Q2 2021 Cable One Inc Earnings Call
Please signal conference specialist by pressing the star key followed by zero.
After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then 1. Please note that this event is being recorded I would now like to turn the conference every day, Steve Cochran Chief Financial Officer. Please go ahead.
Nicole.
Good afternoon, and welcome to cable 1 second quarter 2021 earnings calls, 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.
As call in today's earnings release and in our recent SEC filings.
1 is under no obligation and expressly disclaims any obligation except as required by law to update or alternate 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.
Patients are 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 Dot cable 1 dot net.
On today's call is our president and CEO, Julie Lawlis with that let me turn the call over to Julie Thank.
Thank you Steven and good afternoon, everyone. We appreciate you joining us for today's call.
The second quarter of 2021 marks the sixth anniversary of our spin off from Graham Holdings Company.
Finally, the Washington Post company.
We were set to celebrate our fifth anniversary last year, but instead focused on supporting our communities throughout the pandemic.
The pandemic is not over yet we remain confident in our ability to continue to pivot our operations as needed and keep our associates and customers safe, while connecting our communities to what matters most.
Ignition of all of our associates efforts since the spin we'd like to share some of the incredible results. We have had over that period of time.
Since the spin our last quarter annualized adjusted EBITDA has expanded from $316 million to more than $850 million and our enterprise value has increased over 400 per cent.
We have maintained our strategic focus on HST and business services across our family of brands.
Emphasize video on continually found ways to be efficient with cost, but not at the expense of quality or reliability.
Our results to date have exceeded expectations with compounded annual residential HFC revenue growth of 17, 9% and compounded annual business services revenue growth, 26%. During the 6 year period ended June 30th 'twenty 'twenty 1.
Last quarter annualized adjusted EBITDA for the same period grew at a compounded annual growth rate of 18%.
Adjusted EBITDA margin standard over 14, 100 basis points from 39% to $53.1 per cent.
Then also unlocked new plank in our strategy.
Since we were no longer a subsidiary of Graham Holdings, We took control of our capital allocation and used our balance sheet capacity to invest kind of rural markets. We serve so low.
Since 2015, we have either made or entered into a total of 10 strategic acquisitions or joint ventures with a total aggregate investment of approximately $4.5 billion east.
These transactions have contributed significantly to the growth in our enterprise value from approximately $2.9 billion as of June 32015.
Approximately $15 billion as of the end of the quota.
This track record gives us great confidence in what lies ahead. Our focus is always remains on the long term future and what's next for cable 1.
Turning to our second quarter results. We're pleased to have once again delivered a quarter that exemplifies our trajectory since spin off with continued strong customer and financial growth.
Revenues increased 22.4 per cent compared to prior year quarter, adjusted EBITDA increased 37 per cent and adjusted EBITDA margin improved 340 basis points to 53, 1%.
Excluding the impact of hardly operations revenues and adjusted EBITDA increased by 7% and 17%, respectively and adjusted EBITDA margin was 54, 4%.
Our residential HFC customer growth continues on a course, well above pre pandemic trends.
Excluding heart rate in the second quarter of 2021, we added over 12000 residential H S. T customers on a sequential basis that is over 10 times higher than our growth relative to the second quarter of 2019.
On a year over year basis, and excluding heart rate, we added more than 53000 residential HFC customers.
Since the beginning of 2020 through June 32021, our HST penetration has increased over 500 basis points from 33.2% to 3.8.
8.5% highlighting how far we have come as well as a significant growth opportunity that remains available for us to capture.
We continue to support our customers through the pandemic by participating in the FCC's emergency broadband benefit or E V program.
This program provides critical connectivity to those who have been financially impacted by COVID-19.
E D D participants to receive up to $50 off if their monthly bill based on their current Internet service and rented equipment and those who live on qualifying tribal lands can receive up to $75 off their monthly bill.
We began offering this benefit in May and currently have nearly 5000 customers enrolled with more than 75% selecting premium product offerings with speeds of 200 megs or greater.
Of those enrolled less than 10 per cent or new customers.
Residential HFC demand for higher tiered product offering continues our selling per packages with the download speed of 200, megs or greater was approximately 78 per cent and the second quarter and selling for a gig speed tier reached nearly 15%.
Alan results the increased take rates of our unlimited data plan and continued migration of existing customers into higher tiers contributed to our 6.2% year over year residential data ARPA growth.
