WideOpenWest, Inc.

Thank you for standing by. My name is Robert McArthur, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Wide Open West Q2 2023 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a questions and answers session. If you'd like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you'd like to withdraw your question, you can press star 1 again. Now I'd like to turn the call over to Andrew Posen, VP, Head of Investor Relations. Andrew, go ahead.

Good morning, everyone, and thank you for joining our second quarter 2023 earnings call. With me today is Teresa Elder, WOW's Chief Executive Officer, and John Rego, WOW's Chief Financial Officer. Before we get started, I would like to remind everyone that during our call, we will make some forward-looking statements about our expected operating results, our business strategy, and other matters relating to our business. These forward-looking statements are made in reliance on the safe harbor provisions of the federal securities laws that are subject to known and unknown risks, uncertainties, and other factors that may cause our actual operating results, financial position, or performance to be materially different from those expressed or implied in our forward-looking statements. You are cautioned not to place undue reliance on such forward-looking statements. We disclaim any obligation to update such forward-looking statements. For additional information concerning factors that could affect our financial results or cause actual results to differ materially from our forward-looking statements, please refer to our filings with the SEC, including the risk factors section of our Form 10-K filed with the SEC, as well as the forward-looking statement section of our press release. In addition, please note that on today's call and in the press release we issued this morning, we may refer to certain non-GAAP financial measures. While the company believes these non-GAAP financial measures provide useful information for investors, the presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. Reconciliations between GAAP and non-GAAP metrics for our historical reported results can be found in our earnings releases and our trending schedules, which can be found on our website. We have also included a presentation this morning to complement our prepared remarks. Now, I'll turn the call over to WOW's Chief Executive Officer, Theresa Elder.

