Good afternoon, ladies and gentlemen. Thank you for standing by. My name is Erica, and I am the conference operator today. At this time, I would like to welcome everyone to the Cable One Second Quarter 2023 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. Thank you. At this time, I will be turning the call over to Jordan Morkert.

Good afternoon, and welcome to Cable One's Second Quarter 2023 Earnings Call. We're glad to have you join us as we review our results. Before we proceed, I would like to remind you that today's discussion contains forward-looking statements relating to future events that involve risks and uncertainties. You can find factors that could cause Cable One's actual results to differ materially from the forward-looking statements discussed during today's call in today's earnings release and in our recent SEC filings. Cable One is under no obligation and expressly disclaims any obligation, except as required by law, to update or alter its forward-looking statements, whether as a result of new information, future events, or otherwise. Additionally, today's remarks will include a discussion of certain financial measures that are not presented in conformity with U.S. generally accepted accounting principles or GAAP. Reconciliations of non-GAAP financial measures discussed on this call to the most directly comparable GAAP measures can be found in our earnings release or on our website at ir.cableone.net. During today's call, whenever we refer to second quarter results on an adjusted basis, we are excluding certain non-core assets we divested in the second quarter of 2022 which exclusively provided business services. Joining me on today's call is our President and CEO, Julie Laulis; and Todd Koetje, our CFO. With that, let me turn the call over to Julie.