A reminder, we havent Saudi rate increase in our legacy systems since the fall of 2015, and we actually decreased prices on our higher tiers at the start of 2019, when we launched our new pricing and packaging across the legacy footprint.
Business services revenues continued to show positive momentum this quarter with a growth of 31% year over year and 5.6% excluding hardware operations.
Our business services team continues to seek opportunities to partner with government and local entities to provide connectivity in rural communities.
In 2020, we were awarded a $29 million, we were awarded a $29 million from 3 agencies to expand broadband services for schools libraries, and small businesses within Gila County, Arizona.
We recently completed construction on a portion of that project, putting a fiber optic network that will provide fast and reliable high speed Internet service to businesses and piece on Arizona.
Once the entire project is completed it will consist of more than 200 route miles and nearly 29000 fiber miles, making this 1 offs cable 1 from largest single fiber construction project to date.
Businesses have shown incredible resiliency throughout COVID-19, and we consider ourselves a trusted partner to our business customers and have worked closely with them to those who've been impacted adversely by the pandemic.
Wow, we arent back to pre pandemic numbers, we have seen business services revenue accelerating each month through 2021 fueled by strong demand for connectivity in both the SMB and the enterprise segment.
To round out another quarter of strong growth, we turned to our minority investments where residential HFC customers grew by 1.7% on a sequential basis and added a total of approximately 5400, new residential and business day to customers as a reminder.
Operating net ads are now consolidated with our operating results and are no longer included in this figure.
These results demonstrate the continued demand for quality HFC services as well as a share focus of our strategic partners.
Turning to our network average data usage was approximately 475 gigabytes per month.
Plant utilization during peak now averages below 20% for both downstream and upstream traffic.
Downstream improved meaningfully year over year from 25 per cent to 19% and upstream utilization grew slightly from 17% to 18 per cent.
As a result of our ongoing investment and upgrades targeted at expanding capacity we.
We continue to stay well ahead of the demand curve.
Moving to integration teams from across the company continue to focus on bringing our new brands together.
Given that Fidelity's performance is ahead of plan, we've been able to pivot our primary focus too hard range, where we are developing relationships and having knowledge exchange between pure leaders as we develop our 3 year roadmap.
As previously mentioned, we expect to start realizing synergies in 2022 in the meantime, our great continues to execute successfully on its business strategy.
Through years of lessons learned strategic resource allocation and hard work. We believe integration is now 1 of our core competency.
With the close of the hard grade transaction, we now compete in approximately 24 per cent of our markets with Internet service providers that offer residential broadband download speeds of 100, megs or higher well.
Still a relatively low competitive profile, we continue to run our business as if every market is highly competitive offering award winning products and services, maintaining a local focus on customer needs.
Before handing the call over to Stephen I'd like to mention a few other notable events from this quarter.
We are honored to have been named third in the nation on PC magazine's 2021 list of the top 10 fastest Internet service providers.
Speed test for this award were conducted through that.
During the height of the pandemic, which affirms our confidence in the robust and reliable network, we have engineered and built.
We are proud to have met the surge in internet usage throughout the pandemic to have provided the connectivity that has been so critical over this past year and a half.
Spark like business was also named the top business Internet service provider by PC magazine ranking fifth in the nation businesses across our footprint gave sparkly top marks in overall satisfaction cost reliability and support to name a few.
These awards would not have been possible without the tireless efforts of our associates, who remain dedicated to supporting our customers and our community.
In keeping with our commitment to supporting our communities not only through our products and services, but through philanthropic initiatives and partnerships. We are pleased to share that we recently awarded more than $100000 in grants to.
30 nonprofit organizations across our 24 state footprint through the company's charitable giving fund which was launched in January 'twenty 'twenty 1.
The charitable, giving fun, which will annually awards $200000 on grants to local nonprofit organizations in our markets concentrate support in the areas of education and digital literacy hunger relief and community development.
Finally, I'd like to welcome Todd Tucci, who will join the company as senior Vice President of business development and financing in September.
Todd comes to us from true as Securities where he most recently served as managing director of technology media and telecommunications leveraged finance team.
He brings more than 20 years of relevant capital markets telecom industry and financial leadership experience.
Making him a valuable addition to the cable 1 leadership team.
And now Steven.
Thanks Julie.
The second quarter of 2021 generated exceptional financial results revenues for the second quarter were $401.7 million compared to $328.3 million in the prior year quarter low $22.4 per cent increase.
