Optimum Communications, Inc. 2026 Q2 Earnings Call

Good morning. Welcome to Optimum's second quarter 2026 earnings call. I am joined today by Optimum's Chairman and Chief Executive Officer, Dennis Mathew, and Chief Financial Officer, Marc Sirota. Dennis and Marc will walk you through our second quarter results. Then be available for a question and answer session. Before we begin, I would like to remind everyone that today's presentation contains forward-looking statements. Please take a moment to review the cautionary language regarding forward-looking statements included on slide two of our presentation. We will also reference certain non-GAAP financial measures today. Reconciliations to the most directly comparable GAAP measures can be found in our earnings release, which is available on the investor relations section of our website. With that, I will turn the call over to Dennis.

Thank you, Sarah. Good morning, everyone. Our second quarter results reflect disciplined execution. We generated total revenue of approximately $2 billion and adjusted EBITDA of $786 million. Broadband subscriber net losses improved sequentially to 40,000. We added approximately 50,000 mobile lines. Convergence ARPU grew year-over-year. We expanded gross margin and adjusted EBITDA margin, including operating expense improvement of approximately $30 million year-over-year. We continue to operate in a challenging environment. We are encouraged by our progress and remain focused on what we can control, maintaining disciplined cost management while continuing to invest in initiatives that support long-term growth and position the business for sustained success. As we disclosed in our 8-K in June, we have a clear strategy in our long-range plan to do exactly that.

The transformation will take time and will require a meaningful reset of our balance sheet. We are actively executing against the strategic pillars that we believe will improve performance. Delivering simple, broader offers with clear value propositions, richer customer experience, simplifying service delivery through operational improvements, and investing thoughtfully in our network and capabilities. In the second quarter, we delivered against these pillars. We continued to execute on a simplified go-to-market strategy, strengthen customer retention efforts, and sharpen base management to build high-value customer relationships and compete more effectively in the current environment. We advanced our customer experience transformation as we continued our rollout of Google CCAI, AI-powered network management, frontline tools, and new billing solutions. We improved productivity through stronger cross-functional execution, disciplined cost management, deeper use of data and AI-powered performance management, and workforce optimization.

Finally, we continue to invest in fiber expansion and network modernization across our footprint. Alongside these actions, we took steps to enhance our financial flexibility and strengthen our capital structure. Last month, we successfully completed the previously announced tender offer, representing another important milestone in that process, which Marc will discuss in greater detail shortly. We also published our long-range plan, providing stakeholders with greater transparency into our strategic priorities, operating objectives, and long-term financial outlook. Collectively, these actions reinforce our commitment to strengthening the business, advancing our capital structure, and increasing flexibility to continue investing in long-term value creation. In addition, we simplified our operations by divesting non-core businesses. In early Q2, we completed the divestiture of an advertising agency services business that generated approximately $100 million of revenue in full year 2025 and had an immaterial impact to adjusted EBITDA.

We made the decision to exit a small number of low-density, non-core markets within our West footprint, and we expect those customers to transition to other service providers during the third quarter. Additionally, in the coming months, we expect to wind down operations of New York Interconnect, an advanced advertising joint venture that allows marketers to purchase TV and digital ad space across multiple MVPDs in the New York DMA. Going forward, Spectrum will expand their advertising business to provide many of the products and services of New York Interconnect, including continued representation of portions of Optimum's advertising inventory. Taken together, these actions support our strategy to simplify the business and focus on our highest priority growth opportunities. Next, I'll turn to our focus on strengthening high-value customer relationships on slide four.

Our strategy is centered on strengthening customer relationships by delivering a more integrated and converged experience across broadband, mobile, video, and value-added services. By leveraging the breadth of our portfolio, we're making it easier for customers to choose, connect, and stay with us while driving stronger acquisition, retention, and engagement, which creates a stronger foundation for long-term value and growth. Broadband remains the cornerstone of the strategy. While the competitive landscape continues to evolve with the expansion of fiber overbuilders and fixed wireless providers across our footprint, we are executing targeted initiatives to improve performance and reinforce our competitive position. These efforts are helping improve customer acquisition rates and gross ad performance while providing insights that are shaping a broader evolution of our go-to-market approach. As we scale these learnings, we are delivering simpler, more compelling offers that better reflect market dynamics and evolving customer needs.

