Converge consolidated revenues up by 13.2% in 1Q2025; EBITDA margins, ROIC growing to 62.0% and 18.4%, respectively

1Q2025 Key Highlights

• Converge registered consolidated revenues of P10.8Bn for 1Q2025, higher by 13.2% YoY
• 1Q2025 Residential revenues grew to P9.1Bn or 11.5% YoY growth
• Enterprise revenues reached P1.7Bn, a growth of 22.9% YoY
• EBITDA grew 14.8% to P6.7Bn with margin ending at 62.0% for 1Q2025
• Net income after tax increased by 18.3% to reach P3.0Bn representing net income margin of 28.0%
• Consolidated residential net fiber additions for 1Q2025 reached a total of 140,270
• Maintained industry-leading ROIC at 18.4% for 1Q2025

Residential and Enterprise segments both maintained double-digit revenue growth  

Converge Information and Communications Technology Solutions, Inc. (PSE: CNVRG) ("Converge" or the "Company") recorded consolidated revenue growth of 13.2% in 1Q2025 to P10.8Bn-reinforcing the Company's position as the fastest-growing fixed broadband and technology services provider in the Philippines.

The residential business grew to P9.1Bn during the same period, representing 11.5% year-over-year growth. Converge ended March 2025 with a total of 2,701,336 residential subscribers. This is comprised of 2,340,208 postpaid and 361,128 prepaid subscribers. FiberX continued to have strong customer take-up. BIDA Fiber and Surf2Sawa recorded 24,102 and 70,497 respective net adds in the first three months of 2025.

In 1Q2025, enterprise revenue grew by 22.9% year-on-year to P1.7Bn. Along with strong double-digit growth from all enterprise subsegments, revenues from the Wholesale subsegment grew by 54.0% from new customers and service innovations. Fiber port utilization reached 34.4% as of March 2025, with almost 5.4 million fiber ports still available for service. This shows that Converge is still well-positioned to capitalize on the industry's growth momentum in existing service areas.

Strong profitability metrics continue to be industry-leading 

The Company's EBITDA grew by 14.8% to P6.7Bn in 1Q2025, representing an industry-leading EBITDA margin of 62.0%, from P5.8Bn in 1Q2024 or 61.1% EBITDA margin due to prudent cost management and improved operating efficiency. Similarly, the Company maintained its industry-leading Return on Invested Capital ("ROIC") at 18.4% from 18.3% last quarter. Net income after tax grew by 18.3% to P3.0Bn in 1Q2025 from P2.6Bn in 1Q2024, resulting in a net income margin of 28.0% for 1Q2025, higher than net income margin of 26.7% during the same period last year.

Converge has been able to maintain its strong balance sheet and cash flows with ample liquidity and gearing comfortably within bank covenants. As of March 31, 2025, the Company's outstanding borrowings stood at P28.3Bn from P29.5Bn as of December 31, 2024 while net debt position (as measured by total financial debt less cash and cash equivalents and short-term cash placements) decreased from P12.5Bn as of December 31, 2024 to P10.3Bn as of March 31, 2025. The Company's debt service coverage ratio ("DSCR") was 3.2x, the net debt-to-total equity was 0.2x, and gross debt- total equity was at 0.5x well within the required financial covenants from its debt facilities. Its Net Debt-to-EBITDA ratio, based on the last twelve months' EBITDA from April 2024 to March 2025, stood at a conservative 0.4x. This low leverage level, supported by robust cash flow generation, provides Converge with significant financial flexibility to execute capital expenditure plans and capitalize on the growing demand for high-speed fixed broadband infrastructure in the Philippines.

Total cash CAPEX as of 1Q2025 amounted to P2.6Bn for expansion and redundancy projects including more than 35k fiber ports deployed and more than 60km of fiber backbone, with the turnover of turnkey projects expected to be completed during the third and fourth quarters of this year.

Converge introduced product enhancements and bundled packages for Residential and Enterprise segments  

Residential

For a more comprehensive entertainment experience for its residential subscribers, Converge introduced Super FiberX, which includes bundled FiberX plan with automatic boosted speeds of 100Mbps, Xperience Box with a SkyTV Standard or Premium Plan and Freemium channels, BlastTV access, and WiFi-6 modem. The Converge Xperience Box is a Google-certified Android TV box that allows the customer to download apps such as YouTube, Spotify, and streaming apps like Netflix. This provides residential subscribers options to choose their all-in-one connectivity and entertainment experience either with Super FiberX or the Converge Netflix Bundles launched last year depending on their viewing preferences.