Thank you, Jordan, and good afternoon, everyone. We appreciate you joining us for today's call. Before jumping into our second quarter results, I'd like to offer a couple of thoughts about our industry as a whole. Despite the current headwinds we and our peers face, the broadband business is strong, and there is no industry we'd rather be in. We believe the long-term demand for connectivity will persist into the future, fueling the opportunity for growth. Fast and reliable internet is critical for today's consumers, and data usage continues to grow as the average Cable One household now relies on 20 connected devices in their home, slightly higher than the national average. The connectivity business is growing and evolving, and we are excited and ready for what the future will bring. That said, we persist in navigating this choppy environment, confident in our long-term business and steadfast in the following fundamentals. We have a strong competitive position, which will become even more firmly rooted as we focus on innovative ways of delivering greater value to our customers. And we have a talented and entrepreneurial workforce of associates who are neighbors to our customers and long-term members of our communities, enabling us to contribute to the economic development of the cities and towns we serve. Now I will provide some highlights from the quarter before handing it over to Todd. Our ongoing financial results are a testament to our solid roadmap, which focuses on delivering seamless connectivity and superior service to our customers. In the second quarter, we delivered residential broadband revenue growth of 5.8% from the prior year, and business services revenue growth of 1.6% on an adjusted basis, with data services within this segment meaningfully outperforming this rate. The adjusted EBITDA margin was up 150 basis points from the prior year to 54.5%, reflecting continued efficiency and product mix shift, greater capital efficiency while continuing to increase our network capabilities and capacity, and adjusted EBITDA less CapEx was $149.8 million, an increase of 24.6% year-over-year. The growth we experienced in both residential and business broadband was offset by lower revenue in video and voice services. More than a decade ago, we correctly identified that the video subscription model was broken and strategically shifted our focus, resulting in significantly less exposure today. Turning to residential broadband, the second quarter is historically our toughest of the year due to seasonality. Coupled with depressed home move activity, a slowdown in some new builds, and market competition, we continue to experience a low transaction environment, ending the quarter with a decrease of approximately 5,900 customers on a sequential basis. While the current environment has resulted in a slowdown in growth connects, our turn rates remain below pre-pandemic levels. These low turn levels include the impact of the attrition from our current rate adjustments and are a clear indication of our customers' appreciation of our consistent reliability and the value we provide to them. Turning to residential broadband ARPU, we saw strong year-over-year growth of 5.9%. In the first half of 2023, we rolled out our first internet rate adjustments in eight years, which together with speed tier upgrades have been the primary drivers of our ARPU growth. During the second quarter, a subset of customers across several rate plans in our Sparklight markets received a $5 increase. To show our appreciation to our loyal HSC customers, we increased download speeds across most of our high-speed internet plans in Sparklight markets in mid-May. We also increased speeds in a portion of our fidelity markets in the quarter. The demand for higher speed tiers remains robust, with sales of 500 megabits or higher at nearly 65%, increasing 755 basis points sequentially, and gig sales at an all-time high of nearly 40% in the quarter, an increase of 229 basis points sequentially. While the adoption levels demonstrate many of our customers are willing to pay for faster and more reliable products, we are modeling and testing new pricing and packaging in an effort to strike the right balance between subscriber growth and long-term profitability across all demographics within our towns and communities. Our business services growth story on the commercial side continues. On an adjusted basis, we drove business services revenue growth of 1.6% year-over-year, despite inflationary pressures impacting existing businesses as well as new business creation. The business services team is focused on executing on areas within our span of control, and as a result, we are seeing strong demand in the carrier, wholesale, and enterprise customer segments. One example is a recently completed $29 million expansion project in Gila County, Arizona, which will help bridge the digital divide for 10 schools and eight libraries in the area. With funding from three agencies, Sparklight Business extended its fiber network from the town of Sholo in order to provide high-speed internet to communities across the county. At more than 200 route miles and nearly 29,000 fiber miles, much of it through solid granite, this is one of the largest single-fiber e-rate construction projects executed by Sparklight. This project also brings fiber network presence into a number of underserved communities in Northern Arizona, where we will be able to offer both residential and business services in the future. Overall, wired competition in our markets continues to increase and may create some pressure in a subset of our markets. Our team is constantly innovating so that our customers have products and services that make their lives easier and a future-proof network to support them well into the future. Our customers know they have a choice, and they are choosing us for reliability and speed, which has been demonstrated quarter over quarter in our low turn rates. Using that fixed wireless competitive activity, our third-party research indicates that the unlimited data plan offered by mobile service providers is available in approximately 40% of our markets today. As mentioned on previous calls, we anticipated that a portion of our historic market share from DSL customers would be willing to test out mobile fixed wireless, but ultimately those customers would gravitate back to wired broadband service as they recognize the need for greater speed and reliability. We are now starting to see that