Cogeco Announces Q3 2025 Financial Results and Canadian Wireless Launch

Executive Summary

• Cogeco Inc. reported financial results for the third quarter ended May 31, 2025, alongside an update on its Canadian wireless service launch and revised fiscal 2025 financial guidelines.
• The company reported a decline in revenue and adjusted EBITDA compared to the prior year, driven by subscriber losses in the U.S. and competitive pressures, though free cash flow saw significant growth due to reduced capital expenditures.
• Cogeco revised its full-year fiscal 2025 outlook, lowering revenue projections to a low single-digit decline and net capital expenditures, while maintaining stable adjusted EBITDA and increasing free cash flow guidance.

Key Details

• Q3 2025 Financial Highlights (Three months ended May 31, 2025):

  • Revenue: $758.5 million CAD, a decrease of 2.4% (3.9% in constant currency) from $777.2 million in Q3 2024.
  • Adjusted EBITDA: $367.8 million CAD, a decrease of 0.5% (2.0% in constant currency) from $369.8 million.
  • Profit for the Period: $74.0 million CAD (down 1.8% from $75.3 million).
  • Profit Attributable to Owners: $20.5 million CAD ($2.13 diluted EPS), up 8.1% from $19.0 million ($1.97 diluted EPS).
  • Adjusted Profit Attributable to Owners: $23.1 million CAD ($2.40 diluted EPS), down 20.5% from $29.1 million ($3.02 diluted EPS).
  • Free Cash Flow: $147.5 million CAD, a 63.6% increase from $90.2 million, largely due to lower net capital expenditures.
  • Net Capital Expenditures: $125.8 million CAD, a 25.9% decrease from $169.8 million.
  • Cash Flow from Operations: $401.4 million CAD, up 19.8%.

• Segment Performance:

  • American Telecommunications: Revenue decreased 3.5% (6.6% in constant currency) due to subscriber base decline, particularly in entry-level services. Adjusted EBITDA decreased 0.5% (3.7% in constant currency).
  • Canadian Telecommunications: Revenue decreased 1.8% due to lower revenue per customer from declines in video/wireline phone subscribers and competitive pricing, partially offset by high-speed Internet additions. Adjusted EBITDA decreased 1.5% (1.3% in constant currency).
  • Media Activities: Revenue increased 4.4%, supported by digital advertising growth and strong listener engagement.

• Operational Updates:

  • Wireless Launch: First cohort of users is already on the Canadian wireless service. Expansion into 12 Canadian markets (Alma, Magog, Rimouski, Saint-Georges, Saint-Hyacinthe, Saint-Sauveur, Trois-Rivières in Québec; Brockville, Chatham, Cobourg, Cornwall, Welland in Ontario) is underway, with full geographic deployment anticipated in the fall.
  • Fibre-to-the-Home: Added close to 9,500 homes passed during Q3 2025, mostly in Canada.
  • U.S. Customer Trends: Experienced higher-than-usual customer losses, attributed to temporary factors and a shift to Internet-only services; go-to-market enhancements are being implemented.

• Fiscal 2025 Revised Financial Guidelines:

  • Revenue: Lowered to a low single-digit decline (previously stable).
  • Adjusted EBITDA: Remains stable.
  • Net Capital Expenditures: Lowered to $600–$650 million CAD (previously $660–$735 million).
  • Net Capital Expenditures (Network Expansion): Lowered to $110–$150 million CAD (previously $140–$190 million).
  • Free Cash Flow: Increased to stable (previously a decrease of 0% to 10%).
  • Reasons for Revision: Additional revenue pressure in the U.S. due to competition, offset by cost reduction initiatives, operational efficiencies, and lower expected capital spending.

• Dividends:

  • Board declared a quarterly eligible dividend of $0.922 per share, an 8.0% increase from $0.854 per share in Q3 2024.

Notable Quotes

• "Our financial results for the third quarter of fiscal 2025 were notable for our strong Canadian Internet subscriber loading, efficiencies-driven margin expansion and significant free cash flow," stated Frédéric Perron, President and CEO.
• "We are deeply excited to ramp up our wireless customer base in Canada over the coming weeks, adding to our prior launch of a similar service in the U.S. last year. Wireless will become a powerful tool to retain and grow our North American wireline customer base over time."
• "We continued to solidly grow our Canadian Internet customer base for yet another quarter. While we experienced higher-than-usual customer losses in the U.S., this was partially caused by a few temporary factors. We are implementing several go-to-market enhancements as part of our transformation, and are confident that our U.S. customer trends will improve as these initiatives are executed over the coming quarters."