Welcome to the Liberty Broadband 2023 Q2 earnings call. [Operator Instructions] As a reminder, this conference will be recorded, August 4. .

I would now like to turn the call over to Shane Kleinstein, Vice President, Investor Relations. Please go ahead. .

Thank you, and good morning. Before we begin, we'd like to remind everyone that this call includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Actual events or results could differ materially due to a number of risks and uncertainties, including those mentioned in the most recent Forms 10-K and 10-Q filed by Liberty Broadband and Liberty TripAdvisor with the SEC..

These forward-looking statements speak only as of the date of this call, and Liberty Broadband and Liberty TripAdvisor expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein to reflect any change in Liberty Broadband or Liberty TripAdvisor's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based..

On today's call, we will discuss certain non-GAAP financial measures for Liberty Broadband, including adjusted OIBDA.

Information regarding the comparable GAAP metrics, along with required definitions and reconciliations, including preliminary notes in schedules 1 and 2, can be found in the earnings press release issued today as well as earnings releases for prior periods, which are available on Liberty Broadband's website..

Now I'd like to introduce Greg Maffei, Liberty's President and CEO. .

Thank you, Shane. Good morning. Today speaking on the call, we will have Liberty Broadband's Chief Accounting Officer and Principal Financial Officer, Brian Wendling; Ron Duncan, CEO of GCI; and Pete Pounds, CFO of GCI, will also be available to answer questions.

Also during the Q&A, we will be available to answer questions related to Liberty TripAdvisor..

So starting with Liberty Broadband. We remain under the 26% fully diluted ownership cap due to lighter buybacks and their annual issuance of equity awards at Charter. We have not sold into the buyback since January.

We do plan to resume LBRDA and LBRDK buybacks using substantially all of our after-tax proceeds from Charter sales once they resume their buyback..

Charter, looking at it, strong operating results, 77,000 broadband net adds and 648,000 wireless net adds benefiting from the conversion strategy of Spectrum One. Charter is now about 30% of all the postpaid industry wireless net adds, and cable in total is about 47%.

The rural expansion is going well at Charter, pacing with 26,000 subsidized world subscribers added. That was 1/3 of our total broadband net adds coming from these subsidized world builds..

We do expect progress on the investments we've made and easing cost pressures in the back half of 2023 to really reaccelerate growth. 2023 is an investment year and we did see modest financial growth in the quarter as expected due to that.

There remains pressure in the video income system, which is impacting our top line, but not impacting EBITDA as much..

Charter management is executing well on all pillars of its strategy, and we're pleased with their progress. The employee retention initiatives they've undertaken have proved successful with better sales yields, retention and customer service.

We are on track for 300,000 rural passings constructed in 2023, and the network evolution and physical upgrade plans are on track as well. 45% of our customers are now receiving our advanced WiFi product..

Turning to TripAdvisor. We believe the long-term trends and travel experiences will benefit the business and will continue. Recent growth has continued to be led by strength of experiences. Viator revenue was up 59% year-over-year.

We're focused on growing the brand awareness of Viator and building a cost-efficient customer acquisition channel, which we believe is entirely doable and will continue to increase profitability over time. And we continue to evaluate ways to better highlight the value of Viator..

There are -- we are working through the challenges in metasearch while carefully managing costs. TripAdvisor announced cost reductions recently, most recently targeted at the TripAdvisor core and corporate functions. We are investing in strategic initiatives to build deeper engagement with travelers and diversify our monetization schemes.

We are leveraging AI, we have upgraded our trip planning tools built on trips proprietary data using AI, and we are augmenting our content offering both -- with both user-generated plus editorial content, leveraging that AI as well. And we have other initiatives underway to drive increased engagement and membership sign-in..

And with that, I'll turn it over to Brian for the details. .

Thank you, Greg. Let's take a quick look at Broadband's balance sheet. At quarter end, Liberty Broadband had consolidated cash and cash equivalents of $81 million, which includes $60 million of cash at GCI.

As of the end of the day, yesterday, the value of our Charter investment was $19.9 billion, and at quarter end, Liberty Broadband had a total principal amount of debt of $3.8 billion. Note that this excludes the preferred stock and remaining indemnification obligation to Qurate..

As Greg mentioned, we have not sold into Charter's buybacks since January. We do expect to resume share sales to Charter at some point this year to maintain our fully diluted ownership of 26% for our stockholders agreement.

However, due to less buyback activity, we would expect lower tax leakage on our future Charter sales this year compared to the previously estimated range of 7% to 9%..

Taking a quick look at GCI. GCI had a solid second quarter. Revenue and adjusted OIBDA were up $7 million and $2 million, respectively. Revenue growth was driven by continued strength in data sales, particularly to RHC and school customers.

This was partially offset by continued declines in our video business, which impacts revenue but does not have a meaningful impact on margin or free cash flow. Adjusted OIBDA grew less than revenue due to inflationary pressures, primarily in labor and personnel-related expenses.

Over the last year, GCI has added 5,700 revenue-generating wireless subscribers and 4,000 revenue-generating cable modem customers..

Solid performance has allowed GCI to continue making distributions up to Liberty Broadband. Subsequent to quarter end, GCI paid a $25 million dividend to Liberty Broadband using cash on hand, and we anticipate additional dividends will be paid this year. Year-to-date, Broadband has received $65 million in dividends from GCI.

Leverage, as defined in its credit agreement, was 2.95x as of quarter end and GCI has $397 million of undrawn capacity under it's revolver..

And then just a quick update on 2 litigation settlement matters. During the second quarter, GCI paid the previously accrued $41 million settlement to the FCC and DOJ resolving that long-standing inquiry regarding the RHC program.

And additionally, during the second quarter, Liberty Broadband paid the previously accrued $38 million settlement related to a 2015 lawsuit. More information on both these matters is available in our 10-Q, which will be filed shortly..

And with that, I'll turn the call back over to Greg. .

Thank you, Brian. And to our listening audience, we appreciate your continued interest in Liberty Broadband and Liberty TripAdvisor. Our Annual Investor Day will be Thursday, November 9 in New York City. Please save the date, additional details will be provided soon. We hope to see many of you there.

And with that, operator, we'd like to open the line for questions. .

[Operator Instructions] Our first question comes from Michael Rollins with Citi. .

Just curious on the Liberty Broadband side, any new perspectives on the opportunity for Liberty Broadband to close some of the NAV discount relative to the value of the Charter stake and the other assets, GCI and the other assets that you own?.

Yes. Thank you for the question. Look, we are always interested in trying to maintain the smallest discount possible, but when presented with the discount, we are going to try and take advantage of it. And we believe with the cash flows that we are going to be generated from Charter to us, we will be able to repurchase shares at an attractive rate.

Over the long term, we'll see how that narrows and when becomes most logical as it probably will at some point to combine Liberty Broadband at Charter, but we have no current plan or intent..

Operator, I believe we have no more questions. So with that, again, thanks to our listening audience. Appreciate your interest in Liberty Broadband and Liberty TripAdvisor. We hope to see you next quarter, if not sooner. Thank you. .

Thank you. All parties may disconnect..