play out as third-party research shows that mobile fixed wireless share in several of our markets is starting to decline. As I'll touch on in more detail in just a moment, we are continuously evolving our network to meet the long-term needs of our customers and communities in line with our focus on being the most trusted internet service provider in the markets we serve. Ongoing capital-efficient investment in our network is enabling us to compete aggressively for market share as we engineer a network that not only meets the current needs of our customers, but pushes beyond them as we lay the groundwork for DOCSIS 4.0 and 10 gig. As part of our ongoing network evolution, we recently activated high-split technology in two markets, creating the capacity to offer 1 gig symmetrical service and multi-gig download speeds while remaining dedicated to our customer-centric strategy of staying ahead of customers' needs as they continue to accelerate. Indicative of the entrepreneurialism I mentioned earlier in our call, our engineers have developed a unique device configuration using DOCSIS 3.1 that has created 20% to 30% more capacity in the upstream than previously available on traditional low-split hybrid fiber coax plants. We are not aware of anyone in the industry currently optimizing upstream capacity in this way. This is yet another example of how we are improving and extending the life of existing HSC facilities while also creating additional capacity for HSC customers with very limited additional CapEx investments. As I mentioned at the top of the call, demand for data continues to reach new heights, and we don't see growth slowing anytime soon. Nearly 20% of our residential customers now exceed a terabyte of usage each month, an increase of 16% from the same period last year. At the same time, our average network utilization during peak hours actually decreased, driven by the ongoing upgrades we've made to the network. During the second quarter, average customer demand increased 11% from 550 gigs per month to 610 gigs per month compared to the prior year quarter, yet downstream and upstream utilization during peak hours decreased from 21% for both in the first quarter to 20% and 19% respectively. Switching gears, as we continue on our digital transformation journey, we are laser-focused on driving greater efficiencies and agility across our business with the ultimate goal of solving pain points and providing what we call goodness for our associates and customers. Across our family of brands, our associates are fully engaged in evaluating our business holistically and identifying ways to streamline operations in ways that make the lives of our customers easier. We are seeing this come to life through recent initiatives such as expanded SMS messaging, advanced automated payment options, and a consolidated and enhanced IVR and chat platform, all of which elevate our customer experience while unleashing enterprise returns. This means our associates can shift their focus to high-value, high-impact work that drives growth across the business. In keeping with our commitment to advance digital equity across our footprint, we are analyzing the historic amounts of government funding available to support broadband development throughout the U.S., including more than $23 billion in recently announced federal funding in the states we serve. We will take a thoughtful approach to grant funding, applying for grants opportunistically where government funding permits us to expand our network in alignment with our overall network development strategy. Just as importantly, we will continue to challenge government-funded broadband projects that would duplicate our fully upgraded network to ensure that public dollars are directed to unserved and underserved communities. Also in support of our digital equity efforts, we have a number of construction projects in various stages of completion that will bring much-needed broadband service to unserved and underserved communities adjacent to our existing markets in Texas and Arizona. We have spent decades investing in a robust and reliable network with the power and capacity to support the digital future of the 1 million plus customers we currently serve. We will continue to leverage that network to extend broadband service to previously unserved areas and underserved rural communities in pursuit of our purpose of keeping our customers and communities connected to what matters most. Positive momentum continued in the second quarter for unconsolidated investments, where we saw residential and business data customers grow by approximately 20,500, or 4.4%. These figures include both acquired and organic growth, but they do not include the operations of MetroNet or Zipley, where we have less significant investments. We are pleased with the solid results of these companies, which are successfully providing fast and reliable broadband services to rural America and are run by some of the best business and financial leaders in our industry. Shortly after the end of the second quarter, we monetized our equity stake in Whisper Fixed Wireless, which resulted in a healthy return on our initial investment. Thank you to the team at Whisper for their role in our shared journey. Later in the call, Todd will provide further insights into our recent investment activities. Before handing the call over, there are a few events from the quarter that I'd like to touch on. While a number of severe storms hit our markets in Missouri, Texas, Oklahoma, Mississippi, Indiana, and Louisiana in quick succession in mid-June, we were very fortunate that our associates and their families remained safe. Our thoughts are with all of those still recovering from these storms. I want to take a moment to thank our associates who took care of our customers and communities by working tirelessly to restore service as quickly as possible following the events. I'd also like to share that we recently published our first corporate responsibility report on our investor relations website, which highlights our efforts in environmental stewardship, investments in our associates and communities, and fostering best practices across our business. We invite you to explore this report to learn more about Cable One's ESG practices. We are pleased with our progress and remain committed to making ongoing, measurable, and positive impacts across our footprint. And now, Todd will provide a full recap of our second quarter financial performance.