Demand for our broadband product remains healthy. More than half of new broadband customers continue to choose our 1 gig or higher offerings, reinforcing the value customers place on higher speed connectivity and the quality of our network. We also see encouraging signs in several of our larger markets where our execution and competitive positioning continue to improve. This drove improved win share and year-over-year growth in gross ad performance in the second quarter in key markets. At the same time, we remain focused on reducing churn across our footprint, particularly in our West footprint, where competitive pressure remains the most intense. Our base management and acquisition strategy is centered on multi-product relationships, which drive stronger, healthier, and longer tenured subscribers.

Leveraging our converged and data-driven approach, we are seeing a higher percentage of new customer additions taking multiple products and services compared to the portion of customers taking only broadband. On mobile, we saw our best ever second quarter mobile trends, which increased mobile and broadband convergence penetration to approximately 9% at the end of the second quarter. Mobile is central to how we manage and grow our base. We are driving higher penetration through targeted upsell and cross-sell, simplifying our offers and expanding multi-line adoption, taking a customer first data-driven approach to streamline device financing, improve quality of sale, and strengthen network quality. This week we advanced that strategy further, expanding our multi-year agreement with T-Mobile to access its 5G standalone network, delivering faster, more reliable service, a broader device lineup including wearables, and stronger roaming business and rural connectivity.

By extending mobile connectivity beyond smartphones to wearables and a growing universe of connected devices, this capability substantially expands our addressable market, multiplying the number of devices and revenue streams we can serve per household and business, and positioning us to capture a greater share of connectivity spend over time. Paired with our fiber network, this converged offering is expected to be a durable competitive advantage and a meaningful driver of long-term profitable growth. Similarly, we are increasing the penetration of our newer and more profitable E tier video offerings as customers respond to their simpler and more compelling value proposition. The E tier offerings now represent approximately 18% of our residential video base, up from 10% a year ago. Importantly, customers of these newer packages continue to demonstrate meaningfully lower churn than legacy offerings, reinforcing the role video plays in strengthening customer relationships and broadband retention.

We are also continuing to thoughtfully expand our streaming offerings, giving customers direct access to popular streamers like Netflix and HBO Max, alongside targeted promotions like our Disney+ Hulu offer. The majority of customers who take these services keep them well past the promotional period, pointing to durable engagement and a growing base of recurring value. Beyond à la carte, we continue to enhance the value of our TV subscriptions, giving subscribers direct-to-consumer app access to services like FOX One, Paramount+, and Starz when those channels are in their packages. Moving to slide five. Throughout the organization, we continue to identify opportunities to simplify processes, enhance productivity, leverage AI and automation, and expand digital capabilities so that we can execute efficiently while providing a better experience for our customers.

Operating expenses, excluding share-based compensation, declined approximately 5% year-over-year in the year to date period and by 4% year-over-year in the second quarter. This reflects our continued focus on improving operational efficiency across the business and was driven in part by a few key areas. First, we lowered sales acquisition costs by approximately 10% by optimizing our channel mix, managing media more efficiently, and improving sales yield, allowing us to acquire customers more efficiently. Second, we reduced customer activity with fewer truck rolls and lower call volumes as we continued to improve network reliability, expand digital self-service, and simplify the end-to-end customer journey and experience. The total volume of truck rolls and service calls collectively declined by over 20% year-over-year in the second quarter. Many of these improvements are enabled by AI capabilities embedded throughout our organization.

As I mentioned earlier, one example is our deployment of Google CCAI, Google's Customer Engagement Suite, an AI-powered customer service platform that provides agents with real-time assistance during customer interactions alongside AI virtual agents powered by Google Gemini. Together, these capabilities help improve the customer journey, deliver a more personalized experience, and resolve issues more efficiently. This work directly influences point 3. By operating more efficiently, we have optimized our workforce and reduced both internal and external resources. These structural and sustainable efficiencies have improved our OpEx profile while we maintain strong operational execution and deliver a consistent customer experience. In conclusion, we remain pragmatic about where the business stands. Broadband continues to face pressure. The competitive environment remains intense, but our focus is on the areas we can control and execute against every day. Importantly, we did what we said we were going to do.

We delivered on our commitments by growing mobile, improving efficiency, expanding margins, and simplifying the business. Those results demonstrate our ability to execute consistently, even in a challenging environment. They have strengthened the foundation of the business. That same disciplined approach gives us confidence in the path ahead. We are applying the same focus and execution to stabilizing broadband and strengthening the overall business. We believe we can make meaningful progress. We also recognize that these improvements will take time and will not happen overnight. We are building a simpler, more efficient, and more customer-focused company for the long term. Our team remains committed to executing that strategy every day. With that, let me turn the call over to Marc, who will walk through our second quarter subscriber and financial results.