This increase which included $56 million of revenues from her great operations was fueled by a residential agency revenue increase of 26, 6% and a business services revenue increase of 31%.
When we exclude second quarter 2021 hard grade results, we would have seen second quarter total revenue increased by 7% residential agency revenues increased by $15.7 per cent and business service revenue increased by 5.6%.
Residential residential agency customers grew by approximately 165000 or 21.7 per cent year over year, approximately 110000 residential data psus came to cable 1 and the hardware to acquisition of which approximately 19000 or contributed to heart rate and the aniston on exchange in October 2000.
'twenty.
Excluding hardware customers, we added over 12000 residential HST customers on a sequential basis.
Operating expenses were $112.4 million or 28 per cent of revenues in the second quarter compared to $106 million or 32.3 per cent of revenues in the prior year quarter of 430 basis point improvement driven largely by a decrease in programming and compensation expenses.
Selling general and administrative expenses were $88 million for the second quarter of 2021 compared to $65 million in the prior year quarter. These expenses were 21, 9% of revenues in the second quarter of 2021 compared to 19, 8% of revenues in the prior year quarter.
Net income in the second quarter was $106.2 million net income included a $33.4 million non cash gain on fair value adjustments associated with the company's existing investments in heart rate, partially offset by a $21.4 million noncash loss on fair value adjustments associated with the call input ops.
1 is to acquire the remaining equity interest in Mega broadband investments.
As a reminder, the N V I options are subject to mark to market accounting on a quarterly basis until these options are exercised or expire any changes in the assumption used to determine their fair values could increase or decrease the resulting valuation which in turn could cause significant non operating fluctuations in our GAAP financial results from 1 quarter to the next.
Net income per share.
On a fully diluted basis was $16.68 per share inclusive of the noncash gains and losses just mentioned.
Adjusted EBITDA was $213.2 million for the second quarter and increased 37% from the prior year quarter for reference <unk> 2 months of operating results.
Contributed $22.3 million of adjusted EBITDA. This quarter, our adjusted EBITDA margin increased 340 basis points year over year going from 49.7 per cent to 50, 311% cash.
Capital expenditures totaled $89.3 million for the second quarter of 2021, which equates to 41, 9% of adjusted EBITDA.
During the quarter, we invested $19.4 million of Capex for network expansion and $2.4 million for integration activities, bringing our totals for the year to $26.5 million from $6.4 million respectively.
Adjusted EBITDA less capital expenditures was $123.9 million for the second quarter and increased 46, 6% from the prior year quarter.
In the second quarter of 2021, we paid $15.1 million in dividends to shareholders.
On May 3rd 2021, we closed our purchase of the remaining approximately 85 per cent equity interest in heart rate that we didn't already on the transaction imply to $2.2 billion dollar total enterprise value for 100 per cent of heart rate on a cash free debt free basis. Additionally.
Additionally, on May 3.2021 day, partially off to partially finance the hardware acquisition, we obtained an $800 million term loan, which matures in 2028. The net proceeds of the offering were $789.8 million after deducting issuance costs.
From a liquidity standpoint, we had $449 million of cash and cash equivalents on hand as of June 30th and we continued to generate significant free cash flow.
At quarter end, our debt balance was approximately $3.9 billion consisting of approximately $2.3 billion in term loans $920 million in convertible notes and $650 million in unsecured notes and $5.6 million of finance lease liabilities.
We also had $459 million available for additional borrowings under our revolver as of June 30th 1.
We're all our debt to last quarter annualized adjusted EBITDA after netting cash on hand against debt was at 4.1 times as of June 30th.
Paul we are now ready for questions.
Thank you everyone now begin the question and answer session to ask a question you May Press Star then 1 on your Touchtone phone, if you're using a speakerphone. Please pick up your handset before pressing the keys to withdraw your question. Please press Star then 2 and at this time, we will pause momentarily to assemble the roster.
My first question today will come from Phil Cusick with J P. Morgan. Please go ahead.
Hey, guys. Thanks.
2 questions if I can the pace of the residential broadband.
Through the quarter 12000, a great result on an organic basis, how sustainable is that and especially when you think about the E V b programs and potential further federal support.
In the future.
Phil It's Julie I'll start out with that I mean.
Don't have a crystal ball I don't know, what's going to happen with the pandemic or with schools and in certainly the impacts of those things going forward as planned versus not would probably impact our business, but I feel pretty confident I mean, we sort of pointed.
To.
