Liberty Latin A 2025 Q1 Earnings Misses Targets as Net Income Widens

Liberty Latin A (LILA) reported its fiscal 2025 Q1 earnings on May 7th, 2025. The company saw a 1.4% decrease in total revenue, reaching $1.08 billion compared to Q1 2024. Earnings per share remained stable at $-0.69, but the net loss widened significantly to $-126.70 million. This result missed expectations and led to a reassessment of the company's financial guidance. Liberty Latin America anticipates meaningful growth in Group Adjusted OIBDA and Adjusted Free Cash Flow for the remainder of 2025, notwithstanding challenges in Puerto Rico.

Revenue

The revenue of Liberty Latin A decreased by 1.4% to $1.08 billion in Q1 2025, down from $1.10 billion in the same quarter of 2024.

Earnings/Net Income

Liberty Latin A maintained a stable EPS of $-0.69 in Q1 2025 compared to Q1 2024. However, the company's net loss widened significantly to $-126.70 million, a stark increase from the $-500,000 loss in Q1 2024, indicating continued financial challenges.

Post-Earnings Price Action Review

The strategy of purchasing Liberty Latin America shares following a quarter-over-quarter revenue decline and holding them for 30 days resulted in a 16.23% return over the past five years, underperforming the benchmark's 84.08% return. This strategy demonstrated a low Sharpe ratio of 0.25, reflecting poor risk-adjusted returns. The maximum drawdown reached -17.99%, with volatility at 12.22%. These figures suggest that the risk associated with this investment strategy outweighed the potential rewards, highlighting the need for investors to consider alternative approaches or reassess their risk tolerance.

CEO Commentary

Balan Nair, CEO of Liberty Latin America, commented on the strong start to 2025, emphasizing the addition of nearly 60,000 organic broadband and postpaid mobile subscribers, a 50% increase from the previous quarter. He emphasized the importance of Fixed-Mobile Convergence (FMC) in their strategy, leading to an 8% year-over-year growth in rebased Adjusted OIBDA, with significant growth in the C&W Caribbean and C&W Panama segments. Nair also noted ongoing investments in network upgrades and subsea cable systems, while acknowledging slower-than-expected progress in Puerto Rico.

Guidance

Liberty Latin America expects significant growth in Group Adjusted OIBDA and Adjusted Free Cash Flow (FCF) before distributions in 2025, despite challenges in Puerto Rico. The company anticipates reduced capital intensity and remains committed to cost efficiencies to support Adjusted FCF growth. While Puerto Rico's progress has been slower than expected, performance outside this region aligns with previous financial expectations.

Additional News

In recent developments, Liberty Latin America has not announced any major mergers or acquisitions within the last three weeks. However, the company has been focusing on optimizing its WiFi services and enhancing video capabilities, which are expected to drive stock price improvements. Additionally, Liberty Latin America announced an upcoming investor call to discuss the first quarter 2025 results, scheduled for May 8, 2025. Investors are encouraged to join the discussion to gain insights into the company's strategic direction and future prospects. The webcast and presentation will be available on the company's investor relations website.