Converge Q3 net income: ?2.1-B (DOWN 3% y/y)

Converge [CNVRG 8.77 ?0.3%; 41% avgVol] [link] reported a Q3 net income of ?2.1 billion, down 3% y/y, and a 9M net income of ?6.4 billion, up 4% y/y. CNVRG said that its 9M performance was driven by a 7.2% y/y increase in consolidated revenues to ?26.2 billion, thanks in part to a net increase of 170,925 subscribers and a 5.2% increase in residential revenues. The company added 78,623 subscribers in Q3. CNVRG’s subscriber gains in 2023 have pushed its sub count up over the two million mark to 2,048,286.  

MB BOTTOM-LINE: It’s no secret that CNVRG’s subscriber acquisition rate is in freefall; the company increased its sub count by 23% from November 2021 to November 2022, but increased its sub count by only 10% from November 2022 to November 2023. That’s a problem in its own right, but it’s compounded by the continued erosion of consolidated monthly residential ARPU (average revenue per user), which fell 5% from ?1,261/month to ?1,196/month in 9M/23. On a proportional basis, fewer subscribers are signing up and the ones that do sign up are choosing cheaper plans that reduce CNVRG’s monthly take. The only silver lining (to me) is the enterprise segment, which is still tiny in comparison to the residential side (?3.8 billion in revenue for enterprise, compared to ?22.4 billion for residential), but which also grew 21% y/y. CNVRG’s SME customer count grew 32% y/y. As good as that result is, though, it will be nothing if CNVRG is not able to juice its residential business. The CNVRG story relies on residential subscribers to be compelling.

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