Thanks, Julie. Starting with revenue, total revenues for the second quarter of 2023 were $424 million, compared to $429.1 million in the second quarter of 2022, a 1.2% decrease. The decrease was primarily due to a continued decline in low-margin residential video and voice revenues, as well as the impact of the divestiture of non-core operations during the second quarter of last year, which contributed $1.1 million of business services revenue in Q2 2022. On an adjusted basis, total revenues were down by 0.9% year-over-year. Our business continues to be driven by the growth of our highly profitable residential data and business services product lines. For Q2 2023, our residential data revenues expanded 5.8% year-over-year when compared to Q2 2022, and our business services revenue grew by 1.6% for the comparable period on an adjusted basis. Data services within our business services segment meaningfully outpaced this growth. Given business services, as reported, still includes video and voice revenues, which have similar characteristics to that of our residential segment. Operating expenses were $112.8 million, or 26.6% of revenues in the second quarter of 2023, compared to $118.4 million, or 27.6% of revenues in the comparable quarter of the prior year. A 100 basis point improvement, driven largely by a $12.6 million decrease in video programming costs. Selling, general, and administrative expenses were $86.2 million for the second quarter of 2023, compared to $90.8 million in the prior year quarter. SG&A, as a percentage of revenue, was 20.3% in the second quarter of 2023, compared to 21.2% for Q2 of 2022, a 90 basis point improvement. Adjusted EBITDA was $231.3 million for the second quarter, an increase of 1.7% when compared to the second quarter of 2022. Our adjusted EBITDA margin for the second quarter of 2023 was 54.5%, a 150 basis point improvement compared to the prior year quarter and a sequential increase of 30 basis points as we continue to drive growth in our higher margin advanced broadband products. Capital expenditures totaled $81.5 million for the second quarter of 2023, which equates to 35.2% of adjusted EBITDA, compared to $107.3 million, or 47.2% in the prior year quarter. During the second quarter, we invested $15.1 million of CapEx for new market expansion initiatives and $4.8 million for integration activities. Our Q2 capital expenditure decrease was driven by our working capital optimization initiatives, the meaningful amount of previously completed network upgrades, and certain growth-related factors. We expect capital expenditures to normalize in the second half of the year as we continue to proactively invest in our network, specifically customer growth initiatives. Adjusted EBITDA less capital expenditures was $149.8 million for the second quarter of 2023, an increase of 24.6% from the prior year quarter and 13% on a sequential quarterly basis, as both elements of this key cable one metric continue to improve. Our capital allocation strategy remains consistent with our historic principles of proactive investment in highly reliable advanced broadband networks. Attractive investments and organic extensions of these networks in and around our current geographies, and strategic acquisitions of or investments in other complementary rural broadband providers, all balanced with a predictable return of capital strategy and a disciplined debt repayment philosophy. In the second quarter of 2023, we distributed $16.3 million in dividends and repurchased nearly 61,000 shares of our common stock, or 1.1% of outstanding shares, for $41.4 million. We also repaid $54.6 million of debt in the quarter, $50 million of which was a voluntary repayment of our outstanding revolver balance. As of June 30th, we had approximately $161 million of cash and cash equivalents on hand. Our debt balance was approximately $3.8 billion, consisting of approximately $1.8 billion in term loans, $920 million in convertible notes, $650 million in unsecured notes, $438 million in revolver borrowings, and $5 million of finance lease liabilities. We also had $562 million available for additional borrowing under our $1 billion committed revolving credit facility. Our weighted average cost of debt for the quarter was just under 4.3%. Our net leverage ratio was 3.9 times, and the vast majority of our borrowings are either fixed issuance or have been synthetically fixed under long-term contracts, considerably mitigating our exposure to the prevailing rate environment. During the second quarter, we invested an additional $13.9 million in Zipley Fiber as part of our initial commitment, bringing our total investment to over $36 million. We also made an additional nominal investment in Visionary during the quarter, increasing our investment to $8 million. As Julie mentioned, in July, after the quarter closed, our equity investment in Whisper was redeemed for total cash proceeds of nearly $36 million, and our investment in the TriStar Special Purpose Acquisition Company was divested for total cash proceeds of nearly $21 million. These investment monetizations support our ability to reinvest in our core business growth, other select partnerships, and further strengthen our balance sheet. Finally, starting this quarter, we've posted trending sheets on our Investor Relations website, making it easier to see several quarters' worth of sequential changes in many of our key operating and financial metrics. All figures are presented on a consolidated as reported basis. Before turning the call over for questions, I want to comment on recent media reporting of potential concerns about lead-covered copper cables used in the telecom industry. For context, the vast majority of our plant consists of fiber or hybrid fiber coax cables, with copper cables representing only a small percentage of our overall footprint. In response to the recent publicity, we conducted an internal assessment of our network and did not identify any lead-covered cables. With that, we are now ready for questions.