<unk> that and it's just thinking it's not knowing because none of us know with with the Crazy World that we're living in but thinking that.
The back half of this year.
Likely going to look like 2019, now having said that we said that at the beginning of this year 2 and clearly.
We're outpacing that by a long shot so the real answer is we don't know, but we're prepared to handle the growth.
That we can still capture.
The the ABB is pretty interesting as I noted.
Just a little bit under 10 per cent of the customers that have come on are new customers and then likely part of that is.
Getting the word out hand quite honestly.
On the process to enroll as a bit is a bit onerous right now so it will be interesting to see as we pivot to a longer term program.
Do you see what we can bring on with that.
Is pretty interesting to note that those same ABB customers. The majority of which were existing customers. They are upgrading at 3 times the rate of a non EBV customers. So these are people that are taking this opportunity to get more speed more through.
Put more data on but.
But with the government that are putting up a portion of that bill.
Okay, and then second if I can debt to al QA EBITDA 4.1 times, how do you think about that coming down on the type of rates you're raising money are are basically low I think it's all Stephens doing.
And and now does that make you more comfortable with we're taking a little more leverage on them than you bought in the past.
Well I think I think doing what we did probably took us to a leverage level that we hadn't anticipated before that and I think a big part of that was just where we were able to borrow on what we're able to put in place and clearly I think we'd probably look at the converts.
You know.
Quasi leverage I'm just from the standpoint of you know, we clearly anticipate that those will convert overtime and other not that unfortunately, the the very low cost of them.
It means that there's not much of debt service associated with them either and so I think all of that allows us to that being said I think we continue to grow very quickly keep in mind that net leverage number I gave did not include a full quarter of hard great. So and that alone in and it will drop the leverage on top of our continued growth. So I think we'll delever.
Relatively quickly anyway that being said you know as opportunities present themselves I think we definitely are more comfortable with a higher leverage than we probably were you know 2 years ago before we've kind of put the structure in place.
Yeah, I didn't want to make it too complicated, but yeah that was my question. Thank you very much.
Yeah.
And our next question will come from Frank Rosslyn with Raymond James. Please go ahead.
Great. Thank you walk us through a little bit more about what you're getting with hard gray and what can we expect kind of the trends with those subs. In particular, you know talk to us a little bit about day. The extensive fiber network that they that you get with that and and how that fits in your mix and what you think the opportunity is to drive business there. Thanks.
Sure Frank I'll start off and Julie Julie can idea and I think I mean, I think first and foremost we get a company that looks very similar to ours in a lot of ways from the standpoint of the type of markets. They serve.
The type of associates that they have and kind of their focus on focus on associates first and then customers on the communities, we serve and so so that piece of it which is kind of foundational to the things that we generally look at is there you know if they have slightly higher penetration they probably have markets that have slightly higher demos on us and so.
That being said they also have 40 per cent of their network, that's already fiber and so you know some of that.
They are I think a competitive standpoint, and others puts them well positioned keep.
Keep in mind too I think some of the higher penetration actually tied to the higher demos and 2 the nature, especially at Hilton head and the area around Hilton head to what what is kind of a more resort type town and so so yes. So I think from a growth opportunity standpoint, when we look at you know what is our real focus which as you know.
The business services revenue growth and then letting that flow through to EBITDA. We think we have a lot of opportunity there both from a growth on the top end as well as just the ability to drive margins higher over time that will be more aligned with what our overall margins, which will allow for accelerated growth.
Alright, great Yeah, no I mean, I think I think you nailed it.
Pete will flow leadership to know how the growth markets the.
Actually the footprint to grow too not just organically, but their footprint gives us another footprint to 2 edge out from this if we so choose in the future and M&A I think you know as we think about tuck in acquisitions in the future of theirs.
5 more states that now fit into that profile for us that didn't beforehand.
Alright, that's helpful. And then just a follow up with the Mega broadband investment that you have can you walk us through sort of the again remind us the timeline of the Optionality you have and what the soonest that you could.
Potentially you know take a larger stake in that business.
Yeah. So so we have a year and a half time window that begins at.
At the end of the first quarter of 2023.
So starting in 2023 through kind of the you know towards the end of the third quarter of 'twenty 'twenty 4 we have the option and you know there's a there's a time period within each of those quarters that we can notify them that we're exercising it and then obviously theres still approvals and stuff that has to go through so you. Just you wouldn't you would have to announce it and then go through.
