Liberty Broadband Corporation

Welcome to the Liberty Broadband 2024 Q3 earnings call. During the presentation, all participants will be in a listen-only mode. Afterward, we will conduct a question and answer session. At that time, if you have a question, please press star 1 on your touch-tone phone. As a reminder, this conference will be recorded today, November 7, 2024. I would now like to turn the call over to Shane Kleinstein, SVP, Investor Relations. Please go ahead.

Thank you, and good morning. Good morning. Before we begin, we'd like to remind everyone that this call includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual events or results could differ materially due to a number of risks and uncertainties, including those mentioned in the most recent forms 10-K and 10-Q filed by Liberty Broadband and Liberty Trip Advisor with the SEC. These forward-looking statements speak only as of the date of this call, and Liberty Broadband and Liberty Trip Advisor expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein, to reflect any change in Liberty Broadband or Liberty Trip Advisors' expectations with regard thereto, or any change in events, conditions, or circumstances on which any such statement is based. On today's call, we will discuss certain non-GAAP financial measures for Liberty Broadband, including adjusted OIVDA, information regarding the comparable GAAP metrics, along with required definitions and reconciliations, including preliminary notes in Schedules 1 and 2, can be found in the earnings press release issued today, as well as earnings releases for prior periods, which are available on Liberty's website. Now I'd like to turn the call over to Greg Maffei, Liberty's President and CEO.

Good morning, and thank you, Shane. Today, speaking on the call, we will have Liberty Broadband's Chief Accounting and Principal Financial Officer, Brian Wendling, Ron Duncan, CEO of GCI, and Pete Pounds, CFO of GCI, will also be available to answer questions. Also during Q&A, we will be available to answer questions related to Liberty Trip Advisor. So beginning with Liberty Broadband, you may recall we filed a 13D with the SEC on the 23rd of September. It noted that Liberty Broadband and Charter were discussing a proposed all-stock transaction. The combination would rationalize the dual corporate structure, provide enhanced trading liquidity, provide clarity to both sets of shareholders with regard to the certainty of a future transaction, and continue our strong partnership with Charter in the interim. Additional updates on any potential transaction will only be provided if and when definitive terms are agreed upon. I would note that the LBRD NAV discount has tightened considerably since that filing is now in the mid-teens. Giving ongoing discussions between Charter and Liberty Broadband, Charter did pause its buyback, which resulted in a limited amount of proceeds to Liberty Broadband from Charter sales during the period. Looking now at Charter, Charter experienced strong subscriber results and accelerating financial growth in the third quarter. They experienced $110,000 broadband loss, 110,000 broadband net loss, would have been growth absent the impact of ACP. I think Charter is managing its ACP disruption well and anticipate October will be the last month of meaningful impact. Charter also experienced revenue growth of 1.6% and adjusted EBITDA growth of 3.6% during the quarter. They benefited from prior cost actions and the strong political ad cycle. I would note that residential ARPU was up 1.8%, which is an acceleration versus the recent trend. Mobile continued to perform very well with 545,000 mobile net ads, which puts their base over 9 million lines. ARPU was growing in mobile due to the uptake of the unlimited plus tier. Plus was driven by the anytime upgrade program. Free cash flow was 1.6%, which was up 48% over the prior year. and net leverage was 4.22 times slightly below the revised target. All of these were driven by high free cash flow generation and limited share repurchase activity. Turning briefly to L-TRIP, discussions are progressing with TRIP and their special committee. We remain focused on the rationalization of our capital structure. As TRIP mentioned on their call, they did not repurchase shares this quarter given the ongoing discussions with L-TRIP. We will provide an update on this transaction only when such discussions reach a definitive conclusion. Our limited what we can comment upon at this time. Given discussions TripAdvisor has also elected not to present at Liberty's Investor Day, I will at that day make some remarks in the business since the Trip team will not be in attendance. But looking at TripAdvisor itself now, Brand TripAdvisor saw positive growth from some of its strategy work. MAU's return to year-over-year growth year-to-date The direct channel monthly active users was up 30% versus the prior year. This reflects Tripp's ongoing efforts to increase engagement with updated app experience and engaging product features. For example, unique travel content, AI-powered review summaries, and hotel booking directly in the app. Looking at these next segment, Viator experiences continue to balance growth in investment versus profit contribution. Adjusted EBITDA was $30 million in the quarter. an 11% margin. That was solid growth outside of search, experienced solid growth outside of search and direct and low-cost channels, and they continue to see stronger repeat bookings. Turning briefly to the fork, it was the best financial performance they had on record, with revenue up 17%, adjusted EBITDA of $5 million, which achieved a 10% margin, the highest they've ever achieved, and they've had success adding B2P partnerships with MasterCard, as well as a prior announcement with Vodafone. Trip has a robust liquidity picture. As of the end of the third quarter, they had approximately $1.1 billion of cash and just under $500 million of unborrowed revolver capacity.