Our first question comes from Greg Williams of TD Cowen. Greg, go ahead.

Great. Thank you. Just a question on the broadband subscriber trend. On the 5,900 loss, how much do you think was seasonality? How much of that was a swing factor? Conversely, then, how much do you think an upswing or a pop will you see in the third quarter as you think about potential for adds to move back into positive territory? Thanks.

Hey, Greg. It's Julie. Great question. Looking at last year's change from first quarter to second quarter compared to this year, this year's was less. Doing any sort of precise comparisons from previous to that becomes difficult because of the pandemic, which did not follow typical seasonality and M&A and divestiture as well. What we saw in Q2 was less than the drop we saw last year. I think it is highly correlated to seasonality. As far as the third quarter, we don't give guidance, but if trends follow, it should be a good quarter.

Got it. Thank you.

Our next question comes from the line of Craig Moffett from MoffettNathanson. Craig, go ahead.

Thank you. First, just one clarification. You said mobile fixed wireless share is beginning to decline. Did you mean to say that the numbers themselves are actually declining, or the net adds are declining? That is, are they actually losing subscribers? And then second, more subtly, I wonder if you could just comment on your thinking about the MBI put-call option that comes up in 2025, just how you're thinking about the cost and valuation and then financing.

Great. Craig, it's Julie. I'll take the first one. I'll let Todd take the second. We do have a third-party researcher who gives us estimates on share by marketplace. Share is quite low. Our coverage for both T-Mobile and Verizon are approximately 40% of our footprint. We noticed last quarter, but it was quite small, and it became more pronounced this quarter that there are markets where we are seeing that share, as reported by this third party, going in reverse. I can't comment on their net adds. I don't know what their net adds are. We don't see them. Our return rate is spectacularly low, and that includes any losses to competitors in certain markets. So that just tells you how incredibly low it really is. So my supposition is that the majority, the vast majority of any connects that they would get in that 40% of our footprint would be coming from current DSL customers. And it looks like that share that they're having some difficulty in some markets.

It's helpful. Thank you.

Craig, good afternoon. It's Todd. On the MBI front, I know it covered this in the first quarter call and we've had some conversations about that, but just to reiterate and remind, that is an investment that we made in 2020 that has provisions associated with Cable One having the optionality of buying in the remainder of the share that we do not own, which is 55%, and that window opened early this year and runs through mid-2024. That's at a fixed multiple. We don't disclose the multiple, but it's a multiple at which, based on market dynamics, I wouldn't estimate you'll see us affecting that as it relates to our commitment to doing accretive transactions as it then pertains to the put that you brought up that is in the middle of 2025 from an election, likely late in 2025 from a funding requirement. So we feel very comfortable and confident in our ability to prepare for that. That business is performing extremely well. Everything, as I've said in the past, that we liked about that initial investment, we continue to like in terms of its growth rates, its cash flow conversion, its penetration, its rural competitive insulation, and the leadership team there that continues to do a fantastic job. So we're very close to our partner there. We have multiple partnerships with GTCR across our unconsolidated investment. There's a lot of winning strategies associated with that in our opinion for our shareholders, and I think that's the consistent message that I've delivered in the past that's helpful.

Yes, thank you.

Our next question comes to the line of Phil Cusick from JP Morgan. Phil, go ahead.

Hi guys, thank you. I guess following up first on the wireless side, what was that overlap maybe a year ago versus the 20%, and then in terms of your incoming customers, are you seeing any sign that people are coming over from fixed wireless in any way faster or slower compared to where they were a year ago? And then, if I can, what's the exposure of the base to the price increase that you've done, and how should we think about that impacting our crew in the next couple of quarters? Thank you.

Thank you, Phil. This is Julie. I believe you're asking about our overlap with T-Mobile and Verizon's fixed wireless plans from a year ago. I don't have that figure readily available, but I will obtain it and share it with you. It would have been lower, but I can't specify how much. Regarding your second question, we are indeed seeing indicators from Kenex that customers are transitioning to us from wireless. I recall a conversation I had with representatives from two of our systems where this was specifically mentioned. While I can't provide a quantifiable figure, we have been informed that some customers are moving to us from fixed wireless. Your question about the rate adjustment is important; we expected this change to affect about a third of our residential customers. The $5 increase we discussed was applied to roughly a third of our customers who hadn't seen a rate adjustment in over eight years. We approach any decisions about our customers with caution, as they are central to our operations. We conduct market tests and work with a third-party research firm to gauge customer perceptions. We perform several price elasticity studies each year and were confident that this adjustment could be made without adverse effects, and it appears that has been the case. In terms of the average revenue per user resulting from that rate change in this quarter, it came from both the adjustment and customers voluntarily upgrading to higher speed, higher cost plans. We expect to see more revenue related to that adjustment in the third quarter, as not all of it occurred in the second quarter. I hope this addresses your questions.

Thank you. If I could maybe push a little bit harder on the fixed wireless. Within the 40% that you've identified today, anything different in terms of performance in the business either over the last year as fixed wireless has ramped up, or in general, that you might be more vulnerable?

The issue for us right now is just everything has happened quite honestly since COVID. The whole world is different. Listen, there's plenty of penetration opportunity in our markets. Plenty. We don't have a concern about our connects barred down versus pre-pandemic historical levels. However, that is in all markets. So that means in our competitive footprint and our non-competitive footprint. So there is a dynamic that is at play that is not just related to competition. Other things are going on. It is the economy. It is the news-related issue. Those sorts of things. So on that, go ahead.

I'm sorry, Julie. Phil, it's Todd. I was just going to add to that because I think that really nails it. But when you think about what we just discussed as it relates to our ongoing trends and momentum in what the consumer demand curve looks like and the selling rates and the adoption rates, what we still remain very confident in is that we do not see a meaningful, it's hard to describe if any, but a meaningful amount of customers that are churning for that product. But to Julie's point, if it's impacting us, it's impacting us on the gross side of the equation in terms of the more benign connect activity.

Right, which is something that can be solved, I think.

Thank you. And then Phil, on the ARPU side, just to expand on Julie's last comment related to that. She mentioned about the third in terms of that $5. Recall as it relates to the very strong ARPU number that we reported for this quarter and the ongoing momentum there, that there are a couple of other components in addition to, of course, the consumer adoption as it relates to those higher speed tiers and higher capacity. It's also the $2 increase on the equipment that we enacted in Q4 that's still impacting on a year-over-year basis, as well as the mix shift that I talked about, the equipment, and then the $5, then recall last year in May, we did a $5 increase, but it was a $10 increase, apologies, but it came $5 for the first year and $5 in the second year. There was still a subset of those customers that got that second $5.

Got it. Thanks again.

The next question comes to the line of Steven Cahall from Wells Fargo. Steven, go ahead.

Thank you. Maybe first one on penetration. How do you think about just growing your market of potential subscribers? I think your data penetration was down just a touch year-on-year, but I know the network has expanded, but mostly how do you think about trying to get that penetration higher? I think it would assuage some of the fears around net adds if there was this opportunity to push that up five or ten percentage points to where some of the peers are. Do you think there's something that structurally makes your market a little different in that high 30s or low 40s penetration is a natural ceiling? Then I've got a quick follow-up.

Steven, it's Julie. I do not think there's something structural in our markets that would preclude us from pushing penetration higher. I think we're at a point in time where we're sort of whiteboarding how to do business because business is different than it's been in the past. Not doing some one-off reactionary, but looking at a holistic, cohesive strategic plan to address now very specific market and customer segments. I mean all customer segments so that we can get a fit between our overall pricing and packaging across those segments, offers perks, etc., all based on deep conversations and insights from our customers. It's work for us to do, and we can do it.

Great. Then just digging into the ARPU one, which I think you're probably going to get a question from every analyst about. Should we think about the 6% as kind of continuing into the third quarter maybe until you start to lap the modem price increase? It sounds like the up-tiering is a pretty big piece of that. I don't know if you continue to think that the up-tiering tailwind in ARPU is going to continue or if that might have been a little more idiosyncratic to some of the changes you made in the second quarter. Thank you.

I don't think I will give guidance as to what I think it will be going forward. Only that we didn't do something in the second quarter in terms of the upgrading that I wouldn't imagine continuing. As a matter of fact, the gig sell-in is just a number that I would point to that continues to accelerate. In our markets, by and large, you're not doing mass media because we're just a tiny part of the DMA. For us to do marketing, it really is grassroots and growing marketing to get the word out. People are hearing about gig, and it's a great value, and I expect that to continue as well as the wash over from the rate adjustment both on that third of the customers and the modem adjustment as well. Now, I would caution, we're looking at, as I mentioned earlier, that we're striving to find a balance between unit growth and ARPU. Balance doesn't mean that everything is exactly the same, that each lever is the same, but that you're balancing the levers based on customers' needs and perceptions. I would throw that out as a caution.

Thank you, Julie.

Our next question comes from the line of Frank Louthan from Raymond James. Frank, go ahead.

Great. Thank you. Can you talk to us a little bit about the video side? Losses slowed a little bit. Where do you think that sort of bottoms out, and are you kind of hitting that wall? We're stubborn customers there. Then what do you think is having the bigger impact on the subtrends currently for data? Is it household moves, or is it competition, or still a combination of effects?