The process to get to close, which which shouldn't be a long process, but but nonetheless. So you know I think there'll be a lot of factors that play into that everything from where we are on hardware and integration at the time as well as capital markets and where we are from the ability to raise incremental capital, we'll need to close that part of the transaction.
So and that was 1 of the reasons, we structured the deal. The way. We did was you know going in thought as well wanted to as soon as we can get it.
But we needed some level of Optionality in case, just conditions don't allow that to happen.
Okay, great. Thank you.
And our next question will come from Craig Moffett with Moffett Nathanson. Please go ahead.
Hi, Thank you for taking the question I Wonder if you could just talk about the competitive dynamics that you're seeing in your markets, particularly sort of growth markets like Boise, Idaho for example.
There's been so much talk about fiber expansion and and people like T mobile doing fixed wireless broadband.
What are you seeing in those markets in terms of new competitive entry and if maybe you could just quantify what percentage of your footprint today do you see on fiber and what is your best estimate for where you think youre going to be overlapped with fiber in the next couple of years.
Oh, that's a big 1 Craig.
No.
Right now 24% of our footprint has a provider that is offering at least 100 megs about 14% of our footprint.
As a fiber provider and it so relatively small.
What do we see them, we do see some encroachment of smaller not usually bigger smaller mom and pop folks wanting to get into the broadband business because they you know day here, it's a growing happening thing.
We also have some pretty clear insight into.
How each 1 of our markets is performing BCD any competitor that we might have so we we might have AT&T or centurylink DSL and some of our markets. We actually have AT&T fiber and what we know about what's occurring in those markets is that we are winning share not them at this.
Point in time, we are winning share and it does not matter what type of technology that competitor has whether it's D. S L or fiber we are coming out the winner at this point in time.
That being said we are incredibly incredibly incredibly diligent.
About you know boots on the ground we are in our local communities. You know, we don't have operations like call centers overseas or in aggregate.
Aggregated in Big cities, our associates are located in our local markets and so there's boots on the ground. So that we know if anybody is talking to city officials or if there are low case going on so that we can make sure that we are more than ready to meet the competition competition will make us better on the law.
Long run them, we're not seeing anything from T. Mobile at this point in time again, I think as long as we're focused on taking care of our customers I really don't see them coming out with something that meets our customers needs better than what we already provide for them, yeah and I would just add I think.
If you think about 78% of our customers are at 200, Meg or taking 200, megs or higher and average usage is approaching 500 gigs that's not what the customer base that T. Mobile's going after it doesn't mean, they won't be successful on our markets because theres still another 60% of people on some of them are taking this L and they may be successful there.
I don't think we're targeting the same customers, though and because of that I think that.
We obviously are paying attention to but we don't see as a big competitive threat to us.
That's helpful. Thank you.
And our next question will come from Brendan Miscible with Keybanc capital markets. Please go ahead.
Great. Thank you for taking the question I wanted to follow up on Craig's question for Julie.
So Julien markets, where you have fiber competition can you talk about the sophistication of your pricing kind of strict where you're able to price services on a market by market or even street by street basis, how common is that today.
Secondly, can you talk about the ARPA the data for hardware it seems as if it's pretty close to legacy cable 1 but just.
I just wanted to confirm that thanks.
Alright, sure so fiber competition Theres AT&T in the South East and then there is low they are a teeny bit in Texas as well.
And we have a provider called Allo, and Norfolk, Nebraska, which is on 1 of our smaller market 1.
Yes.
And Tds them starting up in Boise.
We do have in the past in order to drive efficiency. We have this mentality that 1 size fits all.
As we have grown.
And increase our footprint and have seen some competition into our markets. We rapidly changed the mindset and so now we offer pricing that can go literally as you mentioned street by Street, and we can offer that pricing just in time.
We don't no we don't have to open up different pricing or competitive pricing is called freedom connects them. We don't have to open that pricing months in advance we can open it just in time on and we found so far that strategy to work well for us in terms of maintaining them.
The balance between market share and our <unk>.
Our appealing hard great I mean, I can talk more to our fidelity did honestly well I'll answer that so the arb the harpoon hard great. It was very similar to the cable 1 <unk> except for on the commercial side, where there are commercial ARPA is quite a bit higher I guess or commercial or if it was quite a bit higher on the hardware market than what it was in cable 1 so that you'll see that pull up the <unk>.
Total there, but from a residential standpoint.
We were we were are pretty close to the same.
Okay. Thanks for taking the question.
The thing I would just add on the competitive side I think you know I joined here 3 years ago and at the time. It was julie's focus to develop a competitive mindset and I would say.
The change over 3 years has been pretty dramatic and I think I think we have an intense focus on it now where I would say that as you said that wasn't a focus on kind of didn't have to be and and it wasn't and it was very much focused on efficiencies and I think we've done a really good job of continuing to focus on margin, but also.
You know drive this competitive mindset throughout the organization.
Great. Thank you.
And our next question will come from Steven Cahill with Wells Fargo. Please go ahead.
Thank you Julie last quarter I think he talked about on the call that subscriber trends had continued to be pretty strong in April I'm. Just curious you had a good subscriber result for the quarter was that kind of consistent through that and any commentary on how things be all kind of coming out of it into this period of kind of fresh uncertainty and may.
Maybe you could talk about how hard grades in your other minority investment companies are performing from a broadband net add basis as well and then a quick follow up.
So sub trends like in the discussion with Phil I would say for 'twenty 'twenty..1 day year started out very strong and we said the first quarter was very strong April was very strong may and June were better as you've heard I mean, we I think we were 31% better in this quarter than we were.
In 2019 in this quarter.
So obviously not as high as 2021.
The height of the pandemic, but higher than 2.
2019 churn also continues to be unbelievably low like we were on a track of driving churn down before the pandemic.
Pandemic hit and of course during the course of the year, we expected that to be low.
Especially when we were doing the keeping America connected pledge, but even in 2021, our churn continues to drive lower which I mean, we really believe people have found a they have choice.
Maybe choice of providers and choices of our plans and they have found on.
On that works for them and give them value.
But its summer and so we're seeing typical summer trends start to set in so.
Yeah.
Paul brings or the kids going back to school or the kids not going back to school that does have an effect on on how we do I think.
And heartbeat is no longer there to be an investment in their numbers are as of this quarter included until they werent in for a full quarter. They worked for 2 months and the 1 thing we mentioned the 12000, which was excluding hardware. They did have 2000 kind of organic in the quarter. There wasn't technically part of that 12000. So I'm sorry. If you include that as on.
Again, then we truly had 14000 those organic but our other investments and you too as we mentioned in a 1.7% sequential growth in the other businesses I think they continue to see similar trends to us which is not as fast as low as you know this time last year, but still kind of better than what has been historic.
Great and then maybe just if we could take that to the penetration you have I have historically thought about penetration as maybe being a little bit lower in your markets than some of your peers, but as youre seeing these strong trends in the selling at 100 Megabits.
Gig sell and the impact of E. D. B you have a little bit more headroom on you know do you see there being more headroom on penetration than what you bought historically the churn dynamic might inform that as well. So just curious your thoughts there.
Yeah I do think that is the case I mean, as we look at customers that are coming on now you know who are they.
They have a credit profile, that's that's very similar to our current customers. So again I mean. These these are good quality customers. Many of them are making a choice to come to us from other providers could be D. S. L could be fiber to the home many of them were sell only were wireless only.
So.
And that group of people, who have come to us during COVID-19. So from say March of 'twenty 'twenty 1.
<unk>.
Stickier than customers prior to them.
That is to say the retention curve on any 1 that has joined us since the pandemic is.
Is better than it's been in the past and in the past is those customers that cohort had very low churn. This new cohort is even stickier.
In terms of penetration on where we can go on the pandemic accelerated the need for a reliable robust HST service and so now that the innovators can see that this network exist theres going to continue to be.
You know innovation and.
Just great products and services that can ride over our network. So sure am I I don't really see at this point in time, we've got a lot of work in front of us in terms of capturing penetration continuing quite honestly to drive our margins.
Yeah, and I would say that the mindset piece I think also positively impacts that because I think the 1 size fits all also as you're marketing to a pretty narrow based on I think with what we've done on that we've definitely been able to become much more targeted to different groups. Not just you know kind of the main group. We were focused on is on for all of those reasons, we feel we've got a.
Continued penetration outside we probably aren't catching the industry averages anytime soon but I think we've got a lot of upside.
Maybe maybe a lot more upside than what the industry does.
Yeah. Thanks.
And this will conclude our question and answer session.
I'd like to turn the conference back over to Julie for any closing remarks.
Thank you Paul.
We appreciate everyone joining us for today's call and look forward to speaking with you all again next quarter be well.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect. Your lines at this time and have a great day.
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