Enterprise

Converge engaged with Starlink to become an authorized satellite broadband reseller and can now offer end-to-end solutions from installation, network management, to maintenance to remote areas in the country. Converge CEO and Founder Dennis Anthony Uy said they target businesses and government agencies in far-flung areas for the Starlink service, including those in agriculture, retail, and even fisheries and cruise vessels. The Company will also bundle Starlink's satellite technology with its own fiber network offering redundancy in case one service is disrupted.

Mr. Uy adds, "We're among the few in the Philippines authorized by Starlink to resell its services an acknowledgment of our deep market expertise and commitment to meeting the evolving needs of both enterprise and government clients. More importantly, this is about transforming the way businesses operate. We're bringing solutions that empower industries to scale and innovate, even in the most remote areas."

Converge has also partnered with another US tech firm, Ribbon Communications, to help improve internet services in the country. Uy said the Nasdaq-listed company is an expert on AI-enabled data transmission technology and they will integrate this into the Converge fiber network nationwide. This collaboration expands nationwide the initial tie up between Converge and Ribbon to integrate the US firm's cutting-edge 5 nanometer - 140Gbaud transmission chipset, which boosts the firm's network capacity to 1.2 Terabits per second. This technology was first rolled out in the metro and regional sites of Converge across North and Central Luzon. Now, the said optical transmission solution will be implemented throughout the rest of the network infra sites of Converge across the country, bringing about substantial improvements in the company's overall data transmission capacity and operational efficiency nationwide.

Converge awarded by Ookla® for service quality covering 2H2024  

For the second half of 2024, Converge cemented its status as the Philippines top internet provider, sweeping multiple accolades from Ookla®. In February 2025, Converge was recognized as the Fastest Fixed Network, delivering download speeds of up to 561.51 Mbps and upload speeds of up to 509.08 Mbps. The Company's commitment to high-quality streaming was also acknowledged, earning the Best ISP Video Experience award with a Video Score of 78.17, ensuring smooth and uninterrupted entertainment for users. Beyond speed, Converge proved its dominance in gaming and overall connectivity. With an impressive Game ScoreTM of 83.06, Converge secured the title of Best ISP Gaming Experience, guaranteeing low-latency and seamless gameplay for Filipino gamers. Additionally, its Overall Connectivity Score of 76.13 solidified its position as the Best Fixed Network, showcasing unmatched reliability and consistency. These achievements reinforce the Company's relentless pursuit to deliver world-class internet services to Filipino households and businesses.

Converge MSCI rating climbs to 'AA' following enhanced ESG practices  

Converge improved its Environment, Social, and Governance (ESG) rating by MSCI to 'AA' which marks Converge as a "Leader" within its industry in managing ESG risks. According to MSCI's latest assessment which covered the company's 2023 data, the upgrade from last year's average 'A' rating reflects the stronger board-level oversight and enhanced auditing of ethics practices within Converge. Its implementation of a comprehensive data security framework, including robust breach mitigation measures, also contributed to the upgrade.

"Enhancing our ESG practices to align with global best practices has been central to our strategy because we believe this is how we can build a stronger and more sustainable business. Our improved standing shows that we are on the right track, particularly in areas like labor management, governance, and data security," said Converge Chief Commercial Officer and Chief Sustainability Officer Benjamin Azada.

"We are proud to have our efforts recognized and we remain committed to further advancing our ESG initiatives, especially in topics that matter most to our stakeholders," he added.

Since the rated period, Converge has further strengthened its ESG efforts, including its refurbishment program for reclaimed modems from churned subscribers. More than 80 percent of the modems it recovered last year were refurbished and reused compared to only about 50 percent in 2023. Likewise, Converge brought down its network Scope 1 and 2 greenhouse gas intensity from 2.3 to 1.4 tCO2e/petabyte amid its increased use of renewable energy and better energy management. In addition, the Company also showed progress in promoting continuous education among its workforce with its average training hours increasing to 57 hours last year from 33 hours in 2023 as it provided multiple avenues and platforms for employee learning.

This press release may contain forward looking statements and information that are, by their nature, subject to significant risks, uncertainties, and assumptions. Many factors could make or cause the actual results, performance or achievements to be materially different from those expressed or implied in this release. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein.