended to grow these measures. We continue to invest capital to, among other things, increase fiber density and coverage, expand our footprint, increase plant and data capacity, enhance network reliability and improve the customer experience. We have rolled out multi-Gigabit download data service to 53% of our markets and currently offer Gigabit download data service to all of our passings. We are currently deploying DOCSIS 4.0 capabilities, which, together with Sparklight TV, further increases our network capacity and enables future growth in our residential data and business data product lines. As a result of multi-year investments in our plant and network, we increased broadband capacity and reliability, which has enabled and will continue to enable us to offer even higher download speeds and to support the continually increasing data usage by consumers. We believe these investments will reinforce our competitive strength in this area.

We expect to continue to devote financial resources to infrastructure improvements in existing and acquired markets as well as to expand high-speed data service in areas adjacent to our existing network. We believe these investments are necessary to continually meet our customers’ needs and remain competitive. The capital enhancements associated with acquisitions include rebuilding low-capacity markets; reclaiming bandwidth from traditional QAM-based video services; implementing multi-Gigabit download speeds; deploying DOCSIS 4.0 capabilities; consolidating back-office functions such as billing, accounting and service provisioning; migrating products to Cable One platforms; and expanding our high-capacity fiber network.

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Our primary financial goals are to grow residential data and business data customers and revenues, to increase profit margins and to deliver strong Adjusted EBITDA and Adjusted EBITDA less capital expenditures over the long term. To achieve these goals, we intend to continue our disciplined cost management approach, remain focused on customers with expected higher relative value and supplement our growth by targeting a broader scope of incremental customers, including those who are more value-conscious. We combat competitive threats in our markets through targeted pricing and product offerings and further planned investments in broadband plant upgrades, including the continued deployment of DOCSIS 4.0 capabilities and new data service offerings for residential and business customers. Given our strategic focus on our higher margin residential data and business data product lines, we assess our level of capital expenditures relative to Adjusted EBITDA, unlike others in our industry who may compare their capital expenditures to revenues due to their much larger residential video customer bases.

Our business is subject to extensive governmental regulation, which substantially impacts our operational and administrative expenses. Thus, we could be significantly impacted by changes to the existing regulatory framework, whether triggered by legislative, administrative or judicial rulings. The FCC has opened inquiries looking at several initiatives that could lead to increased regulation of our data, voice and video services. Some states, including Arizona and Missouri (where we have subscribers), have proposed administrative actions and/or legislation in the past, which if adopted could lead to increased regulation of our provision of data services. Several

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