Tom might have more to comment on, but as it relates to video, Frank, we don't sell video. There's no end coming into the bucket. It's just outgoing out of the bucket. Where do I see it going? I think we have been pretty vocal about this for 10 years now, saying that customers have a lot of other choices that, quite honestly, are more economical for them than being forced to take a package that we're forced to take from programmers. We're pretty low in video penetration right now. I think it continues to decline, and it's of little risk to us as it affects revenue way more than it does EBITDA.

I was just going to add on the video side, and then you can go to the data side. But, Frank, Julie's spot on. It's a smaller base, so the percentage will probably start to decline a little bit when you're declining off the smaller base until it's the, as we've discussed in the past, the when not if moment. There is still a lot of revenue in it. There's not a lot of margin in it, but there's still some margin in it. We're very focused on the strategy that makes the most sense for those customers first and foremost. In many cases, the demographics associated with those customers are a little bit higher skewed on the elderly side. Transitioning them into a digital environment off that video is something that takes a little bit more hand-holding in some of our markets, which we're doing. We view that as an opportunity in many cases to continue to introduce our data product or extend additional services in our data ecosystem to those customers, but that's just a little bit of a timing dynamic. We want to make sure that as we're looking at the when not if dynamic that we're also very proactively addressing the cost allocation.

Yes, related to subtrends, remember that we're very geographically dispersed. The size of our markets averages about 18k homes passed. Any competitor that would affect us is not the same as it might affect a more consolidated footprint. That being said, it's uncanny that the same dynamics are happening related to connects specifically in both competitive footprints and footprints where we literally have no one else providing a wired product or even unwired of 100 megs or more. So there's definitely another phenomenon at play, and my guess is it is economic and related. So it's both of those things.

Okay, great. Thank you.

Our final question comes from the line of Brandon Nispel from Keybanc Capital Market. Brandon, go ahead.

Great. Thank you. Thanks for taking the question. I think I have a bunch of follow-ups. Julie, you mentioned three key would be a good quarter. Can you just handicap that for us? Is that positive net adds? I would assume. Secondly, you mentioned a third of your customers received the price increase, but you also mentioned fidelity customers. So as a third of the total customer base that got the price increase. And then on that price increase, you also mentioned it was in May. Is that a one and a half quarter benefit this quarter or a one-month benefit where it hit in bills in June? And then my question, those are all follow-ups, is really for Todd, and with a low transaction environment, I would have thought things like truck rolls; customer care costs would actually be lower. Can you maybe give us an update in terms of your thoughts on OpEx trends for the rest of the year? Thank you.

To clarify, I did not state that the third quarter would be strong. I mentioned that the third quarter generally performs well seasonally, and that is my expectation moving forward. We are focusing a lot of our efforts on the back-to-school season because it usually yields positive results. One-third of our overall customer base joined in mid-May, so only part of the second quarter benefited from that. I believe your next question for Todd was about OpEx, which I thought was performing quite well.

Yes, I like the 100 basis point improvement year-over-year. Sequentially, it's pretty flat on a percentage, which is what you might be pointing out, Brandon. And I would say the low transaction environment does offer us an opportunity to focus on some of the costs, both the OpEx, as well as the CapEx; you'll see that the CapEx dynamics were meaningfully lower than run rate, some of that timing on projects. But a lot of that, as I mentioned in my prepared remarks, around working capital optimization and just some growth-related dynamics on the OpEx side. Also keep in mind is that second quarter is when we enact our annual wage increases for our associates. And we will continue to reiterate that our number one investment always will be in our team and in our culture. And we did have those roll through in the second quarter. So while you might have a little bit lower transaction environment, not the OpEx driven by the annual wage increases offset that slightly.

Great. Thank you very much for taking all the questions.

We appreciate you.

That concludes our Q&A. I will now turn the call over to Julie Laulis for closing remarks. Julie, it's yours.

Thank you, Erica. I appreciate all your support today. As always, I want to thank our associates for their incredible work on behalf of our customers and Cable One. We appreciate everyone joining us for today's call, and we look forward to speaking with you again next quarter. Thanks, everyone.

Ladies and gentlemen, that concludes our call today. Thank you for joining. You may now disconnect.