Thanks, Andrew. Welcome to WOW's second quarter earnings call. Our results this quarter continue to reflect our strategic focus on market expansion, strengthening our legacy footprint, and aggressively managing our cost base. WOW is undergoing two significant transitions. First is our market expansion. We are committed to building 400,000 fiber greenfield homes by 2027. which accelerates our transition to a broadband business. Additionally, we are also increasing our edge out activities with both advanced HFC, which can enable DOCSIS 4.0 and 10G capability, as well as fiber to the home edge outs in certain markets. We are pleased to share that as of the end of July, we have added 16,900 new homes passed so far this year in both Greenfield and Edge Out areas, which is more than we've added in the last three years combined. I'm pleased to share that we are on pace to achieve more than 50,000 new homes passed this year, more than the last four years combined. These market expansion initiatives continue to be central to our strategy and represent the core thesis of our growth and value proposition. In Q2, we saw success in improving our legacy footprint while adding new homes past in our greenfield and edge-out markets. Importantly, the growth of new customers in these areas is exceeding our expectations. Our second transition is primarily within our legacy base. We made the shift to broadband first a few years ago, and we have seen our margin consistently grow while customers appreciate our high speeds and good value with great service. We listened to our customers and embraced streaming and the customer's desire to cut the cord on traditional video services. We just launched the next step in our transformation to a broadband business which involves transitioning our low margin video business to a high margin streaming service. We believe this partnership with YouTube TV creates a competitive advantage and presents an excellent opportunity to offer customers what they want at an exceptional price point. YouTube TV gives customers a more robust choice of programming. at savings of hundreds of dollars annually over traditional cable. Customers get an additional discount off of YouTube TV when they subscribe with WOW. They also get a discount on add-ons like the NFL Sunday Ticket, which is exclusive to YouTube TV. In addition to the benefits to our customers, we will be able to accelerate the reclamation of bandwidth previously used for our legacy video service. This allows WOW to efficiently transition our network for DOCSIS 4.0 and serve the growing demand for customer usage without overbuilding our own network. YouTube TV also allows us to transition away from higher cost, low margin video to a high margin service with an even greater mix of channels. What we are doing is unique among cable operators and is giving customers more of what they really want at a much better price. These initiatives represent the next phase of the strategy that we articulated at the end of 2021. With regard to HSD subscribers, we saw a steady improvement as we make further progress in our base and continue to be on track to return to growth this year. During the second quarter, we lost 900 high-speed data RGU's, which was better than expected, and as of the end of the second quarter, we now have approximately 508,000 high-speed data subscribers. Our video business declined further during the quarter, which we expect to continue as a significant number of customers are no longer taking traditional video and choosing to stream content instead. As mentioned, the new partnership with YouTube TV presents a fantastic opportunity to capitalize on this trend and we believe will also drive an increase in HSD subscribers. In fact, we're seeing an uptick in HSD connects already, just one week after launching YouTube TV. This new video model also will decrease our operating expenses over time since we will see fewer truck rolls, and calls into the call center than from our traditional video. We expect to see positive contribution this year to a limited extent and a more meaningful contribution next year. Our broadband first strategy continues to be reflected in our metrics as 87.1% of new customers purchase HSD only. This is the 12th consecutive quarter with an average sell-in rate of approximately 87% or higher. Demand for higher speeds is not abating either. In fact, our record share of new customers is buying higher speeds than ever. Our high-speed data-only sell-in mix showed that a record high of 91% of our customers, new customers, are buying speeds of 200 meg or above, and approximately 82% are taking speeds above 500 meg, including further momentum in customers taking our 1.2 gig service. As we've said before, this trend is even more pronounced in our new markets, where nearly 94% of customers are buying speeds of 500 meg and above. These statistics demonstrate the strong demand for faster and higher speeds and the superior quality and reliability of our network. It also reinforces our confidence in our ability to continue taking share in our new markets. High-speed data ARPU increased to a record $70, reflecting the full effect of the rate increase that was introduced on March 1st for a small number of customers, and to a greater extent, customers purchasing higher data speeds. High-speed data ARPU will continue to increase in the back half of the year as we see the impact of an HSD rate increase that was put into effect on July 1st to another portion of our base that weren't impacted in March. We also expect ARPU to grow as existing customers upgrade to higher speeds and from the addition of new fiber customers in greenfield markets and new wedge-outs. I would like to spend a few minutes providing an update on our expansion strategy which is really starting to accelerate. Through June 30th, we passed a total of 11,700 Greenfield homes in Central Florida and in our edge-outs. Since the end of June, we added another 5,200 homes, bringing the total number of new homes passed this year in Greenfield and edge-outs to 16,900, which is nearly six times the number of new homes added in all of 2022. In fact, since the beginning of 2021, we have now passed nearly 22,000 new homes, of which nearly 78% were added this year. We expect the pace of adding homes passed to continue to increase throughout the year. As you can see in the slide, response to our entrance to these markets has been fantastic. The Greenfield homes are built with the latest fiber-to-the-home technology, and our 2023 edge-outs are utilizing either fiber-to-the-home or new technology for HFC, which puts us on the road to DOCSIS 4.0 and 10G capability in those markets. The strength of these technologies is absolutely contributing to the strong penetration rates that we are seeing. The chart on the right-hand side of the slide shows exactly how successful our expansion strategy is, with strong penetration rates across all of our vintages. Our 2023 vintage of edge-outs are already at 23.4% penetration rate, while our 2021 and 2022 vintages also reported exceptionally strong penetration rates of 45% and 31% respectively. And while our greenfield markets are at 20% penetration in aggregate, they are averaging penetration rates of 30% in 30 days from launch. Now that's a 1% increase in penetration per day. This is substantially faster than we expected in our original business case, which tells us we picked the right markets and our playbook is resonating with customers. Edge-outs are also performing very well, with early penetration rates that exceed our expectations and demonstrate the extremely strong reception to WOW's high-speed internet, exceptional customer service, and competitive value proposition. As we said before, our expansion strategy remains an engine of growth for our business, and the performance supports our confidence and our ability to grow quickly in new markets. While we haven't externally announced a target for new homes passed for 2023 before, we now feel confident in saying that we will surpass 50,000 new homes in 2023 between Greenfield and Edge House. To conclude before handing the call to John, we are in the midst of two major transformations of our business. First, the expansion of our homes past through Greenfield and Edge App. Already this year, we have built nearly six times more homes than all of last year, and well more than the last three years combined. We are driving subscriber growth faster in those markets than we'd planned. Second, we are continuing to transform our legacy footprint through the next phase of broadband first, through our unique partnership for a cable operator with YouTube TV, which gives us a lower cost, higher margin service that is more attractive to our customers and efficiently accelerates our path to DOCSIS 4.0. Our strategy, our plan, and our execution continue to put us in a good position to deliver value to our customers, employees, and shareholders as we look to the remainder of this year and into 2024. Now I'll turn the call over to John, who will go over our financial results in more detail.